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Term entry
Wholesale Distribution
Selling your clothing line in bulk to retailers at wholesale prices (typically 2-2.5x your cost), who mark up 2-2.5x for retail. Fashion wholesale inventory turns average 6-12x annually. DTC customer acquisition cost ($129 average) is driving brands toward wholesale/omnichannel strategies.
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What is Wholesale Distribution?
Wholesale distribution is the B2B model of selling garments in bulk to retailers, who mark up the price and sell to end consumers. With DTC customer acquisition costs averaging $129 / ₹11,739 for fashion (up 25-40% since 2023), wholesale is increasingly essential for brand profitability. Fashion retail inventory turnover averages 6-12x annually, with fast fashion exceeding 15x and luxury extending to 150+ days.
How wholesale pricing works,global standard:
| Metric | Formula | Example |
|---|---|---|
| Cost of goods (COGS) | Materials + CMT + overhead | $10 / ₹910 |
| Wholesale price | COGS × 2 to 2.5 | $20-25 / ₹1,820-2,275 |
| Suggested retail price (SRP) | Wholesale × 2 to 2.5 (keystone) | $40-62.50 / ₹3,640-5,688 |
| Your gross margin | 50-60% at wholesale | $10-15 / ₹910-1,365 per unit |
| Retailer gross margin | 50-60% at retail | $20-37.50 / ₹1,820-3,413 per unit |
Payment terms,global comparison:
| Term | Risk Level | Cash Flow Impact | Common Usage |
|---|---|---|---|
| Pro Forma (prepay) | Lowest | Best,cash upfront | New relationships, small boutiques |
| COD | Low | Good,immediate on delivery | Small retailers, emerging markets |
| Net 30 | Medium | Moderate,30-day float | Standard for boutiques globally |
| Net 60 | Higher | Stretched,60-day float | Department stores, large retailers |
| Net 90 | Highest | Strained,90-day float | Major department stores (USA/EU) |
| Consignment | Variable | Worst,payment only on sale | Boutiques, new brands testing retail |
Types of wholesale buyers,global market:
| Buyer Type | Order Size | Margin Expected | Payment Terms | Examples |
|---|---|---|---|---|
| Boutiques | 6-24 pieces/style | 2.2-2.5× | Net 30-60 or consignment | Independent shops globally |
| Department stores | 50-500+ pieces/style | 2.5-3× + markdown money | Net 60-90 | Nordstrom, Selfridges, Isetan, Galeries Lafayette |
| Online retailers | 20-100 pieces/style | 2-2.5× | Varies by platform | SSENSE, Farfetch, Net-a-Porter |
| Multi-brand retailers | 30-200 pieces/style | 2.2-2.8× | Net 30-60 | Anthropologie, Free People, Opening Ceremony |
| B2B platforms | Variable | Platform fees 10-20% | Direct deposit cycles | Faire ($1B+ GMV), NuOrder, Joor |
Why this matters for fashion entrepreneurs.
Wholesale distribution accelerates revenue but changes your business model. With DTC CAC averaging $129 / ₹11,739 per customer (up 40% since 2023), wholesale provides access to established customer bases at zero acquisition cost. Glossier's partnership with Sephora generated $100M in first-year wholesale revenue, illustrating the channel's power.
