# Doing wholesale work for others...



## FatboyGraphics (Sep 20, 2009)

We currently do embroidery wholesale work for a local competitor. The relationship started as a friend starting a brand...to him getting alittle more involved in custom apparel with us doing that production as well....to then him sourcing his own custom apparel and buying equipment...meanwhile we still do his embroidery. 
We are competing for the same clientele and more and more importantly im starting to resent doing some of his work. 
So here I'm trying to decide if it is worth doing the business when I know if I stopped it would directly effect his business pretty good. Or if I should just suck it up and continue to do the work because money is money. 
Past 3 months it's been about 10k in sales. But it will drop off during the summer. I expect about 40-50k in sales for the year if we kept him. We provide the blanks so his sales include the costs for the blanks.


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## jcoh (Mar 13, 2017)

There's always going to be competitors but you always have to way your options. I would more focus on the bottom line instead of the gross sales. Business is business, go with your gut feeling.


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## rastoma (Sep 21, 2014)

FatboyGraphics said:


> We currently do embroidery wholesale work for a local competitor. The relationship started as a friend starting a brand...


Did this friend hang around a lot and watch you work and also helped out and actually did printing or cutting?



FatboyGraphics said:


> to him getting alittle more involved in custom apparel with us doing that production as well....to then him sourcing his own custom apparel and buying equipment...meanwhile we still do his embroidery.


Did he tell you first he was going to cut you out of everything except embroidery or did he buy everything and then tell you out of the blue he was going to do everything himself now that you trained him?



FatboyGraphics said:


> We are competing for the same clientele and more and more importantly im starting to resent doing some of his work.


Again, was this something he asked your opinion on first and to see if you were cool with it or did he go behind your back after you taught him everything you know?



FatboyGraphics said:


> Past 3 months it's been about 10k in sales. But it will drop off during the summer. I expect about 40-50k in sales for the year if we kept him. We provide the blanks so his sales include the costs for the blanks.


How much embroidery work do you do outside of this 'friend's'? If his work alone is more than you currently do at retail then I would consider continuing to do it. If his work is just a small fraction of your overall embroidery I would stop. That's just me. Or significantly increase your cost to him.

To me, there is no such thing as 'business is just business'. If you don't have morals to go along with your business it's not worth doing. And it sounds like this 'friend' used you for free training and then decided to cut you out of the picture when he saw how much money you were making.

Now if he talked to you about this first and you gave him the go ahead and told him you would help him start his business, then you can't regret that.


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## FatboyGraphics (Sep 20, 2009)

We worked together for another company 8 years ago, then we both left. He left the industry, I started my own business.

After a year of us doing his production of apparel, he got his own production suppliers and never told me, just stopped sending me work except for embroidery.

He's about 1/10th of our sales. And obviously since he is wholesale the Profit isn't as high as our other 9/10th of our business.

Our embroidery turn around time is struggling this time of year due to team sports...if I cut him out it will free up some scheduling time and our turn round time will obviously improve. I think that's one thing I'm struggling with....my retail customers are being effected to help support another company. While I'm seeing it as everyone is my customer....in reality....my customers are my customers and his are his so if his are late who cares...but I'm not like that and can't think like that because you know that will be the only time he would admit who he gets his embroidery done by. When we do good work I'm sure he'll never mention who does the work.


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## binki (Jul 16, 2006)

It is business, not friendship. In the end you are loyal to your business and your customers of which he is one. There are a few things you can do and we have been in the same boat. 

1) Expand and get more equipment and people
2) Work another shift
3) Raise his prices
4) Increase his lead time
5) Turn down his work
6) Give him blackout times during your busy times
7) Get out of the wholesale business

You can do any or all of these. 

We only fire customers for 2 things. Either they are a PITA (always bugging us, don't pick up on time, don't have the money when they come to pick up, etc.) or they are unprofitable. if they are unprofitable we up the price. If they fall into the PITA category then we drop them. Generally the PITA is always unprofitable for us so it is easy.


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## PatWibble (Mar 7, 2014)

Usually mixing wholesale and retail only makes sense if the wholesale doesn't effect the retail. From what you are saying it is effecting your retail customers.
If all your friend has left you with is the embroidery - the time consuming stuff that uses the expensive machinery - then you need to look at a way to make it work for you.

Talk to him and try to schedule his work for the quieter times. Just because he is your biggest customer doesn't make him the most profitable one, so he shouldn't expect to go to the front of the queue when he orders.

Don't risk loosing him yet. You might regret that in the quiet times. But also don't let him effect your retail business. Those local teams are the ones who come back year after year.


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## gardenhillemb (Oct 29, 2015)

We block out certain hours during our production week to accomodate our contract customers that is based on our usual workload during the seasons. If they come with a time sensitive order, their other orders get pushed to the back of the schedule that number of hours. I don't let them affect my retail customers or other contract customers. When and if they become too much of a pain, I fire them. It usually helps me in the end.


