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Buying Wholesale Brand Name Fashion in Italy, a Dealer Guide

Aug 17, 2007
Italy is home to the most sought after luxury fashion brands. Therefore it is only obvious for fashion dealers to source their goods from Italy. This article outlines the most important things you should know to source profitable, authentic merchandise. Purchasing top brand name fashion in Italy at wholesale is in fact a very profitable business for foreign retailers and fast-growing accordingly.

In order to secure profitable and consistent sources of quality discounted goods, it is important that one has a knowledge of how the industry works and of the unwritten "rules of the game". Is is also recommended to have some local trustworthy broker in place to handle suppliers and all sourcing issues.

First of all let us say the the term "wholesale" is here intended in a general sense meaning the purchase of discounted goods in quantity. In fact wholesale technically does not exist in the brand name fashion industry, as it will be explained later in this article.

Four ways to buy wholesale brand name fashion in Italy
1)Purchase of stock, closeout and liquidations of previous seasons goods from the brand house.
In this case, the excess inventory is sold directly to jobbers (stock dealers) in very large quantities by the brand house. These dealers, who are usually a handful even for the most prestigious brands, then divide their lots and sell them to discount retailers or other stock dealers.
These lots are the most sough after as they are very convenient in price since they come straight from the factory and are usually also first choice and well assorted (full range of sizes and colours). For the same reason these lots are the hardest to get and usually "feed" the top fish in the discount fashion business. Also the usual minimum purchases of $20-30,000 keep away many of the smaller buyers.

As each link in the chain increases the price, to get the best bargains it is important to have access to the jobbers who buy their stock directly from the brand house. These are comparatively few, have established clients and require fairly large orders to get your attention.

Please note that while this type of stock sale applies to many garment brands (for example Diesel jeans, Replay jeans, top name suits) it seldom applies to top name handbags such as Gucci, Fendi, Prada, Chloe, Ferragamo. These top brands feel that their image would be hurt by discount sales of this kind. So they do their best to be left with little stock as possible and this they tend to retail directly through their own retail outlet stores in Italy.

Therefore be very suspicious of large lots of top name handbags being offered at discount price.
While we always recommmend a personal visit when purchasing, these type of lots since they are consistent, can often be purchased remotely, based on detailed packing lists with photos.

2)Purchase of stock, closeout and liquidations of previous season goods from retail stores.
At the end of each fashion season, there are wholesale dealers who go and "clean up" what's left in privately owned retail stores, hundreds of them at a time. All the goods are then gathered in a warehouse and put on sale the following year (for example, left over spring/summer goods 2006 will be put for sale in january/february 2007). While this type of stock has high discount usually, lots are not very consistent (available styles sizes and colours are often limited and unpredictables). For this same reason of vast array of item types, packing list and photos are seldom made available and item selection has do be done in person at the warehouse.

3)Purchase current season or preorder next season collections to the brand house through Italian retailers who hold an account with the brand house.
Now this is where we get into the technical definition of "wholesale". Most fashion brands, do not wholesale to anyone! They only sell to retail dealers who have an account with them (New accounts with top brands are becoming impossible to get). Distributors are simply agents of the brand in a foreign country that collect retail orders for that country.

Some dealers who have a few retail stores, when they place their orders they place some for their retail stores and some extra to sell on the international market. These extra goods are what you can profitably purchase. Dealers do this for two reasons. Firstly because to keep their accounts with big brands they are bound to place large orders every season and they cannot always be sure to be able to retail them. Secondly because by selling some of their order to foreign buyers they do have a much smaller markup but by selling larger quantities they can quickly recover cash flow.

This practice is known and tolerated by the brand houses but it must not be overdone or the dealer may lose his/her account. This explains the scarcity of goods. Also, the dealers with an account get about 50-55% discount when ordering the goods. They will keep10-15% for themselves for a quick international sale so you end up with a 30-40% discount from list price. But obviously they cannot sell for less than what they paid! Therefore be very wary of current season goods being offered at 50% off or more.

The better dealers offer packing lists with photos for current goods. To place orders for next season collections instead it is necessary to select items in person as next season collection styles are jealously guarded by the brand houses and no photos are usuallly circulated until season has begun.

4)Purchase directly from the brand house through your own account.
This is of course the most desirable way to place your orders for next season collections as you get the most discount. It is however next to impossible to get your own account with the most famous names as the allowed number of retailers is already saturated in most countries.

