Wholesale Terms For Fashion Accessory Brands

Supplying boutiques or online retailers can be an exciting step for your fashion accessory brand. It means your products are reaching new customers, your stock is moving in bigger volumes, and your brand is starting to build a real retail presence.

But wholesale can also get messy quickly if the commercial details are left to emails, text messages or assumptions. Minimum orders, payment timing, returns, delivery risk, branding and discounting all need to be clear from the start.

Your wholesale terms don't need to be complicated. They just need to set the rules in a way that protects your cash flow, your product quality and your brand reputation.

What Are Wholesale Terms For A Fashion Accessory Brand?

Wholesale terms are the rules that apply when you sell your products to another business for resale. For a fashion accessory brand, that might mean supplying jewellery, sunglasses, bags, belts, scarves, hair accessories or other products to boutiques, gift stores, department stores or online retailers.

These terms usually cover the practical things that matter day to day, such as:

• the minimum order quantity or minimum order value
• wholesale pricing and whether prices include GST
• payment terms, credit terms, deposits and late payment consequences
• delivery timeframes, freight costs and when risk passes
• returns, faulty stock and unsold stock
• how the retailer can use your brand name, photos and product descriptions
• whether the retailer can sell on marketplaces or outside an agreed territory
• whether there's any exclusivity
• what happens if either party wants to end the arrangement

You might call this document a wholesale agreement, stockist agreement, retail stockist contract or wholesale terms and conditions. The name matters less than what the document actually says.

If your stockists are small businesses, the unfair contract terms regime under the Australian Consumer Law may also be relevant. Since November 2023, unfair terms in standard form small business contracts can attract penalties, not just be declared void. That means your terms should protect your business without being one-sided in a way that creates legal risk.

Do You Need A Wholesale Agreement Or Stockist Agreement?

Yes, you should have a written agreement if you're supplying retailers on wholesale terms. Without one, you may struggle to recover unpaid invoices, manage damaged stock disputes or stop a stockist from using your brand assets in ways you don't like.

A wholesale agreement is usually better when the relationship is a straightforward product supply arrangement. You sell products to the retailer at a wholesale price, and the retailer resells them to customers.

A stockist agreement can be similar, but it often focuses more on brand presentation, approved sales channels and retail standards. For fashion accessories, that can be especially useful because your brand value often sits in the look and feel of the product, packaging, photography and customer experience.

Wholesale Terms Outline To Tailor

Templates can be a helpful starting point, but fashion wholesale arrangements often need tailoring. A lawyer should adapt your document before you use it, especially if you offer exclusivity, consignment, marketplace restrictions or import and export arrangements.

1. Parties: Write the correct legal names, ABNs and contact details for your business and the stockist.
2. Products: Describe the accessories covered and how product ranges or seasonal collections can be updated.
3. Orders: Set out order forms, minimum order values, acceptance of orders and whether you can reject or cancel orders.
4. Pricing: State wholesale prices, GST treatment, price changes, terms of sale and any discounts or freight thresholds.
5. Payment: Cover deposits, due dates, credit limits, late payments and suspension of supply.
6. Delivery And Risk: Explain freight costs, delivery estimates, risk transfer and what happens if goods are lost or damaged in transit.
7. Returns: Separate faulty products, incorrect shipments, change-of-mind returns and unsold stock.
8. Branding And IP: Give a limited licence to use your trade marks, photos and product copy, subject to your brand rules.
9. Sales Channels: State whether the stockist can sell online, on marketplaces, overseas or through third-party resellers.
10. Exclusivity: Record any exclusive territory, duration, sales targets and termination rights.
11. Ending The Agreement: Explain notice periods, unpaid invoices, final orders and use of leftover stock and brand materials.

What Should Your Minimum Order And Payment Terms Say?

Your minimum order and payment terms should be clear enough that a retailer knows exactly what they must buy, when they must pay and what happens if they don't. This is one of the biggest cash flow protections in your terms of trade for a fashion wholesale relationship.

For minimum orders, you can set rules such as:

• a minimum opening order value, such as $1,000 plus GST
• a minimum reorder value, such as $500 plus GST
• minimum units per style, colour or size
• pack sizes, such as earrings sold in sets of 6 units per colour
• seasonal order cut-off dates for pre-orders

For payment, many fashion accessory brands use one of these structures:

• Payment upfront: Best for new stockists or smaller orders.
• Deposit plus balance: Common for pre-orders, such as 50% on order and 50% before dispatch.
• 7, 14 or 30 day account terms: More common once you trust the stockist and have approved a credit limit.
• Pro forma invoice: You issue the invoice first, then only dispatch once payment clears.

Worked Example

Say Mia runs a Melbourne accessories label selling handmade hair clips to boutiques. Her opening order minimum is $1,200 plus GST. A new boutique orders 80 units at a wholesale price of $15 plus GST per unit, so the order is $1,200 plus $120 GST.

Mia's terms require 50% on order and 50% before dispatch. The boutique pays $660 upfront, including GST. When the stock is ready, Mia invoices the remaining $660 and dispatches only after payment clears.

This gives Mia enough cash to produce the order without carrying the full cost herself. It also avoids the awkward position of chasing payment after the boutique has already received and sold the stock.

If you do offer account terms, consider adding a credit limit and a right to pause supply if invoices are overdue. Without that, a retailer can keep placing orders while debt builds up.

Who Is Responsible For Delivery Risk, Defects And Returns?

