Hi makers! Kelly here, taking over for Al on this week's Tip Tuesday. I'm pretty excited to bring you some valuable information on a topic I know many of us have been searching for answers on: how to get our beautiful knitwear into local stores.
Wholesale? Consignment? Renting a space? Just thinking about it is enough to get your head spinning. But never fear, ambitious makers - we have some special guests lined up to help us out over the course of a few information-rich blog posts. Sarah, owner of Mama Knows Clips and Crochet / Mama Knows Luxury, is going to tell us all a little bit about how to get your fabulous items carried in small boutiques.
First and foremost on the agenda is understanding the difference between wholesale and consignment.
Wholesale is when a store or company buys your products in advance to sell through their own venue. Selling wholesale is a special beast all on it’s own, and we'll get more into that later.
Consignment Selling is when you make an agreement with a store to sell your items. You assume all of the risk, as they do not pay you anything in advance.
There are many things to consider when making a consignment deal with a store, and Sarah is going to address a variety of them in a two part blog post. Ready for Part 1? Let's go!
Hi everyone, I'm Sarah! I run Mama Knows Clips and Crochet, making knit and crochet accessories for my clients and their families. I also own Mama Knows Luxury, bringing big stitch merino yarn and locally handmade giant yarn tools to the market. I've been selling handmade items online since 2013, and recently branched out to selling in local stores. My products are currently available at Heavens to Betsy in Devon, AB, and The Maker's Keep in Edmonton, AB. I'm so happy to share some tips and insight I think would be helpful to those intimidated or confused when it comes to getting their knits on store shelves.
1. Understanding Types of Consignment Options
Generally, there are three types of consignment options: Rent, Commission, and a Rent + Commission Combo.
Rent - You pay the store a set amount of rent to use space in their venue.
The biggest benefit of a Rent Only Agreement is that you have a fixed cost you can budget for and anticipate each payment cycle. That being said, one of the downfalls is the store may not be as motivated to actively sell your items since they already know they get paid each cycle regardless of your sales. I always recommend negotiating a “trial period” of 60-90 days before signing a binding contract for rent. I also recommend trying to negotiate binding contracts no longer than 6 months so you can continually assess the sales volume and have the option to leave if sales aren’t where you need them to be.
Commission - You pay the store a set $ or % commission amount to sell your items in their venue.
There are two important benefits to commission only agreements. Firstly, you assume very little risk as you only pay when the store sells your item. Secondly, the store may be more motivated to sell your items in order to ensure they earn money. The main downside of this type of agreement is the commission amounts can be prohibitively high in some cases. We will discuss appropriate commission amounts later.
Rent & Commission Combo - You pay the store a set rent amount and a set $ or % commission to sell your items in their venue.
This option can bring you the best of both worlds with attractive benefits to both parties. From the store’s perspective, the rent portion allows for the store to cover fixed costs while the commission allows for the store to increase their income each cycle. The commission will often motivate the store to sell the items much like in a commission only structure. From the vendor’s perspective, both the rent and the commission are usually lower, which allows the vendor to spread the risk out and account for busy and slow cycles. If you have a busy cycle, you will feel less gouged by the commission. If you have a slow cycle, you will be paying a much lower rent amount than would be negotiated in a rent only agreement.
2. Rent and Commission Pricing
In all cases, the pricing you pay should be based on the caliber of the store. Don't just assume the pricing you are quoted is fair; do your research, and compare all the options available to you. Don’t just assume all commissions should be “x” amount and all rent should be “y” amount. For example, you can expect higher rent costs from stores that are in a prime location, have a huge following, cater specifically to makers, stay within a specific product type and dominate their niche, have a proven documented track record, have a wait list for space, or offer additional perks like trained sales people, specific social media sharing or advertising packages, etc. You should expect lower rent costs from stores that are new to the scene, have a remote location, do not use social media, have a smaller client base, etc. We will discuss considering all of these things when making your decision.
Rent Pricing – Rent pricing is usually based on square footage. Stores will often have a myriad of space options from wall shelves, to counter top displays, to booths and tables, etc. Work closely with the store to find a spot that will suit your products. You should also be able to break down the pricing to a “per square foot” amount so you can compare to other stores. When you rent space you will usually have a specific place that is yours to fill as you see fit, within reason.
Commission Pricing – Commission structures can vary widely from store to store and from one geographical place to another. You really need to do the math here; work out if you will still be making a profit, and look at your product pricing to see if it needs to be adjusted. Compare commissions from one store to another, and remember to take the caliber of the store into account when considering differences.
A note on raising your prices to accommodate commissions: with social media and online sales dominating our world, we really need to be careful when raising our prices specifically at one store in order to accommodate the commission structure. Some stores encourage people to increase their prices just for in store products, but you need to be cautious; this can put you in some hot water. Imagine you went to a store and purchased an item you loved. Later, you decide to look it up online, only to find that you could have ordered it from the same vendor, significantly cheaper and possibly even had it customized. How would you feel? Who would you be angry at? Would you feel burned specifically by the vendor?
If you really need to raise your prices to accommodate a commission, you need to ask yourself if it’s worth it. If it is, consider raising your prices across all venues including online, staying cohesive no matter where your clients find you. A shopper may be willing to pay a small price premium to purchase in-store to “get it now,” to touch and feel, to avoid shipping costs, but that price difference needs to be negligible at best.
Is your brain about to explode yet? Don't worry, you have a whole week to process this plethora of information before we dive back into it again. Tune in for Part 2 next Tuesday to read tips on setting up a contract, and displaying your fabulous merch in stores.
Happy making, happy selling!
Sarah, Mama Knows Clips and Crochet
Kelly, OML Dream Team
Sarah is the maker behind @mamaknowsclipsandcrochet and the force behind Mama Knows Luxury, bringing big stitch merino yarn to the masses and to Canadians in particular. Sarah loves to share her knowledge, and and often finds herself explaining how she "did it" or demonstrating a stitch to her friends. She believes that being a part of the creative community is both an honour and a privilege, and takes at least a little time each day to immerse herself in the creative process.
Kelly is the mind, body and soul behind @knitbrooks: handmade modern knitwear inspired by nature’s endless beauty. After completing a photojournalism program, Kelly used both knitting and crocheting as a way to relax after a long day working as a reporter/photographer. This hobby has since transformed into a way to combine her love of creating fashionable knitwear, with her passion for photography, a cozy lifestyle, and her awe and admiration of the untouched wilderness.