Dear TFBM,
I am in the children's wholesale business. I have several stores place orders with us. We make the garments. Then, we call up the stores to get credit card information and the store owners inform us they forgot to call and cancel their order. What is the right way to handle this? What do you recommend we do differently? What actions can we take at the beginning of the order being placed?
Sincerely,
Frustrated with overstock
Dear FWO,
This is a sad reality of this fashion wholesale businesses. The designer fronts money for supplies, fronts money for production, and then get stuck with stores that won't take their orders. Mentors to me have said, "You should expect this in the industry and you should expect it anywhere from 5-20%." Not only that, but showroom sales reps absorb none of this loss.
They still want their fees and won't offset commissions on delivered orders with non deliverable orders. This can leave you with a profit margin so low that you are practically working for free. Start up costs are already so high that once you take these hits as a small business it can crush you!
Here are some things you can do to gain a bit more control over your orders.
These are lessons I learned the hard way.
Katie, TFBM
I am in the children's wholesale business. I have several stores place orders with us. We make the garments. Then, we call up the stores to get credit card information and the store owners inform us they forgot to call and cancel their order. What is the right way to handle this? What do you recommend we do differently? What actions can we take at the beginning of the order being placed?
Sincerely,
Frustrated with overstock
Dear FWO,
This is a sad reality of this fashion wholesale businesses. The designer fronts money for supplies, fronts money for production, and then get stuck with stores that won't take their orders. Mentors to me have said, "You should expect this in the industry and you should expect it anywhere from 5-20%." Not only that, but showroom sales reps absorb none of this loss.
They still want their fees and won't offset commissions on delivered orders with non deliverable orders. This can leave you with a profit margin so low that you are practically working for free. Start up costs are already so high that once you take these hits as a small business it can crush you!
Here are some things you can do to gain a bit more control over your orders.
These are lessons I learned the hard way.
- Once you take an order or get an order from your rep type up your own PO and send it to the buyer. Let them know that you are putting their order into production queue and payment will be required on X date. Allow them 7 days to cancel their order and after that they are committed.
- Call your buyer after you email the PO (This is assuming someone else wrote the order for you.) Put a person with the brand, YOU! Introduce yourself and let them know you are thrilled to have them as a new or repeat vendor and you look forward to shipping their order on X date.
- If you have a sales rep get your own carbon copy order forms with your terms on it and require a signature from the buyer. This way you have some recourse, "Jane according to the PO you signed you were allowed 7 days to cancel your order. Since you didn't cancel then you have agreed to take this order. I have paid for production based on your signed PO and can't afford for you to not take the order. When can you take delivery?"
- Call 1-2 weeks in advance to shipping time to get payment information. Let them know you need payment information now and let them know what date their order will ship. Believe me it takes this long to get a old of most clients anyways.
- Ask Why. Remember your customers are people, talk to them accordingly. There is a reason they can't take delivery and most likely it's financial. Work with them. Ask if they can take 1/2 the order now and 1/2 in 2 weeks. If you have a good relationship you may offer a net 30 so they can sell some of the merchandise before they pay you.
- Finally if you can't get anywhere with them taking the order call your sales rep to help, and let the client know that you will be letting the showroom know that they are not taking delivery of their order. They will know this is a bad mark against them for placing future orders with any line in the showroom.
Katie, TFBM