How To Become A Wholesale Clothing Distributor
Wholesale clothing distributors stand in a unique position in the marketplace that can give them an opportunity to make money. They purchase clothing from the manufacturer, brand, or importer, and then resell it at a higher price to retailers and possibly end users. A retailer can be a local boutique, since only with access to a stream of new merchandise will the boutique maintain its customer base. End users can include universities that buy uniforms for their sports teams, hospitals that buy gowns for their staff, and police forces that purchase uniforms for their officers. As a matter of fact, one of my first customers was a distributor who purchased a pallet of socks from my business, Closeout Explosion, and supplied those socks to prisons in New York State.
Since manufacturers, designers, and importers, seek to sell in volume, and are usually not interested in using their resources to serve hundreds, or thousands, of customers, these suppliers are happy to work with distributors who will handle the sale and distribution of their wholesale clothing. While an established global brand like Ralph Lauren might have an established sales force to work with thousands of retailers located globally, a brand such as R & M Richards might prefer to supply its dresses to distributors who in turn will serve hundreds of relatively small retail accounts.
The middleman role in the clothing supply chain is usually carried out via a wholesaler distributor. A retailer buys a certain volume of a product from the manufacturer's representative, who in this case is the distributor, and then sells it to end users at a mark-up.
With the advent of ecommerce goliaths like Amazon, many distributors have been cut out of the wholesale chain, although there are still plenty of opportunities to work with smaller and up and coming brands that are not selling directly to consumers through websites like Amazon. The key is to find these smaller and up and coming brands, sign exclusive representation agreements, and then grow your sales in tandem with the rising popularity of the brand. Or, you can find a brand that was once popular, or a brand that is not heavily promoted or seen on Amazon, and distribute the brand's clothes to retailers. Distributors outside of the United States and Europe might have a better chance of pursuing this business model, since most brands primarily focus on the USA and European market.
A distributor can also develop a competitive edge by purchasing closeouts, and buying out the merchandise of defunct brands, since these types of buys can give the distributor exclusive access to the clothing (since it's not widely available in the market) and extra low wholesale costs (since the merchandise is being purchased in a distressed situation). Distributors can find closeouts through search engines such as WholesaleCentral.com, CloseoutCentral.com, and TopTenWholesale.com
Ideally, you will want to represent a brand that needs representation in your market, this way retailers in your market will be likely to buy the brand's clothing through your business. You can purchase clothes from designers who are not yet selling in your market, or you can purchase overstock clothes from international brands, and sell those clothes at a discount in your market.
So, what is a wholesale distributor? In a nutshell, a distributor acts as an intermediary between the manufacturer and the retailer. He collects orders from retailers and passes it on to the manufacturer who puts his mark-up on the goods and finally ships it either directly to the stores, using a drop ship model, or simply fulfilling orders based on an exclusive representation agreement with the distributor. While a distributor does not technically to stock any inventory, stocking inventory in a warehouse can be helpful if the distributor wants the opportunity to make immediate sales. Plus, many retailers might need merchandise sooner than a supplier can ship products to their stores, so having inventory on hand can strongly encourage retailers to make purchases, since they can obtain the goods immediately.
Many wholesalers have a single warehouse that houses thousands of products, while other wholesalers focus on one or two niche product lines. Some distributors choose to have warehouses strategically located around the country so retailers who order can get the products delivered to their store more quickly while benefiting from lower shipping costs. If you are not in a position to lease warehouses throughout the country, you can either partner with a supplier that does have a national network of warehouses, or you can lower your prices to offset the additional shipping costs that retailers who are far away from your warehouse will have to pay.
If renting a warehouse is currently out of your budget, and you need space to store your merchandise, you can consider using a public warehouse, which is essentially a storage facility that can store your pallets of merchandise, and will charge you only based on the number of pallets that you have in their facility. I would be happy to put you in touch with reputable public warehouses if you would like to try out this option.
As a wholesaler, you should be able to purchase large quantities of goods in bulk quantities, since you want the opportunity to be able to pass on the savings of bulk buying to your wholesale accounts. If you are not ready to buy in large quantities, you can still ask for lower prices from your suppliers by demonstrating that you have the opportunity to quickly scale up your business provided that your supplier gives you access to wholesale products at the lowest possible prices. You can also choose to selectively purchase items from different sources, thus picking and choosing the best priced items from each supplier, without having to commit to purchasing large quantities of a given item.
I personally believe that it is more beneficial to build a long term relationship with a supplier, instead of spreading yourself too thin and only being able to buy small quantities from many different suppliers. The reason being, that if a supplier sees that you can buy large quantities of clothing, the supplier will think of you when the supplier obtains a closeout or special buy.
Another reason wholesalers are popular with retailers is because they often work with manufacturers to produce a wide range of products. For example, fashion wholesalers can provide manufacturers and designers with feedback from their customers in terms of what the sizes, styles, and colors, are needed the most.
Now that we know what a wholesaler is, let's discuss how they make money.
1. Distributors can market products from a manufacturer, importer, or designer, and have the products drop shipped directly to the stores that they serve. For more information on drop shippers, take a look at this article:
2. Distributors can set up a warehouse, purchase pallets of clothing from department stores, and invite retailers to their warehouses where the retailers can pick and choose the clothing that is suitable for their boutiques. You can purchase pallets of clothing through online liquidation sites such as CloseoutExplosion.com, Bstock.com, Liquidation.com, and DirectLiquidation.com
3. Distributors can set up a network of distributors that will serve segments of a greater market. For example, a wholesaler based in the New York Fashion District can set up distributors who will sell her clothing throughout the five boroughs of New York City.
4. Distributors can lease a commercial van, and visit stores in their cities and make sales directly to store owners. If you are ready to lease a van, and you are doing business in a state that provides grants for the purchase of commercial electric vehicles, you might consider purchasing an electric van, since your "fueling" and maintenance costs can be dramatically lower than as compared to a gas powered vehicle.
5. Distributors can visit flea markets while vendors are first setting up, and offer them special deals on wholesale clothes.
6. Distributors can also target international markets. For example, many wholesalers in New York and in Dubai, focus on supplying boutiques in Africa.
7. A distributor can import clothing, and effectively become an exclusive, or almost exclusive, distributor of a certain brand, in their country. For example, a distributor in Guyana can order Calvin Klein dresses from a wholesaler in the USA, and then distribute those dresses to boutiques throughout Guyana.
If you plan on importing wholesale pallets or lots of clothing from the United States, you should consider using the services of a freight forwarder. A freight forwarder will aggregate shipments, enabling it to receive lower shipping rates from airlines and container shipping companies, thus being able to provide you with added savings when it comes to shipping internationally. Some of the freight forwarders that I have used for my wholesale customers include, Corporate Messengers, Express Air Freight, Schenker, Laparkan, Brady Cargo, Tropical Shipping, Impex, Grandbelle International, CaroTrans, Trans Atlantic Line, and KG And Dons Shipping.
On a final note, while you need to be careful not to underestimate the buying power of your customers, you also need to be sure that you are buying the clothing at a price that will allow you to resell it profitably to your customers. If you are doing business internationally, you will want to calculate the exchange rates to ensure that you can resell your items at a profit. Having said that, keep in mind that customers in many countries will pay a premium for internationally recognized brands, and especially for American brand names.