Investment by brand stage:
| Stage | Wholesale Readiness | Investment Needed |
|---|---|---|
| Pre-launch | Not ready,build DTC first | $0 |
| Startup (0-$50K DTC) | Begin exploring,attend trade shows | $1,000-5,000 / ₹91,000-4,55,000 (trade show booth, line sheets) |
| Growth ($50K-$200K DTC) | Launch wholesale,target 5-10 boutiques | $5,000-25,000 / ₹4,55,000-22,75,000 (inventory, samples, sales rep) |
| Scale ($200K+ DTC) | Expand wholesale aggressively | $25,000-100,000+ / ₹22,75,000-91,00,000+ (working capital, showroom, team) |
DTC vs Wholesale economics (per $100 revenue):
| Metric | DTC | Wholesale |
|---|---|---|
| Revenue per unit (at retail) | $100 | $40-50 (your wholesale price) |
| COGS | -$25 | -$25 |
| Customer acquisition | -$15-30 (CAC) | $0 (retailer's customer) |
| Fulfillment & shipping | -$8-12 | -$2-5 (bulk shipping) |
| Returns handling | -$5-10 | -$1-3 |
| Net contribution | $28-47 | $7-23 |
| Volume potential | Limited by CAC | 5-20x higher volume |
Global wholesale entry points by market:
- USA: Faire marketplace (50K+ retailers), NY NOW trade show, Dallas Market Center, showroom representation ($2,000-5,000/mo / ₹1,82,000-4,55,000/mo)
- UK: Top Drawer London, Pulse London, Liberty London buyer days
- EU: Tranoi Paris, Premium Berlin, White Milano
- Japan: Rooms Experience Tokyo, IFF (International Fashion Fair), showroom in Minami-Aoyama
- Middle East: Dubai Fashion Week, local showrooms in DIFC/City Walk
Cash flow reality:
Wholesale extends your cash cycle dramatically. If factories require Net 15-30 and retailers pay Net 60-90, you're funding 30-75 days of working capital per order. Working capital needs: $10,000-100,000+ / ₹9,10,000-91,00,000+ depending on wholesale volume. Options: invoice factoring (sell receivables at 2-5% discount), trade credit insurance, or line of credit.
Where to source.
Global B2B wholesale platforms (fastest route to retail partners):
| Platform | Fee Structure | Reach | Best For |
|---|---|---|---|
| Faire | 25% first order, 15% reorders | 500K+ retailers, mainly USA/UK | Emerging brands, easy onboarding |
| NuOrder (by Lightspeed) | Subscription $200-500/mo | Premium retailers globally | Established brands, full digital showroom |
| Joor | Subscription (custom) | 13,000+ brands, 400K+ buyers | Premium/luxury, global reach |
| Brandboom | $0-199/mo | Growing network | Clean digital line sheets, order management |
| Bulletin | Commission-based | NYC/USA boutiques | DTC-first brands entering wholesale |
Global trade shows (in-person buyer access):
| Show | Location | Cost (Booth) | Buyer Profile |
|---|---|---|---|
| NY NOW | New York | $3,000-15,000 / ₹2,73,000-13,65,000 | Multi-brand retailers, gift shops |
| Top Drawer | London | £2,000-8,000 / ₹2,10,000-8,40,000 | UK/EU independent retailers |
| Tranoi | Paris | €3,000-10,000 / ₹2,73,000-9,10,000 | Premium European boutiques |
| Premium Berlin | Berlin | €2,000-8,000 / ₹1,82,000-7,28,000 | Contemporary European market |
| White Milano | Milan | €3,000-12,000 / ₹2,73,000-10,92,000 | Italian/European luxury boutiques |
| IFF Tokyo | Tokyo | ¥300K-1M / ₹1,82,000-6,06,000 | Japanese specialty retailers |
| Dallas Market Center | Dallas, TX | $2,000-10,000 / ₹1,82,000-9,10,000 | Middle America retailers |
Showroom representation,global pricing:
- New York Garment District: $2,000-5,000/mo / ₹1,82,000-4,55,000/mo + 10-20% commission (rent: $35-115/sqft)
- Los Angeles Fashion District: $1,500-4,000/mo / ₹1,36,500-3,64,000/mo + 10-20% commission
- London: £1,500-4,000/mo + 12-18% commission
- Paris/Milan: €2,000-6,000/mo + 12-20% commission
- Shared showroom models: $500-2,000/mo / ₹45,500-1,82,000/mo (lower commitment)
Sales rep structure:
- Independent reps: 10-20% commission, regional coverage, no base salary
- Showroom reps: Base ($1,000-3,000/mo / ₹91,000-2,73,000/mo) + 10-15% commission
- In-house sales team: Salary + 3-8% commission (scale stage only)
What it costs.
