I am a one man shop in a small community. I primarily make my living doing finish carpentry and light remodeling. For the past two years, I have also been making and selling wooden craft items at arts and craft shows as a supplemental income. It has been a help in that remodeling work in this area tends to slow in the holiday season, but the crafts increase.
My question is that I am thinking about selling my crafts wholesale to gift shops, etc. and I am looking for responses from woodworkers who are doing this or have tried it. I am hoping to get some pointers so that I can avoid the any pitfalls. Any help would be greatly appreciated.
(Business and Management Forum)
From contributor D:
I would recommend teaming up with an internet marketing specialist many of which can be found selling like products on e-bay and such. These people are hungry for suppliers. Suppliers are in much greater demand than marketers.
In general, smaller retail stores tend to keystone prices (double them). Out of the 50% that they pocket they pay their expenses, salaries, and profit. The corollary is that the wholesaler has to make something for $5.00 that will readily sell for $10.00. And the $5.00 has to include the costs of marketing to the retailer as well as all of the ordinary costs of production.
Meantime, the wholesaler is often constrained from selling at retail at the same time - unless the wholesale customer is far away. To do so is to compete with one's own customer. So wholesalers generally have to stay out of the retail market when it would compete.
The idea here is that the wholesaler makes money because the increased volume allows for cost efficiencies, but often there are few savings at an intermediate level. For example, you can really save quite a lot if you can afford to buy and use a trailer load of lumber - but that's a lot wood.
Similarly, certain machinery will markedly increase production efficiency and reduce labor costs, but that machine has to be kept running 24/7 to provide these efficiencies and still pay the mortgage.
You might do well to arrange for counseling at your local branch of SCORE. They can usually be reached by calling the SBA or your local Chamber of Commerce. Retried executives of SCORE provide this service free of charge, and you will often find persons who have navigated these waters.
But as I said first off - we do it. We do it by selling at retail a very high quality product at the highest possible price, and by selling at wholesale for a very tiny margin. In time, we hope that this will result in growing wholesale volume, but I can tell you that it is slow going and the slightest mistake quickly erases all our wholesale profits.