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## rastoma (Sep 21, 2014)

After reading your second reply.... if I were you... so thus this just an opinion which ain't worth much 

I would raise this prices at least 50%. If you've give him cheaper wholesale prices just because he's your friend that I would go up 100%. But first talk to him. Explain how your direct customers are suffering and they have to come first. And mention to him that you're sure he feels the same about his direct customers. Explain the prices you first gave him are not sustainable now. 

Ooohhh... just thought of something. If you need to add more equipment, then maybe see if he can pre-pay you for the next 12 months. Would that be enough to buy a second embroidering machine? I have no idea. Maybe they cost a lot more than that. But you could tell him he can lock in the current price for the next year that way but you will be able to do more work and take care of him and you other customers better. And then after 12 months you'll have to go up. Just a thought.


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## chuckh (Mar 22, 2008)

If you are purchasing the blank goods for this client, I would hope and expect that you are adding a mark-up to the cost of goods and the accompanying shipping costs as well. if he doesn't like that, tell him to bring you the goods and expect a 1-2% no-fault reject rate. Yo are his embroiderer, not his bank.....


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## FatboyGraphics (Sep 20, 2009)

i appreciate the replies... gives me some other feedback to consider. 

Yes i order his hat blanks...I do mark them up, but only a couple bucks. He can't buy the blanks because he works out of his house and can't get the accounts setup.

He brings us his hoodie/pullovers/polo blanks.

Its a tuff decision, because i know that we'd get some of the customers he gets if we cut him loose. Then again, we'd lose a nice chunk of cash to. But may run a more productive shop because of it and earn back the business in turn around time.
Then again, we may not. lol


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## rastoma (Sep 21, 2014)

sourcenshipit said:


> Please contact us for Tshirt production and Drop Shipping


SPAM much lately?

You didn't even read the OP's message.


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## Signature Series (Jun 11, 2016)

When you are dealing with team sports the challenge you face is the 4-5 months that most of these sports all start their new seasons at the same time give or take. Wholesale in team sports market is tough due to this issue. You cannot go out and simply buy more equipment for a few months of the year that is low margin. If he is 10% of your sales I am guessing being wholesale he is 5% or less of gross profit. In my opinion there are only two options - raise your prices to him or get out of wholesale in that market. Keep in mind he will not find it easy to replace you if his work load is in peak time. Second, if your delivery times to your customers start to lag because of the wholesale work you stand a chance of losing those teams. Teams are pretty loyal for the most part but time is the one factor, along with cost, that could get someone to look elsewhere. 

I would start looking at other wholesale opportunities outside of the team sport market that helps fill voids in your slow season. For us, we would never do wholesale in our own market and only look outside for opportunities.


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## into the T (Aug 22, 2015)

so you have thousands of dollars worth of equipment,
and do everything including maintenance

your friend does nothing but advertise and drink mint juleps on his front porch,
while you spend 18 hours/day in the salt mine

can i be your friend too?


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## Ripcord (Sep 2, 2006)

I've done contract work before (the opposite of you, I did printing for embroidery companies.) I don't know the reason, but all the wholesale companies I've printed for started off as good customers but gradually developed an attitude. The last one I dealt with used to hold off ordering the shirts until a few days before the deadline and then push me to get it done sooner, saying their customer was frustrated because they had been waiting three weeks (well who's fault is that?) On the other hand if they ordered the shirts on time they'd call me twice a day to tell me that I hadn't picked them up yet.

As the OP mentioned, I began to resent the contract printing. I made less of a profit because they supplied their own shirts, and they always wanted me to give their stuff priority over my regular work in order to make up for their own lack of customer service skills.

I don't do any contract printing now and I've never regretted losing any of that business. It was easy to replace with customers I can deal with reasonably and make a whole lot more money from.


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## STPG Press (Jul 6, 2015)

into the T said:


> so you have thousands of dollars worth of equipment,
> and do everything including maintenance
> 
> your friend does nothing but advertise and drink mint juleps on his front porch,
> ...


It' called brokering and there's nothing wrong, unethical, devious, or anything else with doing so. I broker many things because my volumes and/or skills aren't sufficient enough to bring it in-house.

Actually, many companies benefit from brokers because it's like them having a sales rep for free. I broker 100% of my embroidery. My embroidery shop loves the business they are getting without having the overhead of paying an extra sales rep to do the work.

Brokering done properly is a win/win for both parties.


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## Ripcord (Sep 2, 2006)

I broker embroidery too (as well as promo items etc.) Rather than just sitting back and watching the money roll in, a good broker can add value to a job by doing all the design work, price negotiation, scheduling, and legwork including delivery of the final product to the customer. If the customer were to call the embroiderer directly, he would need to do all that himself, and a lot of customers would rather pay for someone to handle it all for them.

