Gautham Srinivas · Last updated 1 September 2026 · 6 min read
Wholesale Terms, Explained Before Your First Stockist
tl;dr
Five terms decide whether a stockist makes you money: minimum order, payment terms, margin, who owns the stock, and who pays freight. Wholesale pays you about half the retail price, and pays you whether or not it sells. Consignment pays more per unit and only if it sells, which is a cash-flow risk wearing a better outfit. If you consign in Australia, register on the PPSR before you deliver.
Why this is landing on more brands than it used to
Shelf space is genuinely moving toward small brands.
NielsenIQ and Kearney put established niche brands up 1.5 points of US market share between 2022 and 2025. Large and mid-size national brands gave up 2.1 points over the same stretch.
Their line for it is good: scale is still powerful, but scale is no longer destiny.
Which means a lot of founders are about to have their first terms conversation. This is that conversation.
The five that decide whether a stockist is worth it
Most advice about getting into stores stops at the yes.
That is the easy half. The terms you agree in the next email decide whether that stockist becomes a business or a slow way to give away inventory.
Only five matter for a first account. The rest is detail you can settle later.
- MOQ: the smallest order you will accept
- Payment terms: when the money actually arrives
- Margin: what the shop makes, which is what they are really buying
- Ownership: whether they bought the stock or are just holding it
- Freight: who pays to get it there, and back
MOQ, in one line
The smallest order you will pick, pack and invoice.
It exists because serving an order costs about the same at six units as at sixty, so tiny orders lose money.
Set it in dollars first, then convert to units. Low opening minimum, higher reorder minimum.
Net 30, in one line
The invoice is due thirty days after you issue it.
You made the stock, paid for it, shipped it. Now you wait a month. That is a loan and you are the bank.
Take payment before dispatch on the first order. Offer terms once they have reordered.
Keystone, in one line
The shop doubles what they paid you. Wholesale is half the shelf price.
It is a convention, not a law, and it exists because the retailer pays rent, staff, card fees and the discount they take to clear what does not move.
Price backwards from the shelf price. Never forwards from your cost.
Consignment, in one line
They hold it, you still own it, and you are paid only for what sells.
It pays a bigger share of retail and pays it later, if at all. You are funding the inventory either way.
In Australia, register it on the PPSR before delivery or you can lose stock you legally own.
Put it in writing before the first delivery
This does not need a contract. It needs one email you can both find again in a year.
- Wholesale price per unit, and the RRP you expect them to hold
- Opening minimum and reorder minimum
- Payment terms, and when the clock starts
- Who pays freight out, and who pays it back on returns
- Whether stock is bought, on sale or return, or consigned
- How much notice either side gives before stopping
Questions
- What terms should a new brand offer its first stockist?
- A low opening minimum so trying you is cheap, payment before dispatch rather than credit, a wholesale price at roughly half your RRP, and stock sold outright rather than consigned. Then a higher reorder minimum and terms once they have bought twice.
- Do I need a contract with a stockist?
- Not usually for a small independent. One email covering price, RRP, minimums, payment terms, freight, ownership and notice does the job. What matters is that both of you can find it in a year.
- Which term catches small brands out most?
- Payment terms, because the cost is invisible at signing. Thirty days of credit across several accounts at once is a real amount of working capital, funded by you, while the stock sits on someone else's shelf.
Sources
Related guides
What Is MOQ? Minimum Order Quantity, Set Properly
MOQ is the smallest order you will accept. What it means, why it exists, how to set yours in dollars instead of units, and when to break it.
Net 30 Payment Terms: What They Really Cost a Small Brand
Net 30 means the invoice is due thirty days after you issue it. What that costs you in working capital, when the clock actually starts, and why not to offer it on a first order.
What Is a Line Sheet? The One Page a Buyer Actually Reads
A line sheet is the document a buyer orders from: SKUs, wholesale price, RRP, minimum and terms. What belongs on it, what to cut, and the format buyers expect.
Keystone Pricing: The Margin a Buyer Expects
Keystone means doubling the wholesale price to get the shelf price, so the shop keeps fifty percent. Why it exists, how to price backwards from the shelf, and the trap that catches DTC brands.
Consignment vs Wholesale, and What Goes Wrong After the Yes
Wholesale means the shop buys your stock. Consignment means they hold it and you get paid only if it sells. The trade-off, and the ways a retail deal turns bad after you have shipped.
How to Get Your Product Into Stores: The Seven-Step Playbook
The practical playbook for getting a consumer product onto retail shelves: which stores to pitch first, the margin math a buyer runs in their head, the pitch email in full, and the follow-up cadence that lands stockists.
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