What to Know Before Entering a New Wholesale Market: Legal & Logistics Guide

B2B marketplaces make it possible for fashion brands to expand into new markets, but competition can be fierce. To ensure you stand out from the crowd and have the best chance of success in expansion, prepare your business with all the necessary logistical and legal requirements. 

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This comprehensive guide will offer actionable strategies on how to expand wholesale distribution and ensure you are ready for global growth. 

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What Defines a Wholesale Market in Fashion 

A fashion market is a region with a high concentration of brands and buyers. The USA, France, Italy, and the UK are considered the main fashion markets, and this is where the most highly attended fashion weeks are held. 

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Regions including Japan and Australia are also prominent markets. Each market has its own unique way of working and its own set of wholesale distribution challenges.  

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Market Research and Competitive Analysis

Before entering a new wholesale market, it's important to research if there is growth potential. 

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Use trend forecasting and consumer insight tools to identify product demand, and enlist the help of data and analytics platforms to work out regional buyer personas and pricing trends. 

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Legal Requirements Before Entering a New Market

Business Registration and Licensing

It’s important to understand any permits required to enter new markets. Be sure to register for VAT or tax compliance in the region you are looking to expand into, and take into consideration local legal requirements regarding operating a business in a new country. 

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Intellectual Property and Brand Protection

Take the time to safeguard your designs with trademarks or other relevant protection to avoid competitors in new markets from counterfeiting your designs or supplier confusion, which could lead to misuse. 

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Import/Export Regulations

Educate yourself on the relevant customs laws and international trade rules for the new market you intend to enter, and be sure to obtain any documentation required in good time ahead of making new retail connections. 

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The most common documents required for international wholesale business include a bill of lading and a certificate of origin. 

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Contract Law and Supplier Agreements

Draft supplier and distributor contracts ahead of time, so that once you make connections in markets, your business can be protected immediately. 

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Creating agreements ahead of time with a legal professional will ensure that you are complying with international intellectual property and labor laws and avoiding legal pitfalls. 

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Logistics and Supply Chain Essentials

Choosing the Right Logistics Partners

Logistical partners can make or break a smooth entry into a new wholesale market, so take the time to find the right Freight forwarders, third-party logistics (3PLs), and consolidation services that can meet your needs and efficiently aid your expansion. 

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Shipping Options & Cost Structures

Research the costs of air vs freight shipping to find the most cost-effective solution for delivery to new markets. Don’t forget all the specific requirements you will need, including duty, brokerage, storage, and drayage.

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Warehouse & Distribution Requirements

Consider whether it's more beneficial to your brand to house stock in a local warehouse or to opt for cross-border distribution. 

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Forecasting your inventory turnover expectations can help you to decide on the most efficient plan. 

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Returns, Reverse Logistics & Defect Management

Think about how you will handle garment returns internationally. Typically, in wholesale, the retailer is responsible for the return of freight, unless a defect is found, in which case your brand will be asked to foot the bill. 

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It’s important to have a strategy in place for how you will handle these situations before entering a new market.   

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Financial and Tax Considerations

Wholesale Pricing and Profit Margins

Take time to analyse your costs and work out your wholesale pricing strategy for this new market. It's crucial to conduct research to avoid over- or underpricing your garments. 

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Tax Compliance and International Payments

Ensure that you are not only VAT-compliant for the market you are entering, but that you have a good understanding of customs charges and have factored that into your overall operational costs. 

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Remember that international business will also require you to deal with international currency, so it is worth looking into B2B ecommerce platforms that can help with secure cross-border payments. 

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Digital Infrastructure and Technology Tools

Using B2B Platforms and Marketplaces

Have you considered how you will find new retail connections in the market you wish to enter? B2B fashion platforms and wholesale marketplaces can be a good way to gain access to vetted international retailers open to doing business. 

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Alongside joining a business network, wholesale brands should work on marketing their website and social media platforms for maximum chance of exposure to new connections.  

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Automation and AI in Supply Chain

Advanced technology can assist brands entering new markets in a variety of ways, from smarter, data-driven inventory forecasting to logistics tracking and automated vendor management. 

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Brands can use AI to reduce the need for manual processes, freeing their teams' time to work on more important elements of business expansion. 

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Conclusion

Before entering a new wholesale market, there are critical legal, logistical, and financial steps all brands must take to ensure international compliance. 

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Seeking the advice of legal experts and logistical professionals, as well as utilizing a B2B platform with strong international business capabilities like JOOR, will also bring the greatest chance of technological readiness and wholesale success. Book a demo today to find out more.

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FAQs

What legal documents do I need before entering a new fashion wholesale market?

The exact legal documents required before entering a new fashion wholesale market vary, but most markets typically require proof of business registration and tax compliance as a minimum. 

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How do clothing labeling laws differ by country?

Each country has different specifications about what information must be included on care labels. Composition is mandatory in nearly all countries, while other specifications, such as country of origin or care instructions, differ depending on where the garment is sold.

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What are the logistics challenges in international fashion wholesale?

Shipping and customs fees are the two biggest challenges brands face in international fashion wholesale. It is crucial to understand what is required for brands selling internationally and to work out how much this process might cost before entering a new market. 

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Do I need a local distributor, or can I sell directly to retailers?

A local distributor is not a requirement for conducting international fashion wholesale business; you are welcome to sell directly to retailers. However, some brands prefer to work with an agent on the ground who has a strong understanding of the local market.

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How do import duties affect wholesale pricing for apparel?

Brands should calculate the total landed costs of their goods to create effective wholesale pricing. This will retain profit while also covering shipping, import, and customs fees. 

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What certifications are required for children’s clothing in different markets?

The requirements for care labels in children’s garments vary from country to country. They tend to be more stringent and include specifications such as chemical safety and hazard regulations.