Wholesale- how to dance with the devil.

Ridge works with hundreds of wholesale partners and can be found in almost 2,000 doors. Here is what I learned getting here.

DTC vs Brick and Mortar:

That battle is over. Being a DTC purist is just a disadvantage. “Owning the customer” isnt real it turns out. You never really own anything…

Sure you can email them if they buy from you, but Apple would like to have a word about that lol

You are better off being close to your customers.
If they shop in person, be there. On amazon, be there.
Proximity builds loyalty.

The goal is to always drive back to site, capture a higher margin purchase.
But buying from you CANT be a chore…

Omnipresence has beaten exclusivity.
So you have to learn how to dance with the devil

Wholesale ABCs

Before you dance, might as learn the moves.
Like any industry, there is a whole book of terms you gotta learn to succeed in wholesale. Here is a small but useful sample:

• Adjustments- What will be tacked on to every invoice from a major retailer. Its often called the wholesale tax, no matter how you pack your order there will be a deduction of a few hundred dollars off your invoice. If you actually mess up, you will be charged thousands

• B2B- All wholesale sales are B2B obviously, but where you really need to use B2B is with your 3pl. No 3pl wants your B2B business, it is hard and messy. So messy in fact, that brands often get a separate B2B focused 3pl. Thats less common in 2022, but you still need to clear your future wholesale prospects with your fulfillment partner

• Buyers- The gate keepers of wholesale. For independents its typically the store owner or manager, for majors its a whole department. But remember- buyers are the busiest, most underpaid job out there. 65k a year, hounded by brands all day. A little compassion goes a long way.

• Buying groups- These are when lots of independent stores get together to make large purchases together. it gives them the purchase power of a major, getting them better prices. Can be good, but also is an easy way to lose control over MAP

• Carton- Related to MOQ. Try to ship your product from the manufacture in carton sizes that make sense for an MOQ.

• Co-marketing- A fee, usually just a tax, you pay back to the retailer so they can “market” your product. Sometime you get real value- Scheels will put you on a ferris wheel, but walmart will just take your money lol

• Displays- spend the money, get locking displays (if you have a high cost, small good lol)

• EDI- The clunky code holding wholesale together. It is the worst standard across all of commerce, but it is good at one thing- ubiquity. If you want to work with the Majors, you need to have an edi integration with your warehouse.

• Dropshipping- Yeah that dropshipping. A lot of times Majors want to test you on a drop ship model. They list online, they send orders back. Usually they want an EDI integration to get this done, but can be done manually. Helps launch new markets (Nordstrom Canada loves this model)

• Faire- Tech play connecting brands with independent shops. We havent used it, but know a few brands doing 5 figures a day on it.

• Gated Marketplace- There are certain websites/shops that require credentials for customers to shop in. Military exchanges and Govx being two of the most well known. Good way to get a captive audience with a slight discount.

• MAP- Minimum Advertised Price. The hardest part of expanding wholesale is protecting price integrity. MAP agreements let you have some recourse if a seller goes rogue and starts underselling you on amazon.

• Majors- No real definition here. There are regional majors, category majors, and national accounts. The obvious ones are Kroger, Walmart, Target. But REI and Nordstrom are both majors, same with Dicks. Scheels, a great partner of ours, is a regional major. This is what people think of when you get into wholesale, but these accounts take forever to close, are difficult to work with, and require operational excellence. Dont think you can jump straight to a major and make it work.

• MOQ- Minimum order quantity, by sku. Apparel tends to be low, because of sizes, often requiring just 1-3 size runs. CPG can be high, dozens depending on cases. Just try to align MOQ with carton size.

• Net 30/60/90- Unlike shopify, you will be waiting for your money from retailers. Small shops tend to buy without terms, they just make the purchase on your website. But the bigger the order, the longer the terms. Net 45 seems standrad now but lots will ask for net 90.

• Outside reps- The best way to get into wholesale is with outside reps. This is either a company or a contractor with a book of business who will take your product to those retailers. Typically they are industry vets, come from the brand side, and get a massive commission on your business. 10% of all wholesale sales is common. Not just the first order btw, every order from the accounts the bring in.