It is often possible however to establish new accounts with lesser known brands. This can be a great opportunity for profits and the current hottest trend in wholesale buying. In fact it is not too hard to snap up a fast-growing quality brand with lots of potential. The bran, being yet not so well established, will offer you great negotiating power which can results in small minimum orders and great discounts. You can have fat margins as high as over 100% and stay out of the cuttthroat competition which happens for the most established brands. When the brands grows more popular you will then be positioned to reap the profits while other dealers struggle to get an account and requirements to get one become more imposing.

As a general rule, to establish an account with even a smaller brand you are required to own "brick and mortar retail" space of a certain size and in certain location. Fewer accounts for pure Internet retail are awarded. The reasoning behind this is that with traditional stores a brand can assign various accounts to non competing dealers in one country (for example an account to a California dealer, one to a Michigan dealer etc.). This is hardly feasible in e-commerce as there are no geographic barriers to competiton and the brand feels comfortable assigning only one Internet account per country.

It is advisable to resort to a local broker to negotiate and setup your new account with choice brands. A good broker can also recommend a selection of hot new brands suited to your target market and country.

About authenticity and "paperwork"
First of all let us say that while the world an particularly the Internet seem swamped with counterfeit merchandise, in Italy we hardly see any. This is due to the fact that there is plenty of authentic merchandise and profits to be made in Italy that counterfeits are not needed to begin with. Also, most wholesale dealers here in Italy are old fashioned warehouses with the goods "on the floor" and paid for. These businesses have often 20 or more years of activity. No one can sell fakes by the wholesale and stay in business this long.

Good hints to fakes are: easy availability and very low prices. REAL brand name goods are scarce and expensive. That is why when goods are authentic you will not find tons of goods advertised for any given brand nor huge discounts for top merchandise.

About "paperwork": everyone uses this word loosely, however the only "paperwork" that exists for fashion stocklots is the dealers' purchase invoice. Since this is a confidential document (would you show your purchase invoices around?) it is usually not sent but shown privately if requested, upon a personal visit. Believe us, we work with the few dealers in the world who purchase their goods directly from Diesel, Gucci, Ferragamo etc, there is no other kind of "paperwork" (save for the tags, hologram etc which are attached to the garments themselves). Also beware of those claiming to send "full paperwork"; papers can be forged very easily by anyone with a computer, papers are much more easily forged than garments.

Paperwork can usually be seen in person at the dealers. It will NOT be sent by email or fax. This is because it has happened that paperwork sent to clients has been stolen and used to back counterfeit or non-existent merchandise with big damages to suppliers. Most dealers will write their own declaration of authenticity if you need it.
In any case, we invite you to go and see the goods when possible, at least the first time. You will be spending significant amounts of money, you should spend it with confidence.

Why are wholesale fashion dealers in Italy so hard to locate?
The reasons are many, first of all most dealers in this trade do not need to advertise, they have long standing clients and new clients who come by word of mouth. Their main problem is not to find buyers but to find enough merchandise to satisfy them all! Then, consider that the typical Italian businesses, even multi million dollar ones are often family-run and it is rare that enough personnell is available to run a website, take pictures of the goods, publish ads and answer to email inquiries.

Italian wholesale dealers tend to work through brokers who do all this work for them so they can concentrate on what they do best: consistently get the most in demand goods at low prices. Finally, aggressive discount brand name advertising is officially discouraged by the brand houses which want to keep their luxury goods as such. Unofficially though, the whole stock trade helps the same brands to keep their profits high and demand strong as excess inventory and leftovers are always sold.

Therefore, there are unwritten rules that say for example that dealers are of course welcome to do their business, but discreetly. They should not advertise too much that they sell discounted so and so brands, they should not set up their discount store in the same street as the official brand store and so on. Believe us, the low profile is such that it took us over a year in the beginning to find out the wholesale dealers in our own city!

For all these reasons and because dealers tend to specialize in certain brands or type of garments, it is best for you to contact a local broker who can save you countless days worth of time and headaches by pointing you immediately to the right source for your needs and by seeing you safely through all the negotiation, payment and shipping procedures, so that you can concentrate on what you do best: sell!
About the Author
Dr Marino Caliterna is a professional broker of Made in Italy products. Author of the book:"The guide to Italian Wholesale and Stocklot dealers". Find out more about buying wholesale fashion at http://www.italia-consultant.com
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