Dive Brief:
- With wholesale accounting for about 60% of companies’ total sales, it remains the most profitable channel for brands, according to a recent report from NuOrder.
- In terms of what retailers brands are forming wholesale partnerships with, brands said their businesses are nearly split between big-box retailers (57%) and specialty or boutique retailers (45%), per the report. The NuOrder report is based on a survey of 259 respondents, conducted between Jan. 18 and Jan. 26.
- The wholesale channel is anticipated to grow 5 times more than in 2020, per the report. By channel, wholesale is expected to grow 51%, while the DTC channel through brands’ own stores is expected to grow 11% and websites is anticipated to grow 6%.
Dive Insight:
Wholesale continues to prove its importance as a sales channel for brands.
Nearly 60% of respondents said retailers help in marketing a brand, followed by 56% who said larger orders can help scale revenue and 43% who said wholesale allows brands to expand into new markets and regions.
A number of brands have recently turned to wholesale to boost sales and expand their reach. In April, drinkware brand RTIC Outdoors announced a partnership with Walmart to sell its products in more than 3,800 of the mass retailer’s stores. That same month Ōura announced a partnership with Target to sell the Oura Ring, the company’s wearable health monitoring device.
And brands that leaned heavily on selling directly to consumers early on, have found value in wholesale as well. In the fall of 2022 Allbirds expanded its wholesale distribution channel by partnering with REI to sell its footwear. That same year, at-home fitness company Peloton began selling select accessories and its Guide products through Dick’s Sporting Goods.
The NuOrder report also showed changing priorities among brands. Respondents were concerned about expansion and growing their wholesale businesses, as opposed to being preoccupied with solving operational issues, such as supply chain and inventory, as in previous years.
And while the channel is growing in popularity, new challenges are arising for brands. Forty-four percent of respondents said finding new retailers was their top wholesale distribution pain point this year, while 35% cited a lack of standardization and 32% said no visibility into the buying and merchandising strategy were the biggest challenges.
Respondents also cited wholesale concerns around reduced customer demand, increased business costs, excess inventory, supply chain instability and lack of visibility with retailers.