• RTV- Return to vendor. What do you want them to do with product that doesnt sell? Two options- they discount it until it does, or they ship it back for you and you credit them. They shipping it back is an RTV.

• Sell through- what percent of your total order you are selling every week

• SMU- Special make up. A custom sku you make and offer to a wholesaler. Huckberry loves SMUs.

• Tradeshows- Where brands and buyers come together. Some shows are industry events, basically just time to see old friends and party. Some shows are “writing” shows, where orders are actually placed. Knowing which one is which can save you thousands

My biggest tips

• Get to at least 1m in DTC sales before bolting on wholesale.

  • Wholesalers need to see some sales traction to take you seriously. They need to know the products have demand before they allocate the capital and space for them.

• Dont chase majors until you get to 10m in DTC sales.

  • Because a major can suck all the momentum out of your business. They are powerful and they know it. SO if they are 10,20,30% of your revenue, they will bully the hell out of you

• The best retailers are passionate about your products

  • Scheels is our favorite account. They really fucking love the product. They post about it on store socials. Unsurprisingly, they sell through at 2x the rate of over accounts. Find stores that love your product, its a win win.

• Start with an outside rep, get to 1m in wholesale sales, hire internally

  • Outside reps are required for getting started or expanding into new territories

    • Farm stores and golf stores are treated differently, if you want to break across categories, try reps

  • But they are agents, they have multiple brands and multiple incentives

    • You probably cant get to 10m a year just off reps

• Internal hires- be generous

  • We want to be the next Yeti, so we recruited a wholesale director out of Yeti.

  • He might be the highest paid person at Ridge, but he drives sales

    • Every week he is in a new state, driving store to store to check on accounts and make sales

  • He is the only Ridge employee wholesale accounts will ever meet

    • He needs to be on brand, bought in, and free of distractions

    • Thats why he gets paid so much

• Take care of your wholesalers

  • They have a hard business. Running physical stores, with in person employees, and making a profit off of worse margins than you.

  • Plus, Covid was a car crash

  • Just be a good partner, understand they are struggling, and try to make the engagement a success

  • They are taking a risk on you

• Protect amazon

  • No one but you should sell your products on amazon

  • If you see a vendor sell on Amazon, cut them off

  • They wont stop, they will break map, and if you dont stop them now, you might not be able too

  • If one vendor starts selling and you dont take action, it is whackamole.

    • Everyone will start and they will start undercutting each other, race to the bottom

• Tradeshows

  • Take a year and “walk” the shows.

    • Can save you thousands of dollars and a lot of effort

    • get a feel for who attends and make some friends

  • Make meetings with buyers ahead of time

    • No one has time for you at these things

    • just plan who you want to see ahead of time and try to reach them

• EDI

  • All edi software sucks

  • Thats the tip

• Scale

  • Ridge is getting close to 8 figures off wholesale every year

    • Wallets are small wholesale category

  • But still, it is single percentage points of our total revenue

  • Wholesale most likely wont change your business, unless you are in beverages

    • Even makeup brands can do more volume D2C now

  • But wholesale is a cosign, a mark of legitimacy

    • And yes, you can make okay money off wholesale too

• Limit online vendors

  • We have a separate vendor agreement for people who are allowed to sell online

  • We treat it as an add on, not a default

  • Nordstrom? They are allowed

    • But one off shops arent allowed

  • Treat it as a case by case

• Dont bother with international until you hit 10m in the US

  • International is HARD

    • Canada has bilingual packaging laws, do you have french on your packaging?

  • Even though the pot of money seems endless, you need a fully functioning local team before you take on languages and cross border commerce

  • If you HAVE too, there are agencies that specialize in it, but you need to pitch them and pay up

    • No one wants to rep something that wont sell

• Sell in doesnt matter, sell through does

  • The first order is hard, the second order is harder.

  • You need to make sure you can move units or the relationship is over