From my mail:
My name is Jessica and I’ve been struggling to start up my own business for a few years until I came across your book! I graduated from the University of Minnesota in 1997 with a BS in Fashion Design and I found it a complete waste of time (ie. they did not offer up any real education about the fashion industry). I also took night classes at the London College of Fashion, which was rather useful, but I could only attend for 3 months. Firstly I want to THANK you for answering soooo many questions that I had about the industry in plain English. After reading and trying to absorb your book I was able to build my business up to where it is now.
I still make everything individually in house but I’m getting ready to produce a collection properly. I have a very big base of loyal customers and I am trying to keep them happy while I make the transition (I’m currently as selling my designs online). I am extremely busy and now have just accepted a wholesale order for about 40 garments from a shop in Milan. However, I have no idea how to put together a sales contract. I have not found any guides or advice on writing up the paperwork for an order to a retailer. (I have been frightened in the past by an old industry teacher from the London College of Fashion who told me “You need to write a good contract; it’s a buyers market and if you don’t do it properly, you may find that they send all the unsold garments back to you and charge you for them!”) It seems to me that there ought to be a template or something for writing a contract and an order between a manufacturer/DE and a retailer, but I guess I am not sure where to look.
Yes it is a buyer’s market but as a vendor, you have the right to stipulate the conditions of sale. If a retailer doesn’t like the conditions, you may sometimes be able to negotiate terms if you feel that would be to your advantage. For a whole range of topics, look over the entries in the sales and marketing index. There you’ll find everything from negotiating with retailers to the top 10 buyer complaints. At the same time, you need to know why the relationship between retailers and manufacturers can be complex and conflict ridden. In this guest post, a retailer explains the factors of some sales policies she didn’t like, considering them to be unfair. Likewise, you need to be concerned about establishing payment terms. Too often, DEs make concessions they shouldn’t or don’t need to make. Lastly, anyone selling consumer direct now but who wants to move into wholesale, should read this too.
As far as agreements are concerned, you need to worry about two kinds if you want to sell clothes to stores. The first of which is included in the book (pg.92). The second agreement amounts to your established selling policies which are based on your own internal rules. The thing is, how do you know what policies you want to implement? The latter is most likely based on avoiding the worst of what can go wrong. So what can go wrong?
Returns from stores are something that can go wrong certainly but more importantly, what kinds of returns should you be concerned with? For example, if a store wants to return items because they were delivered late; that should be permitted unless they agreed to an extension on the delivery date. Returns for defective products should not be impeded in the slightest, those should be handled gracefully. I sense you’re most concerned about potential returns for excess inventory at the end of the selling season and you really have a lot less to worry about than you think.
There’s only one kind of manufacturer who needs to worry about returns of excess inventory and it is because they are the ones who permit it. Usually, these are large concerns selling goods made off shore who are selling to department stores, neither of which affect you at this time. Most of these companies are what we call push manufacturers.
Now, because your stuff is cute cute cute(!), well made and reasonably priced, I feel you may end up selling to department stores fairly soon but in most cases, I tend to discourage DEs from doing that specifically because of the terms of sale that they will try to impose on you. On a first approach, I’d recommend Bendel’s and Nordstrom’s, both will love your line and their acceptance of individual selling policies is more flexible than more ‘corporate’ department stores. Hopefully before you get near those players though, you’ll have a sales rep who will advise you on negotiating terms of sale with corporate customers.
I realize this doesn’t satisfy your request for a template sales policy because there isn’t one. Sales policies can be as unique as product lines. For example, selling “4-packs” is standard in some companies but totally inappropriate for others. Everybody’s market is so different! Accordingly, in the forum, visitors have been sharing their sales policies with each other. You should check our forum on sales and marketing (here’s one that may resonate with you) Another place to find sales policies is by visiting the thread If I were to produce a line. Visitors have submitted their line proposals for feedback and many have included their sales policies as part of the package.
In the meantime, I’ve forwarded your letter to Miracle who is our sales and marketing blogging guru and I’m sure she’ll come up with something a little more direct.
Miracle has sent me five samples of sales forms. These are:
Doc 1 of 3
Doc 2 of 3
Doc 3 of 3
A sample form for COD and credit card customers 82kb
A sample account application 58kb
There’s also an indepth discussion of what one’s sales policies should be.
One last resource is Establishing wholesale terms and sales policies. It has tons of links at close for further reading.