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Skechers' wholesale partners provide reach and scale Although Skechers' company-owned stores provide strategic supply chain advantages, these stores can't provide the volume and scale needed to reach its customers across the U.S. and globally. Wholesale partners enable the company to reach 15,000-plus doors in the U.S. without significant capital investment from Skechers or hiring retail staff. Internationally, wholesale partners can allow Skechers to test new cities/regions without a large commitment, or to scale up sales in a country with minimal effort. The downside of wholesale partners is not read just lower gross profits, but Skechers loses item visibility once the product is shipped to the partners. Skechers accounts for estimated returns, discounts, doubtful accounts, and chargebacks at the time of revenue recognition to wholesale partners, but these charges were only $7.5 million in 2015, less than 0.5% of total revenue. Skechers has kept a balance of wholesale partner and company-owned retail stores to take advantage of the best of both business models. The percentage of revenue from retail stores has slightly decreased from 30% in 2012 to 27% in 2016 (see below chart), but this is mainly due to the international wholesale segment's faster growth rates. Image Source: Author's chart from Skechers' earnings releases.
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