Buy Wholesale Clothing On Credit
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Buy Wholesale Clothing On Credit
Opening a retail clothing shop is quite a challenge. Tasks include finding a suitable space, preparing the space for opening, advertising and setting up a merchant account to accept credit cards, not to mention hiring employees. There's also the task of filling the store with merchandise. Clothing is typically bought at wholesale for half of what the retail price will be. The inventory for a new store can cost thousands of dollars. Your wholesaler may be willing to finance part of that inventory.
Contact wholesalers that have the style and type of clothing you want to sell. Find out their standard terms. New customers may have to pay upfront for their purchases. If you have a stellar track record in running a business, even if it's not a retail business, the wholesaler may accept that and offer you terms as an established customer.
Ask for terms where you have up to 90 days to pay for the merchandise. Clothing is seasonable: If you pay in March for clothes to be delivered in May for customers to wear during the summer, you don't have to pay for them until the end of July. By that point, you likely have sold most of the clothing at retail prices and can pay your wholesaler.
Offer to accept a lower discount in exchange for financing for 90 to 120 days. In other words if the wholesaler's standard discount is 50 percent and payment is due on purchase, offer to pay 55 percent with payment due in three to four months. On a $10,000 order, you may have to pay an additional $500, but you then have additional time to pay.
Provide a note payable to the wholesaler for the amount of your purchase. A note payable has more clout than a simple accounts payable. It's usually secured against the business, although it could be secured against a personal asset, such as your house or car.
Split the payment for the inventory. Pay 50 percent when the merchandise is received and the other 50 percent in 90 to 120 days. Wholesalers have to pay the manufacturers for the clothing. They buy at a 50 percent discount, mark up the clothing by doubling the price and sell to the retailers. If you pay half of your order, the wholesaler isn't out any cash. For example, the wholesaler buys a dress from the manufacturer for $40 and sells it to the retailer for $80. If you pay half of your cost, or $40, the wholesaler isn't out any money.
Wholesale purchasing occurs when businesses buy discounted products in bulk to resell at higher prices to consumers or other businesses. Companies typically work with a wholesale distributor, which makes purchasing more efficient because you don't deal with multiple individual manufacturers.
The amount you pay a wholesaler, distributor, or manufacturer for a product is the wholesale price. Wholesalers use a sliding scale for per-unit prices based on the order amount, so the bigger the order, the larger the discount.
While you can obtain lower per-unit wholesale prices through larger volume purchases, chasing these discounts can have a downside -- the ongoing cost of storing goods you're not selling. Use the economic order quantity (EOQ) formula to determine how many units you should buy based on past sales.
As you lower your unit costs with wholesale purchases, related expenses go down. Larger orders -- a pallet or more of products -- can significantly drop your shipping prices. You'll also make purchases less often, which further reduces shipping overhead.
Buying from wholesalers reduces your administrative costs because you deal with a handful of suppliers instead of 10 or 20 or more individual manufacturers. The best point-of-sale (POS) systems include POS inventory management that automatically orders stock once levels drop to preset levels.
Wholesale buying lets you scale up your business as it grows. If you sell retail apparel and set up another location, adding inventory only requires a larger order from your wholesale clothing supplier.
When your business is ready to work with whole