Wholesale clothing generally refers to clothing purchased at the price that retailers pay when buying direct from the manufacturer. Most of the time, in order to purchase wholesale clothing, the buyer must purchase in lots. Lots are broken down into design, color, and size. In many cases, the number of lots purchased has a great impact on the price paid for the lots.
Purchasing wholesale clothing is generally seasonal. Buying for fall lines usually takes place in the spring, while spring and summer purchasing typically takes place in the fall. This gives the manufacturers plenty of time to manufacture and ship the garments that are ordered. Once the retailers receive the wholesale clothing, they typically mark up the price well beyond what they originally paid. This markup is sometimes more than 200%.
The sale of wholesale clothing to various retailers usually takes place at what is called a “merchandise mart," which is similar to a large trade show. Various manufacturers bring samples of their clothing lines so buyers can look them over and decide what clothing they want in their stores. These shows frequently take places months in advance of the season for which the clothing is needed. This gives the manufacturers plenty of time to produce the number of garments that are ordered.
In order to gain an edge on their competitors, sometimes retailers arrange for clothing lines to be sold to them exclusively. To gain exclusive selling rights, the retailers typically must agree to purchase all the lots produced. This often results in overstocking of merchandise. When this occurs, the retailers sometimes run sales in their stores, offering the clothing at prices that are at or near the wholesale price. These sales usually occur when fashion seasons are coming to a close.
In many cases, even after large price reductions, retailers may end up with unsold inventory. When this happens, retailers may even cut the price below wholesale cost in order to sell the clothing at all. This clothing is typically bought by liquidators, who then sell the fashions to various discount outlets.
Corporations and businesses who order the manufacture of wholesale clothing are often located in the United States or Europe, however, the actual labor involved in creating wholesale clothing is usually outsourced to manufacturers in developing countries. Wholesale clothing is frequently manufactured in countries where labor and operation costs are low, such as China and other parts of Southeast Asia. Some economists argue that outsourcing jobs in the textile industry may have led to trade imbalances, especially between the United States and China.