Your wholesale terms should say who pays for freight, when risk passes and how returns are handled. If those details aren't written down, disputes can easily arise when stock is delayed, damaged or rejected.

For delivery, decide whether:

• you charge freight separately or build it into your wholesale pricing
• you offer free freight above a certain order value
• delivery dates are estimates or firm commitments
• risk passes when goods leave your warehouse, when the courier collects them, or when the stockist receives them
• the stockist must inspect goods and report delivery issues within a set period

If you want the retailer to take responsibility once the goods are dispatched, your terms need to say that clearly. You should also keep shipping records, tracking details, packing lists and photos of packed orders for higher value shipments.

Returns need a separate section. A practical approach is to split them into categories:

• Faulty products: Explain how faults must be reported, what evidence is needed and whether you'll repair, replace, credit or refund.
• Incorrect shipments: Set a process for reporting missing, extra or incorrect items.
• Change of mind: Say whether this is allowed. Many wholesale brands don't accept change-of-mind returns.
• Unsold stock: State whether you ever take back unsold seasonal stock. If you don't, say so clearly.

The Australian Consumer Law still matters in wholesale arrangements, particularly for misleading or deceptive conduct and false representations. However, a retailer buying products for resupply usually won't receive the same consumer guarantee protections that apply to ordinary consumers. Your end customers may still have rights against the retailer, so your agreement should include a clear process for genuine product issues that come back through the stockist.

If you retain ownership until payment is made, you can include a retention of title clause. For higher value or ongoing supply arrangements, you may also need to consider registration on the Personal Property Securities Register, commonly called the PPSR, so your interest is better protected if the stockist becomes insolvent.

Can You Stop Stockists From Discounting Or Selling On Marketplaces?

You can control some sales channels and brand presentation, but you need to be very careful about trying to control resale prices. Under the Competition and Consumer Act 2010, resale price maintenance is illegal, and the ACCC can take action where a supplier stops or pressures retailers from selling below a minimum price.

This means you generally can't:

• force a stockist to sell at or above your recommended retail price
• threaten to stop supply because a stockist discounted below RRP
• offer benefits only if the stockist agrees not to discount
• use a minimum advertised price policy if it effectively prevents discounting

You can usually provide a recommended retail price, as long as it's genuinely only a recommendation. Your terms and emails should avoid language that makes the RRP look mandatory.

There are still sensible ways to protect your brand without crossing the line. For example, your wholesale terms can deal with:

• approved use of product photos, descriptions and logos
• requirements not to alter packaging, labels or swing tags
• restrictions on selling through marketplaces such as Amazon, eBay or Catch, if this is commercially justified and properly drafted
• rules against misleading advertising or suggesting the retailer is your official flagship store
• limits on selling damaged, seconds or old-season stock without clear labelling

Marketplace and online channel restrictions can raise competition law issues if they go too far, especially if your brand has market power or the restriction affects competition more broadly. If this is central to your distribution strategy, get tailored advice before you roll it out across all stockists.

Branding is also an intellectual property issue. If you have a registered trade mark with IP Australia, your agreement should give the stockist a limited licence to use it only to promote and sell your products. You can also set brand guidelines for photography, product names, social media tags, packaging and display standards.

Should You Offer Exclusivity To A Boutique Or Online Retailer?

It depends on what the retailer is offering in return. Exclusivity can help you build a strong relationship with a great stockist, but it can also block you from better opportunities if the arrangement is too broad or too long.

Exclusivity might cover:

• a suburb, shopping centre, postcode, city or state
• a sales channel, such as online-only or bricks-and-mortar-only
• a specific product range or collection
• a limited period, such as 6 or 12 months

If a boutique wants exclusive rights to your jewellery range in Byron Bay, that might be reasonable if they commit to meaningful order volumes, brand presentation and regular marketing. If they want exclusivity across all of New South Wales with no sales targets, that may be too restrictive for your business.

Your exclusivity clause should cover:

• the exact territory or channel
• the products included and excluded
• minimum purchase targets for each quarter or season
• what happens if targets aren't met
• whether exclusivity renews automatically or needs written approval
• whether existing stockists are carved out

Competition law can also be relevant here. Exclusive dealing is regulated under the Competition and Consumer Act 2010. Many exclusive arrangements are lawful, but problems can arise if the arrangement substantially lessens competition in a market.

A balanced exclusivity clause protects both sides. The retailer gets confidence that you're not placing the same products next door, and you keep the ability to grow if the retailer doesn't perform.

If you're selling through multiple boutiques, online retailers and social media, you should also think about channel conflict. For example, your own website promotions may upset wholesale partners if you're constantly undercutting their margins. Your wholesale terms can't force retailers to match your prices, but your commercial strategy should still be consistent and fair.

Key Takeaways

• Wholesale terms help you set clear rules for minimum orders, payment, delivery, returns, branding, sales channels and exclusivity.
• A written wholesale agreement or stockist agreement is much safer than relying on invoices, emails or friendly conversations.
• Be careful with discounting rules. You can recommend an RRP, but you generally can't force retailers to sell at or above a minimum price.
• Your delivery and returns clauses should say when risk passes, who pays freight and how faulty or incorrect stock is handled.
• If you offer exclusivity, tie it to a clear territory, timeframe and minimum purchase targets.
• Branding and IP rules are especially important for fashion accessory brands, so your stockists know exactly how they can use your trade marks, photos and product content.

If you'd like help with your wholesale terms, stockist agreements, brand protection rules or sales channel restrictions, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.