Often, the brokered work is part of a larger order including printing, which I do myself. So the customer has the convenience of making one phone call to one person to get everything they need.


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## STPG Press (Jul 6, 2015)

Ripcord, do you use the SanMar PSST program (or anything similar by other suppliers)?


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## Ripcord (Sep 2, 2006)

I briefly looked into it...Do you use the service? (I haven't quite figured out exactly how it works...)


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## STPG Press (Jul 6, 2015)

It's awesome. Here's how it works (and yes, it's that easy).

First, you can read a little about it by going to https://www.sanmar.com/resources/decoratorrelations.jsp#psst. 

I thought they had a published list of all PSST participants (decorators), but I don't see it now. I would send you my list, but I'm out of town for the next week. You can call your SanMar rep and I'm sure they'll be happy to send you the list.

Get the list, call around, interview, whatever and find someone.

When you place your SanMar order, you will want them to know that you are using a PSST decorator and they will ship the product overnight for free direct to the decorator. During this time, I have already sent over the image/logo to the decorator to be digitized and a proof done.

Once the proof a done and approved, my decorator has received the shipment from SanMar and proceeded to put the job in production.

My PSST decorator happened to be local to me and I would always just go pick up the job and personally deliver to my local clients. However, my decorator also would do blind shipping, so for my out of town/state clients, the finished product would go directly to them.

I never touch the product, but simply take the order, coordinate the job, and collect the money. After a few jobs, it became easy to trust my decorator which is key...and that allowed me to be a little more hands-off.

Hope this helps.

T


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## into the T (Aug 22, 2015)

STPG Press said:


> It' called brokering and there's nothing wrong, unethical, devious, or anything else with doing so. I broker many things because my volumes and/or skills aren't sufficient enough to bring it in-house.
> 
> Actually, many companies benefit from brokers because it's like them having a sales rep for free. I broker 100% of my embroidery. My embroidery shop loves the business they are getting without having the overhead of paying an extra sales rep to do the work.
> 
> Brokering done properly is a win/win for both parties.


i was referring to his apparent lamentation that his 'friend' may be taking advantage of him
i may have misread his thoughts, sorry if i did

there are friends that get a friends rate,
but none of them would abuse that
which was where i was heading

re-think if he is a friend or business acquaintance, because friends put you first 
business acquaintances put their business first

it may have been poorly worded post on my part,
i try to be succinct, but that may not always be effective


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## FatboyGraphics (Sep 20, 2009)

thank you for the replies....gives me more to think about.


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## GinsuGraphics (Jul 28, 2016)

I don't think your friend is undercutting your retail business. You're the wholesaler to him, meaning his cost is higher than yours. If the business you are "competing for" is really yours, meaning you prospected them or they contacted you from your advertising or by referral, then give them a better price than your friend does. I imagine you've probably been thinking he is taking business in your market area but if you aren't actually bidding on all of his jobs then how is he taking your business? If you are bidding on the job and your cost is lower than his then maybe your bid can be as well. If you think of him as a broker or reseller then he is reaching customers you probably don't. If you just bid the jobs lower then you have taken them from him without "cutting him off" directly. $40,000 - 50,000 is a lot of work on the sales end. Are you sure you're missing all of that or just envious that he is getting it period? I would be. But that means you have to prospect harder, sell harder and lower to make the difference between what you're charging him and what he is charging the customer. Is it worth that effort? If it is, underbid him and get the business yourself.


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## Viper Graphics (Mar 28, 2009)

FatboyGraphics said:


> Yes i order his hat blanks...I do mark them up, but only a couple bucks. He can't buy the blanks because he works out of his house and can't get the accounts setup.
> 
> He brings us his hoodie/pullovers/polo blanks.


Working out of his house is reason he can't get an account set up to buy hat blanks? HuH??? But really, at least you can upcharge that item so go for it.


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## jennGO (Mar 11, 2014)

I'm making an assumption here but reading all of your posts I got the vibe that you're ready to drop him. I think there is good reason to: you said it isn't as profitable as 9/10 of your business and slows down your turnaround time. If you can pick up more business by getting rid of his orders and make more $$ then I would consider it. Only if you're confident you can replace the $40-$50k he brought in. 

Definitely not cool he dropped you without telling you since you are friends I would have expected that courtesy


Sent from my iPhone using Tapatalk


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## FatboyGraphics (Sep 20, 2009)

Viper Graphics said:


> Working out of his house is reason he can't get an account set up to buy hat blanks? HuH??? But really, at least you can upcharge that item so go for it.


Yes, some companies require store fronts (pacific and richardson...although i've heard some area reps of theirs let this slide sometimes)


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