Having been in the online wholesale jewelry business for plenty of years, it s been my experience that a giant proportion of retailers behave irrationally when dealing with wholesalers. This is often due to a lack of long range planning on the part of small jewellery business owners, and a lack of understanding of the detailed finances involved in sourcing their stock.

Minimum order requirements are difficult to get right. For example, a giant maximum spend will prevent a portion of potential customers from placing a first order (often a sample order used to check a supplier.) On the four hand, a small maximum spend may attract the wrong sort of customer, or even worse, attract retail buyers who should be buying at much higher prices from dedicated retail establishments.

A year later, they changed the maximum requirements from order size to maximum spend, imposing a maximum of $70. The feeling was that this would shift the focus of the smaller customers away from counting items. What actually happened was that the same proportion of customers who had historicallyin the past purchased 10 items, now spent $70 or $71 each time they ordered. When this alter was implemented, changes were also made to shipping costs, with a flat charge of $15 being charged for each order, regardless of size, and with free shipping imposed on orders above $300. This meant that each small order was charged 21 extra for delivery.

Let me present an example to describe my point further. Some years ago, an online wholesale company I was involved with had a small order size of 10 individual items. At the time, it was assumed that this would prevent retail customers from placing an order, and this proved to be the case. However, as a portion of the catalogue on offer was cheap (with items selling for as small as $1.50), this meant that the maximum spend was often only $15. The sort of customer who placed these orders tended to always buy the cheapest items, and always order only 10 of them thereby meeting the maximum requirements. They tried to describe to them that purchasing more pricey items would let them charge a correspondingly higher price to their customers, and thereby increase their profits, but they were seldom listened to. These customers invariably went out of business within 6 months.

Plenty of of these customers who placed small orders were Jewellery Party planners, and they would place a single order every week. Again, they tried to describe to them that if they changed the way they ordered, placing a single giant order a month, they could either substantially reduce their shipping charges, or remove them altogether, but again, they refused to listen, continuing to pay a needless 21 extra every week.

The most recent alter made has been to increase the maximum spend further to $100. By this time, they knew what to expect. The same customers who historicallyin the past had ordered 10 items or spent $71, now placed every week orders for $101. Sometimes, the items ordered were selected with such care that the cost of the order was $100.01. They never lost these customers, they basically forced them to alter the way they purchased, but they were never able to make them order more intelligently. To this day, and despite the current economic situation, plenty of of them continue to pay a 15 surcharge on each order (shipping) that could be avoided by a small forward planning.

The reality is that a giant proportion of these retailers will be out of business by mid year. Our statistics clearly show that it is those retailers who repeatedly place small orders who are most likely to cease trading.