The Surprising Lesson a Billion Dollar Retail CEO Taught Me That Changed How We Approached Wholesale Expansion at Chubbies

Chubbies was acquired for 9 figures and went through a 10 figure IPO. A huge reason for the acquisition was a successful wholesale expansion. This may never have happened without a happenstance conversation with the owner of our earliest major wholesale partner about avoiding the pitfalls of wholesale expansion.

At the time, we had just received a massive purchase order that would have 10X'd our small wholesale business...from buyers at his company! Without this conversation, I would have succumbed to all the pitfalls.

No brand should have to become yet another cautionary tale, so here are:

1) Three things I learned from the conversation
2) Three ways you can update your thinking on the topic right now
3) Three questions to ponder

Let's do it.

** Three things I learned from the conversation

1. "The only thing that matters is to make sure you always have more demand than supply," he said.

2. He told us that the best brands he'd worked with were not maximizing "today". They were focused on building a long term relationship with their retail partners. Even if they have the buyer wanting more product, they knew going too fast could compromise the long term relationship.

3. And finally, he told us to always have options when building wholesale partnerships. In the same way we never want to have more supply than demand, we never want to be in a position where we need a purchase order, or need a particular wholesale partner.



Three ways you can update your thinking on the topic and questions to consider **

1. LVMH CEO Bernard Arnault: "Growth is not, must not, be a goal. The goal is desirability. People must desire the brand." If you're getting into conversations with early wholesale partners, this could mean a huge increase in revenue, basically overnight. The important thing to learn is that's not the main goal.

To ponder: Are we chasing growth at the potential expense of desirability?


2. Warren Buffett: "We always, of course, hope to earn more money in the short-term. But when short-term and long-term conflict, widening the moat must take precedence."

To ponder: Is the growth decision (wholesale or otherwise) maximizing my probability of building a long term relationship and widening my moat? Or, do I just want the ego boost from being able to tweet that I'm going to be in 3,000 Walmarts next month?


3. Dave Powers, CEO of UGG's owner: “Unless you just have a brand that also is in wholesale, has the margin structure to be successful at wholesale, and is important enough on its own to sustain the growth versus just digital marketing spend. A great brand, meaningful to consumers, will outlast the marketing spend”

Strengthening your brand builds resilience, price insensitivity, and optionality where you don't need any particular purchase order, or don't need to run your direct response ads perfectly today in order to hit your daily number.

To ponder: What can I do today to reduce my brand's "needs"?