In order to run a successful wholesale business, you’ve got to speak the same language as your buyers. From Margins to markdowns, there are a lot of phrases and terminology you’ll hear along the way that aren’t typical to everyday conversations. I’ve created this guide with over 50 of the most common terms you’ll hear help you navigate the industry so you always look like a pro, even when you’re feeling like anything but. #FakeItTillYouMakeIt
Account: A wholesale customer (usually a store)
Assortment: the different products you offer.
Buyback: when a seller accepts unsold inventory from a retailer and provides a refund. Parameters are typically set in advance of a buyback agreement so everyone is in agreement as to which items or shipments will be included.
Brick and Mortar: A physical retail location with a traditional storefront
Case packs: the number of units in a case. This usually determines how your items ship to a retailer. (see also inner pack and master pack)
Catalog: Typically a printed booklet that visually details your products along with detailing your terms + conditions. (this can also be in digital format) It’s sometimes referred to as a line sheet although line sheets are much less detailed compared to catalogs.
Chargebacks: an associated cost of doing business. Chargebacks are typically issued by a retailer when the seller fails to meet their shipping requirements in some way, such as incorrect price ticket placement or incorrect packing.
COD: cash on delivery method of payment where a check is rendered to the shipping company when goods are delivered
Commission: a percentage of the wholesale price paid to the in house sales person managing an account or to the outside sales rep.
Commission Statement: Typically issued monthly, this is a list of all the orders that a salesperson is being paid on.
December Dating: Sometimes offered as a sales incentive, invoices with December dating are due December 1st regardless of when the order ships.
DC: distribution center, Large retailers with multiple locations will have you ship to their ‘DC’ where the DC then allocates the delivery to each retail location
Direct Order: An order placed by a retail buyer directly with the wholesale manufacturer.
Drop Shipping: when wholesaler ships goods directly to its customers.
House Account: Wholesale customers that are handled directly by the manufacturer despite being located within a sales rep’s assigned territory
Inventory: Merchandise in stock and available to sell.
Invoice: a copy of the order a store/buyer has placed with you that is referenced to pay you.
Inner Packs: a smaller pack unit inside of a larger case pack. Typically the minimum you can purchase at wholesale.
Key Account: High volume retailers (like big box stores) who tend to receive special terms and/or discounts due to the large orders they place.
Keystone: When you structure your pricing so an item's retail is set by doubling the wholesale price.
Kitty: This denotes money set aside for a specific purpose. For instance, if you partner with a retailer whose terms state you need to support their advertising efforts you would set aside a predetermined % of each invoice paid to go toward their advertising budget.
Lead Time: the time it takes to produce a design or ship a product from concept to completion.
Letter of Agreement: A document that details the specifics of a sales rep-manufacturer relationship.
Line: The collection of products a product based business is selling.
Line Sheet: A sales tool presented to wholesale buyers that includes images of your products along with information such as pricing, packing and delivery details.
MSRP: manufacturer's suggested retail price If you sell direct to customers, it’s the price listed on your website. If you sell your product wholesale this is the price you suggest stores charge for your products. (important side note, while you can make suggestions, legally stores have the right to sell your products at a retail that is best for their business)
Margin: The difference between what an item actually costs to produce and your wholesale price.
Markup: can be viewed either as a dollar amount or percent difference between the wholesale price and retail price.
Master Pack (or Case Pack): How many total units are in one carton.
Minimums: the smallest amount of an item a retailer can order from you.
Net Payment Terms: Usually requested by larger retailers, net terms is a payment plan where the retailer has a set numbers of days from the invoice date to remit payment. Stores ask for this often times because it helps with their cash flow since they have some time to sell your product in their stores.
Net 30: The most common set of terms, with the invoice being due within 30 days of the invoice date
Net 60: The invoice is due within 60 days of the invoice date
Net 90: The invoice is due within 90 days of the invoice date
2% Net 10: Typically offered to customers set up with Net 30 payment terms this is an incentive where customers receive a % discount for paying within 10 days of the invoice. Some variations of this offer include 1% Net 10, 2% Net 60 and so forth.
On the Water: When you’re importing your products from overseas you’ll often hear transit times quoted to you as “30 days on the water” it means how long the product is on a vessel before it reaches port.
Open to Buy: This is a buyer’s budget. It determines how much a buyer has to spend with your company.
PO: purchase order Typically written by a retail buyer, this document outlines the units a store wishes to purchase, agreed upon cost for each unit, delivery information, and ship windows.
Price Point: a reference buyers make to the retail price of a product. Often times buyers have specific price points they know work for their stores and they look for products that meet that number
Pro Forma Invoice: A way of collecting payment where the invoice is sent to the customer, they send a check, and once the check is received the manufacturer ships the order.
Resale Tax ID Number: Any retailer who wants to purchase goods from you at wholesale should have a resale tax ID number. This ensures taxes are being collected at the point of sale (in store) since wholesale transactions aren’t taxed
Sales Rep: A person who sells your products on your behalf to their network of retail buyers in exchange for a pre determined fee/ commission.
Ship Window: A specific set of dates when you can ship your products
Samples: Buyers often need to see physical samples of your products before committing to placing an order. Samples help them gauge your product’s quality.
Stockist: a list of retail locations (both physical and online) that carry your products.
Style Number: A unique internal sequence of numbers (or numbers + letters) that identifies a style you carry in inventory. They are used to differentiate one product from another and to simplify the order writing process.
Showroom: Where you display the products you are selling for buyers to browse and write orders with you.
Show Special: an incentive to get buyers to place an order with you in your trade show booth.
Sku: Used to help track each item in inventory, see also style number
Tickets: A price sticker or label affixed to products that include important product information such as the retail, UPC, and item number. Each retailer has their own set of parameters when it comes to price tickets. Many of them require you to order price tickets from a third party supplier.
Trade Show: Where companies within the same industry gather under one roof to display and sell their products, meet with retail buyers and learn about industry trends.
UPC: A barcode unique to each of your products that is used by stores to track inventory