5: Closing My First Wholesale Order
Welcome back to Update 5 of The 4 Week Launch Blog on Air Vinyl! I have a huge milestone moment to share with all of you this week, and as you can tell from the title of this blog update, Air Vinyl has officially closed and shipped their first wholesale order! There were a lot of logistics to figure out with closing my first wholesale deal, so in this update I want to share with you the process of getting product out the door and money in the bank. Let's get to it!
Initial Contact...From Kuwait
On May 7, I woke up to an email from a company called Firstline International Company - an Apple reseller in Kuwait. The email read as follow:
One 5:30am Skype call later and Firstline was on board for the initial 200 quantity order to test out Air Vinyl in their stores. The pilot order would consist on 25 of each decal set and 50 of the Los Angeles, CA set. Over a follow-up email after the call, we had agreed to all the necessary details to close the order: packaging design, wholesale price, payment method, etc. Completing the wholesale deal had a lot of similarities to the initial launch of Air Vinyl as I detailed out in the first post of The 4 Week Launch. To show you how I got there, here were the main points that needed to be solved.
- How long will it take to prepare 200 Air Vinyl packages?
- What kind of packaging was right for their retail display?
- Payment and Pricing
- How much do I sell the decals for at wholesale?
- How will I invoice the order?
- How will I get the payment for the order?
- How do I ship to Kuwait?
My packaging was initial created for direct-to-consumer sales online, so I needed to figure out what would be the best for retail sales. After talking through options with Firstline, they wanted to have the decals hanging on a display rack, so I needed to modify the packaging to have a hanger. The company I use for my plastic bags, Clear Bags, is absolutely amazing for this kind of packaging. They have a wide array of options and sizes and I was able to get the same clear plastic sleeve, but with a hanger built in, These bags only cost $5.50 for 100 ($0.055/bag).
So now I'm sitting with all the decals, bags, and insert cards in front of me on my kitchen table and needed to assemble them into completed products. Completing 200 assemblies took me about 3:30 hours (and a few beers). 200 isn't an astronomical number, so product assembly wasn't a big hurdle, but it definitely had me thinking of how I would package a much larger quantity if this pilot order works out. These are good problems to have though, so I would be ecstatic to have to solve that issue.
Payment & Pricing
To fulfill this order I also had to place another order with my decal manufacturer for the Los Angles, CA set. To remind you of the cost of goods (COGS) for the decals, 300 decals costs $151.00, or $0.50 per decal. Including the insert card and packaging bag, the total COGS for a wholesale order comes to $0.66 per unit. So how do I determine my wholesale price?
As a simplified rule of thumb, I had read about companies marking down their wholesale price to be half of the retail price. So for a starting point, I asked for $2.99 per decal with a retail price of $5.99. Firstline accepted this offer immediately, which makes me think it's a little too low. If any of our readers have some good insight on wholesale pricing, comment below. How would you have priced the product?
With the price per unit agreed upon, the next step was to create an invoice. This was another territory I was unfamiliar with and built up to be a more difficult task than it actually was. I thought I would have find a software capable of generating invoices and accepting payments, which led me to PayPal. However, Firstline wanted to pay through a wire transfer, so the invoice would have to be separate. Of course, the best solution is usually the simplest, and a quick google search took me to an invoice template from Microsoft Word. If you're interested, you can download the template here.
I've mailed and shipped enough things in the US to understand how to get a package from San Francisco to New York, but doing a commercial order to Kuwait? Not in my tool belt of experience. But isn't that what starting a business is all about? Solving problems across the board and figuring it out as you go. Firstline requested that the shipping be done through DHL using their company account, which simplified a lot of the process; however, there were 2 details that required a bit more work and research. In order to get through customs in Kuwait, I needed to have an official invoice and Certificate of Origin notarized and sealed by the Chamber of Commerce. 3/3 of those things I have never dealt with before, so I'm off to a great start.
The official invoice was just a duplicate of the invoice I had already generated. The key point was that it needed to be on company letterhead and be signed by myself (the owner). The one that required a bit more research on my end was the Certificate of Origin. Essentially, the Certificate of Origin is an international trade document that certifies the product was wholly obtained, produced, and manufactured in the United States. Since I also needed to have this document sealed by the Chamber of Commerce, I decided to just call them and ask where I find the document and what I needed to do to fill it our correctly. They were very helpful throughout the process and after sending me the PDF to fill out, I was able to go in and have the invoices and Certificate of Origin sealed for $40 (this was charged on the invoice as a shipping charge).
Final wholesale details
As of this update, the wire transfer is in the bank and the product has been signed for in Kuwait! The total revenue for the order came out to $638.00. The total cost was $133.00 for the COGS and $40 for the shipping documents, resulting in a total cost of $173.00. That leaves the total profit for the first wholesale order for Air Vinyl at $465.00.
With Air Vinyl on it's first retail shelves, I'll be looking to see how it sells and what feedback I get from the retailer. If the product sells well, there could be more orders coming through at a much higher volume. This also opens up the opportunity to make custom designs for the Kuwait region.
Technically, I sold more Air Vinyl in this update than ever before! However, I'm going to separate out sales made through wholesale orders and ones from online sales.
So as you know from reading this update, I made a 200 unit sale. Online sales, however, were down from where they were in the last update. I made 7 sales in Week 7 and only 4 sales in Week 8, resulting in 11 total sales this update. I've noticed that I am very dependent on social media advertising for generating sales, but at the current conversion rate, it is not profitable or sustainable. Over the next 2 week period, I hope to improve my conversion rate and try to be more effective with generating sales. This strategy came about after a phone call I had with a reader of The 4 Week Launch Blog, Sunny Sahota. A lot of the topics that we discussed have been put into play, but I'm going to wait until the next update to jump into the specifics of it all.
I'm really proud of the accomplishment to close my first wholesale deal with Air Vinyl. Being able to get Air Vinyl into stores would be the best path to success for the product. I am continuously looking at potential new retail deals and am hoping that this first one is just the beginning. Online sales numbers have still been lower than I would like to see, so I have started to take some steps towards increasing the conversion of traffic to sales. During this update period I also had a really eye-opening talk with one of The 4 Week Launch readers, who gave me some great insights into generating sales. In the next update, I'll share some of those strategies and show you how I've implemented them in with Air Vinyl.
Thanks for reading and, as always, remember to share any feedback you have by commenting below or emailing me at firstname.lastname@example.org.
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Founder, Air Vinyl Design and The 4 Week Launch