Tips for selling to retailers like ULTA & Anthropologie

What You Need to Know About Selling Your Handmade Goods to Large Retailers

At Wholesale Made Easy, our passion is helping makers and independent brands get their creations into the hands of independent brick-and-mortar shop owners. We know that growing your business often starts with small retailers who appreciate the craft and story behind your work.

However, as many of you continue to expand, you might find yourself wondering: what does it take to sell to larger retailers? How do you even get started? Even if you’re just curious about the process, understanding the steps can open up new possibilities for your business.

As a handmade seller preparing to work with larger retailers like Sephora or West Elm, it's important to understand the complexities involved. Partnering with these large companies can open significant opportunities for exposure and growth, but it also comes with stringent requirements and challenges that can impact your business operations.

So grab your coffee, settle in, and let’s dive into these gems of wisdom that could take your handmade business to the next level.

Here's what you need to be aware of:

1. Buyback Agreements

Some retailers may include buyback clauses in their contracts. This means that if your products don't sell within a certain period, the retailer might require you to buy back the unsold inventory. This can be financially taxing, especially for smaller handmade sellers, as it requires you to manage leftover stock that you had hoped to sell through a retail channel.

How to Prepare:

• Negotiate these terms or agree to only stock a limited number of units initially to test the waters.

• Ensure that you have a plan for what to do with returned products, like reselling them on your own site or via promotions.

  
  

2. Old Inventory

Large retailers don’t want products sitting on their shelves for too long. If items don’t sell quickly enough, they may either return them to you or deeply discount them, cutting into your profits.

How to Prepare:

• Manage inventory rotations and negotiate how long items will remain on the shelves before they are discounted or returned.

• Consider offering incentives for new launches, like providing support for seasonal promotions, to help move products faster.

  
  

3. Terms of Payment

Big retailers often have long payment terms—sometimes as long as 60-120 days. This means that while your products may be selling, you might not see that money for several months. This delay can strain cash flow, especially if you're fronting production costs.

How to Prepare:

• Ensure you have adequate working capital to manage production and overhead costs while waiting for payments.

• Negotiate shorter payment terms if possible, or look into financing options like invoice factoring.

4. Returns

Returns are common in retail, but they are especially important to keep in mind when working with large retailers. Be prepared for returns to be part of your contract. Retailers may return products for several reasons, including damages, customer dissatisfaction, or expired shelf life.

How to Prepare:

• Negotiate the terms of returns, especially if products are seasonal or have limited shelf life.

• Ensure your packaging is durable to minimize returns due to damages.

• Factor in return rates when setting your wholesale prices to ensure profitability.

  
  

5. Sales and Promotions

Retailers like Sephora and West Elm may require you to participate in storewide sales, which can reduce your margins. Additionally, they might ask you to pay for special in-store promotions or marketing efforts to drive sales.

How to Prepare:

• Negotiate when and how your products will be discounted. Be selective about which promotions you participate in.

• Budget for promotional contributions, such as providing free products for in-store displays or contributing to marketing campaigns.

  
  

6. Paying for Shelf Space (Slotting Fees)

Some retailers require suppliers to pay for shelf space. This is known as a slotting fee, and it can be a considerable expense for small businesses, especially for prime placement within a store.

How to Prepare:

• Research if the retailer you're targeting requires slotting fees and, if so, factor this into your budget.

• Alternatively, negotiate for different terms, such as reducing the fee in exchange for higher margins or guaranteed minimum orders.

  
  

7. Special Labeling and Packaging Requirements

Retailers like Sephora and West Elm often have specific requirements for how products need to be labeled and packaged. This could include barcodes, ingredient lists, packaging dimensions, or other legal compliance requirements.

How to Prepare:

• Ensure your products comply with all labeling and packaging regulations. This might include adding a UPC barcode, including certain language on your labels, or meeting environmental standards for packaging.

• Factor in the costs of updating your packaging and ensure you have the capacity to produce labels at scale.

  
  

8. Shipping and Fulfillment

Larger retailers typically have strict shipping requirements. For instance, products may need to be packed in a certain way, delivered to specific warehouses, or use particular carriers. Failure to meet these requirements can result in penalties or rejected shipments.

How to Prepare:

• Familiarize yourself with the retailer’s shipping requirements and make sure your fulfillment team or third-party logistics provider (3PL) can meet those standards.

• Have a system in place to track shipments and ensure on-time deliveries.

  
  

9. Barcodes (UPC Codes)

Most large retailers require you to have a UPC (Universal Product Code) for each product. This is a unique code that helps retailers track products in their inventory systems.

How to Prepare:

• If you haven’t already, you will need to purchase UPC codes for each of your products. These can be acquired through GS1, the global standards organization for barcodes.

• Ensure that your products are properly labeled with UPCs, and that the barcodes are scannable.

How to Set Yourself Up for Success:

1. Negotiate Terms Early: Before signing any contract, make sure you understand all the terms—especially concerning payment delays, buybacks, returns, and marketing commitments. If possible, try to negotiate better terms, such as shorter payment windows or capped return rates.

2. Financial Planning: Selling to larger retailers can strain your cash flow, so ensure that your business has enough capital to support production while waiting for payments. This may mean securing a line of credit or other financing options.

3. Focus on Supply Chain Efficiency: Make sure that your production and fulfillment processes can scale. This will help you meet the demands of larger retailers without sacrificing quality or speed.

4. Get Your Compliance in Order: Research the retailer’s requirements for labeling, packaging, barcodes, and shipping. Consider hiring a consultant or using online resources to ensure you meet all their guidelines.

5. Create a Plan for Returned or Unsold Goods: Make sure you have a strategy for handling any unsold products that are returned to you. This could include re-selling them on your website or bundling them for special promotions.

6. Test and Optimize: Start by selling a limited selection of products to test the market before you commit to large orders. This allows you to gauge customer demand, iron out any logistical issues, and get feedback on your products.

   
   

Final Thoughts:

Selling to large retailers like Sephora or West Elm can be a game-changer for your handmade business, but it requires careful preparation and an understanding of the challenges involved. By staying organized, negotiating terms upfront, and planning for potential roadblocks like returns or payment delays, you can set yourself up for long-term success in the retail world.

Taking the time to research, negotiate, and plan ahead will save you from potential headaches and ensure you’re ready for the scale and complexity that comes with partnering with big-name retailers. Keep your business vision in mind and approach each partnership with a solid strategy in place.