Wholesale pricing matrix,global comparison (at $10 COGS):
| Channel | Wholesale Price | Retail Markup | Final SRP | Your Margin |
|---|---|---|---|---|
| Boutique | $22-25 / ₹2,002-2,275 | 2.2-2.5× | $48-62 / ₹4,368-5,642 | 55-60% |
| Department store | $20-22 / ₹1,820-2,002 | 2.5-3× | $50-66 / ₹4,550-6,006 | 50-55% |
| Online platform | $18-22 / ₹1,638-2,002 | 2-2.5× | $36-55 / ₹3,276-5,005 | 45-55% |
| B2B marketplace (Faire) | $22-25 / ₹2,002-2,275 | 2.2× | $48-55 | 55-60% (minus platform fee) |
| Export wholesale | $25-30 / ₹2,275-2,730 | 2.5× | $62-75 / ₹5,642-6,825 | 60-67% |
Hidden wholesale costs (budget these or lose money):
| Cost Category | Range | Notes |
|---|---|---|
| Line sheet/catalog | $200-2,000 / ₹18,200-1,82,000 | Per season, professional design |
| Sales rep commission | 10-20% of wholesale | Ongoing, per order |
| Trade show booth | $2,000-15,000 / ₹1,82,000-13,65,000 | Per show + travel + samples |
| Samples for buyers | $1,000-5,000/yr / ₹91,000-4,55,000/yr | Ongoing, non-recoverable |
| Returns & chargebacks | 5-15% of wholesale revenue | Budget for this upfront |
| Marketing/co-op contributions | 2-5% of wholesale revenue | Required by some retailers |
| Invoice factoring | 2-5% discount | If you need faster payment |
| Showroom/rep costs | $500-5,000/mo / ₹45,500-4,55,000/mo | Ongoing overhead |
Wholesale profitability threshold (global benchmarks):
- Minimum viable wholesale: 5-10 consistent retail partners
- Break-even volume: $25,000-50,000 / ₹22,75,000-45,50,000 annual wholesale revenue
- Profitable at scale: $100,000+ / ₹91,00,000+ annual wholesale revenue
- Working capital needed: 25-40% of annual wholesale target (to fund receivables and inventory)
- Fashion wholesale AOV: $191-220 (USA), $150-180 (global average), B2B typically 3-5x higher than DTC AOV
Frequently asked.
Start wholesaling when: (1) Your DTC business is profitable with consistent sales ($50K+ / ₹45,50,000+ annual revenue), (2) You can reliably produce 100+ units per style, (3) Your pricing supports wholesale (50%+ margin at wholesale price), and (4) You have $10,000-25,000 / ₹9,10,000-22,75,000 in working capital for inventory and receivables. Too early = cash flow pressure kills the business. Most successful brands start wholesale after 12-18 months of DTC focus. The tipping point: when DTC CAC ($129 average) makes scaling unprofitable.
Standard keystone markup is 2x wholesale price (retailer gets 50% margin). By buyer type: boutiques expect 2.2-2.5x, department stores want 2.5-3x (plus markdown contributions of 5-15%), online platforms accept 2-2.2x. Your wholesale price should be 2-2.5x your COGS, giving you 50-60% gross margin. Example: $10 COGS → $20-25 wholesale → $44-62 SRP. Always price DTC at or above your SRP to avoid channel conflict. Export wholesale commands 20-30% higher prices than domestic.
Payment terms ladder: start with pro forma (prepay) or COD for new relationships. After 3+ orders with consistent payment, offer Net 30. Department stores typically require Net 60-90,budget for this cash gap. Risk mitigation: (1) Run credit checks on new accounts, (2) Set credit limits starting at $2,000-5,000 / ₹1,82,000-4,55,000, (3) Use invoice factoring (sell receivables at 2-5% discount) for faster cash, (4) Include late payment penalties (1.5-2%/month) in contracts, (5) Consider trade credit insurance for large accounts.
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