Quick answer
A first wholesale order creates a cash gap: you pay for production, packaging and freight now, and the retailer pays on its terms later. Australian brands typically fund it with a short-term unsecured facility or line of credit sized on existing turnover, or a property-secured loan for larger orders. Check wholesale margins first — a big order at a thin margin can cost more than it earns.
Key points
- Wholesale margins are lower than direct sales — check contribution per unit first.
- Retailers often pay on terms after delivery, creating a funding gap.
- Confirm the order in writing, including terms, delivery dates and returns.
- Don't let a wholesale order starve your direct channel of stock.
The email arrives: a retailer wants to stock your brand. For a young direct-to-consumer business, it’s validation, reach and a big order all in one. It’s also one of the fastest ways to run out of cash if you don’t plan it, because wholesale flips your normal cash cycle on its head.
Why does a wholesale order create a cash gap?
Selling direct, customers pay you at the checkout, before you ship. Wholesale usually works the other way around:
- You produce the stock, often more than you’d normally make at once.
- You pay for packaging, labelling and freight to the retailer’s warehouse or stores.
- You deliver, meeting their deadline and specifications.
- You invoice, and the retailer pays on its agreed terms after delivery.
Everything before step four is money out. On a large first order, that gap can be weeks or months, and it may be the biggest single cash commitment the business has made.
Is the order actually worth it?
Before thinking about funding, check the margin. Wholesale prices are well below retail, because the retailer needs room for their own margin. Work out contribution per unit for the wholesale order specifically:
| Line | What to include |
|---|---|
| Wholesale price per unit (ex GST) | What the retailer pays you |
| Less production cost | Goods, including any extra cost for retail-ready packaging |
| Less packaging and labelling | Barcodes, swing tags, cartons, retailer-specific requirements |
| Less freight | Delivery to the retailer’s warehouse or stores |
| Less other costs | Marketing contributions, samples, compliance or testing |
| Contribution per unit | What the order really earns you |
If contribution is thin, a large order can generate plenty of work and very little profit. If it’s healthy, the order can be worth funding, especially if it brings new customers to your own store.
Also consider the terms: payment timing, sale-or-return clauses, markdown support and penalties for late delivery. Sale-or-return is riskier, because unsold stock can come back to you.
How do brands fund their first wholesale order?
A line of credit suits wholesale well: draw for production, repay when the retailer pays, draw again for the next order. Unsecured and line-of-credit options are typically $5,000 to $500,000, sized on turnover and bank statements.
A short-term unsecured loan can suit a single large order with a known amount and a clear repayment date after the retailer’s payment.
A property-secured business loan from $20,000 may suit a very large order, or a brand with limited trading history but property equity.
A written purchase order from an established retailer is useful evidence, along with your own trading history. If you’ve got the order in hand, find out how to fund it. The enquiry is quick and involves no credit check.
How do I protect my direct channel?
This is where many brands stumble. The wholesale order absorbs all available stock and cash, and the online store sells out. Your direct channel is usually higher margin, and those customers are yours. Protect it by:
- Producing for both channels, not diverting online stock to the retailer.
- Keeping ad budget aside, so online sales keep running during the wholesale build.
- Funding the combined need — wholesale production plus normal reorders — rather than just the wholesale order.
The ad-spend payback calculator can help you test how much of a funding amount should go to online stock and ads versus the wholesale run.
Illustrative example: a snack brand’s first supermarket-style order
Illustrative only. A healthy snack brand sells online and in a few cafés. A regional grocery group offers a first order of 12,000 units across its stores, paid on terms after delivery. Wholesale price is roughly half the brand’s online price. After production, retail-ready cartons, freight and a small promotional contribution, contribution per unit is thin but positive.
The founders negotiate to reduce the first order to 8,000 units as a trial, confirm terms in writing, and fund production and packaging with a short-term facility repaid when the grocer pays. They fund an extra online production run at the same time, so their direct customers aren’t left short. The trial proves sell-through, and they renegotiate pricing for the next order with real data behind them.
What should I have in writing before production starts?
- The purchase order: quantities, prices, delivery dates and locations.
- Payment terms and how invoices must be submitted.
- Packaging, labelling and barcode requirements.
- Returns, sale-or-return and markdown arrangements.
- Penalties for late or short delivery, if any.
Get all of this confirmed before you commit to production. Borrowing against an order that later changes is a stressful place to be.
How do I price wholesale without losing money?
Pricing wholesale well starts with your full cost, not your retail price. A simple approach:
- Work out your true landed cost per unit, including retail-ready packaging and freight to the retailer.
- Decide the minimum contribution you need per unit to make the order worth the effort and risk.
- Check the retailer’s expected margin against your recommended retail price.
- Test the volume. Bigger runs may lower your unit cost, which improves wholesale margin.
If the numbers only work at volumes you can’t fund or produce, it’s better to negotiate a smaller trial order than to accept terms that stretch the business too far.
Makers juggling capacity alongside a stockist order should read loans for Etsy sellers and makers.
Say yes to the stockist with confidence
A first wholesale order can be a turning point, as long as it’s priced well and funded sensibly. If you’ve landed one, send us a quick enquiry. There’s no credit check to ask, your details are read by one real person rather than circulated to a string of lenders, and we’ll call to talk through timing and terms. Please fill in the form as accurately as you can — turnover, time trading and any property — so our first suggestion is the right one. For the bigger picture, read DTC brand funding.
Frequently asked questions
Can I get funding for a wholesale order?
Yes. Business funding can cover production, packaging and freight for a confirmed wholesale order. A written purchase order from an established retailer, plus your own trading history, gives a lender a clear picture of what the money is for and how it comes back.
How long do retailers take to pay?
It varies by retailer and agreement. Many pay on terms after delivery rather than up front. Get the payment terms in writing before you commit to production, and build them into your cash-flow plan.
What margin should I expect on wholesale?
Wholesale prices are typically well below your retail price, because the retailer needs their own margin. The key is whether contribution per unit, after production, packaging and freight, still makes the order worthwhile.
What if the retailer cancels or returns stock?
Read the agreement carefully for cancellation, sale-or-return and markdown clauses. Sale-or-return arrangements carry more risk because unsold stock can come back. Factor these into how much you borrow.
Should I take a wholesale order if it means pausing online sales?
Usually not. Your direct channel is higher margin and it's yours. Plan production so both channels are supplied, and fund the extra stock rather than diverting it.