Compromising with Retailers

Posted by Miracle Wanzo on Nov 25, 2005 at 12:11 pm / Sales and Marketing / Trackback

Julie wrote a wonderful post, and Jinjer felt some items were not feasible for apparel manufacturers. Here is a compromise

1) Send me a free sample (and don’t charge me for shipping it, either). I love samples!

Many brands make promotional items just for market week and they give these items out to retailers who place orders. For example, I visited a showroom to view a line of contemporary casual lounge wear. As a sample, they gave away their tank tops which were relatively inexpensive to produce. Other brands have given away old stock to retailers who write orders. To retailers who write orders. I thought this was great because I got something to wear for myself and I got a chance to realize how great it really felt to wear.


When you see a line, you typically aren’t trying it on unless you fit their sample size and even then, most buyers aren’t going to try clothes on at a trade show -maybe in a showroom- they do this all the time, many apparel showrooms have dressing rooms. So getting a sample when you order is a great way to get an item from that brand, wear it, give it to a customer let them give you their feedback or whatever. It works well when you can do it. This is not always feasible for everyone.

Having said that, it is difficult for many DEs to offer samples to retailers. For one, you don’t have samples unless you stock your line. If you’re a pull manufacturer, then your only samples are your actual *samples*, which cost you a heck of a lot of money to make. Even larger manufacturers make one set of samples for each sales rep and if they are lucky, two sets for themselves. So there are no samples to send. If you are a push manufacturer, then you have stock from which you can pull samples. So what can you do? You can send out of season stock or excess stock of inexpensive merchandise, if you have it. And if you don’t, well then you just can’t do it. This is one reason road reps (traveling sales reps) are beneficial, because they can show the line to retailers who didn’t go to market, or didn’t see the line at market.

2) Guaranteed Sales/Merchandise Exchange Program.

This one is tough to offer. Because clothing gets shop worn if handled too much. Either you can or you can’t.

3) Throw in a free displayer. We’re always at a premium for shelf space.

This is something you really can offer if you have shelf items. Many companies offer a free display with a purchase of X units, because that display fits X units. One brand had underwear that was packaged so that it would stand upright. The display looked like a wire desktop letter organizer, with a wrap around it with their brand logo and information about the promotional item (it looked like the business card holder, but had different dimensions that fit the product perfectly and looked a lot better). It wasn’t horrifically fancy but it worked. It doesn’t have to be fancy and cutting edge, and you often can use existing merchandise display ideas from other industries and buy ready made displays and just add your own information and artwork.

I am so excited about this concept because I love merchandise displays so much. I love it SO much. I don’t think manufacturers do enough to merchandise their items for the retailer. Some day, I plan to write an entire post on how DEs can help with retail merchandising because it is something few do. And granted, every company can’t do it because a store looks hideous with too many displays.

Displays are beneficial, especially if many of you have a product that has a story. Get creative. Borrow from other industries, because every other industry merchandises better than apparel. Especially food, you learn a lot about merchandising and packaging from the food industry, and if you don’t like food, try gifts or bath and body.

4) Offset merchandise. This means that for every case purchased, two or three extra items are included -free- to help offset a retailer’s costs for items that are damaged or stolen

Many companies do this when the product is relatively inexpensive. The problem a lot of DEs have is that retailers are ordering one across the line. For example, if you have S, M, L and XL, many stores are ordering one of each size, you have absolutely no room to offset anything.

This is where differences in industries come in. In the gift industry, some things are case packed in cases of 6, 12, 24 units, etc but many DEs often only require a minim order of four pieces per style. If all a retailer orders is 4 pcs, then you cannot offset, because you don’t have a case pack. What you can do is allow an allowance or bonus based on total dollar amount of the order and I have seen companies that do this. However, the minimums are often $500 to $1000 or more to get the freebies. In addition, the minimums per piece to get an offset are often 12 or 24 pieces, which you cannot do.

5) Free promotional ideas, give-away samples or end-user incentives.

Do it!

