Can you afford to lose an account? Or are your eggs all in one basket?
True Story: Jewelry vendors were invited to present their collections to the regional buyer for a major national retailer. They brought samples of their jewelry lines and showed up at a conference room to set up displays of their merchandise, and waited outside of the room while the buying staff evaluated them.
During the wait, a conversation ensued between the group of vendors. One woman was a designer who had been selling her fashion-forward jewelry line to this well-known retail chain for several years, and was making an excellent profit. Her small company delivered thousands of pieces of merchandise to the chain’s stores nationwide. She had quite a few employees and traveled internationally to buy findings and materials for her jewelry.
Interestingly, this large retailer was the designer’s only wholesale account, and the source of all of her income.
The designer understood that if her line fell out of favor, or the head buyer changed their mind and wanted to bring in new vendors, she could be out of the chain and out of business very quickly. The main focus of her job was to make the retailer happy and to continue their relationship.
Extreme situation? Yes. The designer’s only diversification was that the store bought regionally, so she had a few buyers to deal with, although they all worked for the same company. Still, she had placed herself in a risky situation where she had few options if the store decided to replace her line.
The larger your account base, the more stable your own small business will be. Losing an account isn’t a disaster if you have a broad base of others who regularly place orders. Diversification doesn’t only come through numbers, though. Selling your work wholesale to stores in various parts of the country helps to overcome lost sales during an economic slump in one region, by reaching buyers in areas which are more prosperous.
Diversifying the types of stores you sell to can also keep wholesale orders coming in on a regular basis. Buying times vary depending on the selling season. If you have wholesale accounts with a “high season” in the summer, others who do most of their business in the fall (such as leaf season in New England) and still others in winter resort areas, you will be kept busy throughout the year receiving and shipping out orders.
Sometimes artists can be lured into complacency by chain stores and big brands that place huge orders, and pay less attention to their smaller accounts. This is a mistake. As your business grows, don’t ignore those small and medium sized accounts. They may be your bread and butter when the large retailers stop ordering, or even go out of business.
Do you have a stable base of accounts in your own business that is well diversified?