Since last few years, as market conditions have become more difficult, many of the Indian apparel exporters are just focusing on one agenda, ‘machines chalti rehnee chaahiyen’ – machines should not remain idle. And this is one of the main reasons that most of the exporters are working with wholesalers and importers as they have better orders than individual retailers since they are further associated with many retailers/stores. But it is certainly not a cakewalk to work with such buyers. On the other side, there are many challenges to work with this segment of buyers. Whereas the industry is unanimous in their opinion, on some points, the views are divided as usual. Apparel Online talked with some exporters working with wholesalers and importers to know their stand and their way to tackle the issues that comes when working with such buyers.
Exporters claim that compared to orders with retailers/stores, prices remain 25 to 35 per cent less in the case of orders being placed by wholesalers and importers as they have their own expenditures and they need the margins to sell further to the retailers/stores. But this is not the only challenge for exporters working with these buyers. In some cases, this segment of buyers does not issue any LC which creates payment risks. It takes at least 4 months to rotate the payments from wholesalers/importers to vendors. In some other cases, there is a ‘catch 22’ situation with wholesalers, if his pre-confirmed orders get cancelled, as he will not even listen to exporters.
Earlier, working with this segment did not require too much of concern with regard to compliance, but now day-by-day wholesalers are asking for compliance audits and certifications as they are also under pressure from their clients in this regard.
Despite that working with them is comparatively easy as some of the exporters are of the opinion that wholesalers and retailers have better understanding, be it of their associates or overall market conditions in both the selling and sourcing market. On the vendor’s side, they are also not as ‘strict’ as retailers or brands are on many issues, be it delivery schedule or even in some cases quality issues, they adjust while it can’t be even thought of in the case of retailers or brands.
But to avail these things, an exporter must be backed by good financial strength as wholesalers offer good credit period to their buyers; so they prefer vendors having strong financial strength who can manage even in case of long credit period and continue with sourcing of fabric, etc. Vendors do try to verify wholesalers/importers’ financial condition through their bank accounts before starting to work with them. Even after having reasonably good relations over a period of time, some of the vendors make trips 3-4 times a year to these wholesalers/importers as it is necessary to sit with them to get feel of their business scenario and payment follow-ups. “Normally it takes one trip in a year if you have better understanding with retailers but when it comes to the wholesalers/importers, we have to travel 3 to 4 times which in fact increases our overheads,” says one of the exporters working with wholesalers only and who did not want to be quoted.
None of the exporters accepted that wholesalers ever asked for third-party audit regarding quality. Despite all these odds or positive aspects, some of the exporters are of the view that there is less trust factor in working with wholesalers and it is like ‘lala’ culture. Apart from exporters, there are also many buying houses working with this segment. Many exporters are of the opinion that the scenario becomes worse if working through a buying agent as they get more pressure on price due to commission of buying house/buying agent. Also, they have to bear all the ‘diktats’ of buying houses.
Exporters’ speak…
“We are working with wholesalers from the last 30 years and to be safe about payments, we prefer to work within our limits and there are no major issues when an exporter is working at smaller level and with known/long-term reliable wholesalers.” – Rajiv Kapoor, MD, Affordable Exports, Delhi
“Our 30 per cent business is with wholesalers based in Italy, US and UK and they offer nearly 10 per cent less price to us. Sometimes there are issues when further pre-approved orders get cancelled, but I don’t see any issue working with wholesalers through buying houses as price should get fit in our minimum pricing, all other things don’t matter. There is risk regarding payments in this segment and we have never noticed that any wholesaler has asked us about compliance.” – Uday Sehgal, Director,
Mariko, Noida“We get bulk orders from wholesalers, never work without LC and don’t work at all if there is even a small risk regarding payments. We follow our standard lead time, be it wholesaler or any retailer.” – Animesh Halder, Proprietor, Halder Garments, Kolkata
“We are working with wholesalers from almost a decade and it is comfortable to work with them. We prefer to serve with quality products but it depends on given price too as value for money is always there.” – Rajesh Kumar Gupta, Director, Megha Overseas, Jaipur
“Our way of working is a little different as we have partnership with one wholesaler and working mostly for him only.” – Udayan Kapur, Good Earth India, Noida
