Balancing wholesale and retail pricing is an ongoing process requiring patience, adaptability, and collaboration. Discover how fashion brands can navigate the complexities of wholesale vs retail pricing.
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Striking the right balance between wholesale and retail sales is crucial for fashion brand success. Wholesale pricing, referring to the cost at which products are sold to retailers, and retail pricing, the price at which products are sold to consumers, are integral components of this intricate ecosystem.
It's not merely about pushing products out the door and leaving it up to the retailer to sell your collections at the right prices to the right customers; it's about creating long-term relationships, understanding market dynamics, and maintaining pricing integrity for ultimate wholesale success.
One of the biggest challenges brands face when selling wholesale and direct-to-consumer (DTC) is the desire to maintain influence over retail pricing. While it is easy to control your retail prices on your online store or brick and mortar retail stores, when it comes to your wholesale accounts, the control over retail pricing shifts to the retailers, who hold the power when it comes to setting pricing and promotional strategies.
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Your Manufacturer’s Suggested Retail Price (MSRP) can provide a helpful framework for navigating challenges associated with retail pricing. MSRP serves as a reference point for pricing consistency across your retail channels. While brands cannot enforce MSRP compliance, retailers often follow it as a standard industry practice.
By clearly communicating the MSRP alongside the wholesale price on your line sheets, you can recommend a strong retail price to your retail partners. While retailers are not obligated to follow the MSRP, many do so as it provides a logical and mutually beneficial pricing structure, helping maintain consistency and cohesion across various retail channels.
The true key to balancing wholesale and retail pricing lies in building strong, long-lasting partnerships with your retail accounts. These partnerships should be viewed as ongoing collaborations that evolve and grow over multiple seasons, rather than one-off transactions.
Transparent and honest communication is essential. Be open to feedback from your retail partners, who often have a deep understanding of market dynamics and consumer preferences within their regions or channels.
For example, a retailer might offer insights such as, "Your product is great and on-trend, but the price point is a little too high. If you lowered it by 10%, you might see much higher sell-through rates." Or they might suggest, "Based on our market research, there's a significant opportunity for handbags priced under $1,000 in our region."
This dialogue provides you with a direct line to the pulse of the market. By actively listening to your retailers, you can gain a deeper understanding of market trends, consumer demand, and pricing strategies that resonate with shoppers. This information can then inform your wholesale pricing decisions, ensuring your products align with consumer preferences and maximize sales potential across channels.
Leveraging the communication tools of a B2B wholesale platform like JOOR can help to keep a pulse on your connections and streamline messages within your wholesale channel.
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Working effectively with your retailer partners also provides you with a broader view of the market landscape. Your brand’s wholesale channel can grant you access to the entire retail landscape, which might not necessarily be the case if you solely sell DTC.
The wholesale fashion environment can be a rich source of information, not just about how your collections are performing in the market, but also the bigger, macro picture. How are your competitors leveling up to meet trends? Are consumers buying into these trends, and what are their deciding factors?
Retail, particularly department stores, puts the consumer in front of multiple choices, and gives you information about what they are voting for and where the demand is.
You can observe which styles, price points, and product categories resonate with consumers across different regions or demographics. This serves as a powerful market research and demand analysis tool, allowing you to refine your collections, margins and mark-ups, and marketing efforts to better meet consumer needs.
This collaborative approach benefits both parties. Retailers gain access to desirable products meeting their customers’ demands, while you receive real insights into consumer preferences and market trends. This information allows you to optimize your collections for maximum impact and profitability.
Prioritize visiting stores that stock your brand and competitor brands, chatting with department managers, and actively seeking trends analysis and feedback from frontline staff interacting with customers daily.
This hands-on approach strengthens brand-retailer relationships and demonstrates commitment to understanding the market from the retailer's perspective—leading to better buy-in from the retailer and better sell-through to the consumer.
By asking questions, listening intently, and engaging with your retail partners, you are more likely to not only price your products correctly, but find new opportunities for growth.
Using the right technology can also give you a significant edge in optimizing your pricing strategies and nurturing more productive dialogues with retail partners. Wholesale fashion management platforms like JOOR provide comprehensive visibility into your wholesale operations, empowering you with valuable insights and tools to negotiate more favorable pricing outcomes.
With JOOR for example, you gain an overview of your entire wholesale fashion business, especially sales and volume data. This allows you to easily identify your top-performing retailers, giving you keen insight into which partnerships you should be focusing your attention on for mutual benefit.
Perhaps you notice a particular retailer's purchase volume has declined season-over-season. Equipped with this data, you can open a productive discussion with the retailer to uncover the underlying reasons—is it due to market conditions, product assortment issues, pricing misalignment, or a combination of factors?
JOOR also enables you to pinpoint your best-selling collections and items, as well as those that may be underperforming. This level of granular analysis is invaluable for ensuring you are meeting market demands and pricing your products accordingly. If a particular style is struggling, you can consider adjusting your wholesale pricing strategy to make it more appealing to retailers and consumers alike.
Using regional filtering capabilities can provide you valuable insights into how different markets are responding to your collections. You may discover that certain regions exhibit greater price sensitivity, necessitating a more nuanced pricing approach to maximize success in those areas.
By leveraging the data and knowledge available through a B2B fashion platform like JOOR, you can enter pricing negotiations with your retail partners from a position of strength. While the ultimate decision on retail pricing lies with the retailer, you now have the insights to take proactive steps toward more favorable profitability outcomes for your brand.
Balancing wholesale and retail pricing is an ongoing process requiring patience, adaptability, and collaboration. By keeping open lines of communication with your retail accounts, you can navigate this complex environment with greater ease and success.
By embracing a collaborative mindset and actively engaging with your retail partners, you can unlock insights and opportunities, ensuring your pricing strategies align with consumer demand and drive long-term growth and profitability.
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