If you already run a wholesale business or thinking of going wholesale, you must be clear on the terms and conditions for buyers to agree with. In this post, we will discuss the terms and conditions that you need to add in your wholesale terms sheet.
7 Terms and Conditions in your Wholesale Terms Sheet
1. Minimum Order Quantity
You need to set a Minimum Order Quantity or MOQ in your wholesale terms sheet. Tradegecko defined it as, “Minimum Order means the minimum amount your retailer has to spend per order to be able to stock your products at their store.”
With MOQ terms, wholesale buyers will be aware of the minimum purchase in order to receive wholesale pricing. By setting a minimum wholesale order, you will be able to give the lowest price possible for your wholesale customers. You will also be able to separate the big players to the small players since the former will be able to comply with MOQ.
Although, if you have varied wholesale buyers, you can tailor-fit the MOQ as necessary. But, you still need to set a limit to the minimum price you can give to wholesalers and retailers without hurting your profit margins. To implement this kind of flexible MOQ functionality in WooCommerce, you will need WooCommerce Wholesale Prices Premium installed.
2. Wholesale Pricing
Wholesale pricing is lower than the retail prices but still allows you to make a significant profit since buyers are purchasing in large volumes.
If you have not determined the wholesale price, Tradegecko suggested using the absorption price method by adding the cost plus profit margin. They suggested calculating the cost price by adding the production cost per unit plus total overheads and admin expenses and divided by the number of units produced.
Download our free guide on how to price retail products for wholesale here.
3. Payment Terms
As a business owner, your goal is to make tons of sales and not incur losses. Hence, one of the most important terms and conditions is the payment terms in your wholesale terms sheet. It defines when and how the payment will be made.
By clearly defining the payment terms, wholesale buyers are informed of the allowable payment period.
You can set whether wholesale buyers need to pay before delivery of goods or service. Or, you can give them credit for a specified time frame.
State the method of payment of wholesale buyers such as via credit card, cheque, Paypal or bank deposit.
Tradegecko expounded on the payment terms, “Payment terms are usually either upon shipment of the order, Net-30, Net 60, or Net 90. Net terms just mean you expect your customer to pay the invoice in a specific number of days. But do bear in mind that setting Net-30 payment terms doesn’t mean you will get paid on time, as debtors may still pay late, regardless of when your payment terms are due. “
It should be clear whether you allow net payment after 30, 60 or 90 days for wholesale purchase. And only offer net terms to repeat wholesale buyers with a good track record and good reputation so you can be sure that you get paid.
4. Minimum Retail Prices
You can also set a minimum retail price that wholesale buyers will follow. By having a set retail price, the mark-up between the original wholesale price and the retail price will not be large. At the same time, it also ensures that wholesale buyers will not slash down prices too low that they are not making profits at all.
5. Return and Exchange Policies
As a business owner, you are very well aware that not everything goes as smoothly as you wanted it to be. You need to be prepared for worst-case scenarios. There might be instances that customers return items for varying reasons such as defective item, wrong size, change of mind and the like.
In your wholesale terms sheet, you need to clearly set out your return and exchange policies. Will you offer a 7-days replacement for defective items? Are you going to allow for the exchange of items? Will you offer a 30-day money- back guarantee? These are just some of the things that you need to consider.
By having these policies set, wholesale buyers are also aware of your terms to avoid misunderstandings in the future.
The wholesale terms sheet should also include shipping terms. It must also be clear whether the shipping costs will be shouldered by you or the wholesale buyer or the customer.
Consider the method and form of shipment that wholesale buyers can agree with. Wholesale buyers must be aware whether you offer worldwide shipping or ship only to certain countries. Buyers must also be aware as to the packaging of product orders.
Buyers must know the turnaround time as to when the estimated time of arrival of shipment is.
Allow for a Shipping Window. As explained by The Shop Files, “Just means the timeframe between start ship and cancel dates when vendors are expected to ship. Two weeks is a really common ship window; so an order placed on 5/1 would have a cancel date of 5/15. This means as a vendor you can ship anytime within that window, or timeframe – you could ship right away on 5/1 or take the full two weeks and ship out 5/15.”
7. Ordering Process
The wholesale terms sheet should specify the terms and conditions for ordering products wholesale. Wholesale buyers need to know how they will place orders for your products. Having a quick guide in your wholesale terms sheet specifying the ordering process will greatly help wholesale buyers.