251 | Navigating Wholesale Exclusivity Requests with Katie Hunt
Are you offering wholesale exclusivity on your products for your wholesale customers? While I don’t always encourage it, I do think it is important for you to understand what it means, how to navigate saying no, and what to include in it if you decide to offer it! In today’s episode I’m answering all of these questions, plus share templates and steps to take in every situation.
Today’s episode is brought to you by our free Is Wholesale Right for You? Masterclass! During this class, I'll walk you through 12 questions to ask yourself to determine if your products and your business are ready to sell wholesale, plus I'll provide tips so that you can move forward with confidence in your next steps. Get access to this free masterclass inside our resources library!
Today’s episode comes directly from Proof to Product LABS member, Sarah, who asks,
“I'm fairly new to wholesale and was approached by a store asking if I offer exclusivity. I'd like to avoid offering exclusivity as I don't have a long term relationship with this particular store. And they've only placed one order for $200. The shop owner is pretty insistent and we could be a good fit. I just don't know whether their future orders will be large enough to warrant exclusivity. What do you think also, should I have a contract if we do this?”
In general, I discourage wholesale exclusivity, especially for new to wholesale brands. However, if exclusivity is something that you want to explore in your brand, we’ll dive into that as well in today’s episode.
If you want your questions answered on the podcast like Sarah’s question has been today, make sure you’re on the waitlist for Proof to Product LABS, my 12-month group coaching program where myself and others in the community are having robust discussions every day, plus monthly group coaching calls!
How to Deny Wholesale Exclusivity
If you know that wholesale exclusivity is not for you, you have the power to say no to these types of requests. No is a perfectly acceptable answer. It can be as simple as responding with the following:
“Thank you so much for your interest, but we do not offer zip code protection or wholesale exclusivity at this time.”
How to Handle a Store Who Pushes You for Wholesale Exclusivity
There are times where some stores are adamant about wholesale exclusivity and zip code protection and will push back on your denial of their request. When that happens, your first response should be to find out why!
Why do they want wholesale exclusivity? What products are they looking for exclusivity on? And what categories?
Their answer will provide more context, because it may be to exclude competition with another store who carries similar brands. Other times, it may be on specific products or even a single sku that they want to be the only one who sells it.
Many times, these requests come as a general ask, so knowing the parameters and specifics will help you negotiate or find an alternative option that works for you!
When you’re considering wholesale exclusivity, make sure that you’re having a conversation and asking a lot of follow up questions before you ever agree to anything.
The Pros and Cons of Wholesale Exclusivity
Now, I’m a big fan of Pro and Con lists, so let’s walk through one for wholesale exclusivity from the perspective of a wholesaler.
The Pros of Wholesale Exclusivity
This list of pros is going to be short, because there really is only one pro for wholesalers to agree to wholesale exclusivity.
Strengthen the Relationship with Your Customer
If you’ve had a long-term relationship with this customer who regularly meets your minimums and frequently reorders from you, offering wholesale exclusivity could secure and strengthen your relationship.
The Cons of Wholesale Exclusivity
Now, the cons list is a bit larger and is the main reason why I don’t recommend wholesale exclusivity as an avenue for newer wholesale brands.
Exclusivity Can Be Difficult to Manage
If you offer exclusivity, you will need to cross reference the shops that reside in a specific area, you will need to pay attention to zip codes that come in on different orders, you'll need to monitor what stores are ordering to avoid crossover. It can be very time consuming, and it can also lead to some difficult conversations with other shops if you need to turn down their orders. Because you have exclusivity with a different shop.
Exclusivity Will Limit Your Sales in a Specific Region
There is an opportunity cost to limiting your sales to one store is within an area you may miss out on working with a really great account that is a few blocks over, you may miss out on different types of stores that want to carry your products in that region. We are in the business of selling products and offering exclusivity will throttle your ability to do that.
Alienate Shops that Want to Work with You
Before you ever even establish a relationship with a brand, you may end up alienating them through a wholesale exclusivity agreement with a different store. Back in episode 230 of the podcast, I did an episode with Genesis Duncan, where we talked about turning off zip code protection in your Faire account. Genesis ran into an issue where she was unable to buy from a previous brand because they had zip code protection turned on. They lost a sale because she moved on to find another product.
How to Securely Navigating Wholesale Exclusivity
Every situation is different, which means there may be a valid reason or need for offering wholesale exclusivity to a particular store. If you do, let’s make sure you set strong boundaries and secure an exclusivity contract. Let’s review what I would include in the terms and conditions and exclusivity contract:
How long will the store retain exclusivity? Or will there be checkpoints to reassess?
Which categories or skus will they have exclusivity for?
Set a high quarterly minimum order requirement (dollar amount or sku count based on data).
Include anything else that needs to happen or not happen to continue the exclusivity.
Have a way to clearly and cleanly exit the contract for either party.
If a store contests the terms of your exclusivity contract with the amount they need to spend, or anything else is tied in here, that is a good opportunity for you to gently remind them that they're able to order your regular opening order amount as needed without restrictions and without exclusivity.
If you decide to move forward with wholesale exclusivity, make sure that you have a written contract covering each of these items, what’s included, and have it signed by both parties.
Today’s episode is brought to you by our free Is Wholesale Right for You? Masterclass! During this class, I'll walk you through 12 questions to ask yourself to determine if your products and your business are ready to sell wholesale, plus I'll provide tips so that you can move forward with confidence in your next steps. Get access to this free masterclass inside our resources library!
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Connect with Katie Hunt
Katie Hunt is a business strategist, podcaster, mentor and mama to four. She helps product based businesses build profitable, sustainable companies through her conferences, courses and coaching programs.
Website: prooftoproduct.com | Instagram: @prooftoproduct
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