6) Shared advertising

The only companies that I know of that are doing this in apparel are “department store brands” and by that I mean they have large department store distribution in Macy’s, Sak’s, Nordstrom, etc. The co-op ad dollars are a matter of necessity (as the retail chains require it). I just can’t think of any that offer co-op ad dollars that aren’t large brands. They require very large annual order minimums to be able to get co-op advertising dollars. As a DE, if you have the money you can definitely consider offering co-op advertising dollars to your larger retail accounts, but the problem you can have is spending money on ads when the retailer is not buying good ads. Many retailers are using co-op ad dollars because it reduces or eliminates their cost, thus they may not make the best advertising decisions. So you definitely have to manage that.

However, I think that if you cannot give a retailer co-op ad dollars for an advertising campaign, you definitely should provide them with some support if they are going to advertise your brand. For example, if they are advertising for fall back to school promotion and are going to feature your brand, you can definitely send them some merchandise to sell and allow them to send back what doesn’t sell (within a week or two after the sale) to allow them to have a lower risk and you can get rid of any pieces that are excess stock (because of canceled orders or because of what you normally overproduced as a buffer), or you can give them a break on pricing if they are going to feature your items. One company I work with gave me payment terms because I was running an ad with their product.

7) Replacement of lost or damaged items (for the customer).

This is a difficult one because if your items are defective, you should take it back but consumers “break” clothing all the time, especially -no offense- women who try to squeeze into something too small. I know one manufacturer of handbags who will repair the bag or the zipper under a lifetime quality guarantee because they stand behind their product. So you can definitely offer this but do so within reason.

8) I can’t tell you how many wonderful products I passed up just because I couldn’t take the chance. So, a small minimum ($50. -$100.), and a 30-day-same-as-cash policy would be a good way to help relieve my doubts.

This one I have to comment on because I have read this before. Many of you DEs can’t offer a minimum that low. I’ll tell you what *my experience* has been with minimums. If the manufacturer was a pull manufacturer (meaning they showed a line, took orders, and then manufactured based on the orders they took), the minimums ranged from $250 to $500 and were at least 4 pieces per style. For some of you a $50 or $100 minimum order is 2 pieces, 4 pieces, if that, and if there is no minimum per style (meaning they can order any two pieces from your line in any style, color or size), managing production on that is a nightmare.

Push manufacturers (those who manufacture and then sell) often do have lower minimums and those are the ones who will let you order $100 worth of goods.

I just want to point that out. Your average wholesale price is $25, and you have four sizes in a line (S, M, L and XL), then a $50 minimum isn’t even one piece per size. If you feel compelled to offer a low minimum, then make your minimum order X pieces per style, per color. X number of pieces depends entirely on how many sizes are in your line.

For example, many lines that are sized P/S M/L or S/M M/L require 4 pcs per style, per color. So that retailer ends up with 2 pcs per size, per color. Many brands that are S, M, L, XL, have 4 pieces per style, per color, so that a retailer has one of each size. If you have a sized line such as 2, 4, 6, 8, 10, 12, then you might want to have 4 pcs per style per color because you don’t want to force a retailer to order size 2 if that’s not their market.

The devil of clothing is size and color combinations. Oh, the grief. It’s one of the reasons I could never sell shoes. Size 5 through 10 and half sizes too? Even if you only stock shoe sizes 7 through 9.5, that’s still 6 sizes. One of the things that bothers me most as a retailer of apparel items is the sizes. See, if I wanted to sell clocks, I could buy two clocks. But if I want to sell clothing, well I can’t just buy two pieces, I have to buy at least one in every size, more likely two pieces in every size, and many times, more than two pieces in every size if it’s a good seller. So just by nature of the product, a retailer shells out more money just to get your product, because they can’t just purchase one or two, they need to represent the sizes.

So it is inherently more expensive to purchase an apparel product because of this. I actually had this debate (okay argument) with a friend because when you are a retailer everybody wants to retail like you do -and she wanted to sell high end women’s shoes. I told her that she didn’t have the money for it. She wanted to argue. So I said like this:

Those $300 shoes look cute, but if you want to sell them, they wholesale for $150 (just a hypothetical) and you need one size 6, one 6.5, 7, 7.5, 8, 8.5, 9, 9.5. If you only ordered one piece in each size that’s costing you $1200 just to buy that one style. Even if you take off the size 6 and 6.5, you’re still in for over a grand for EACH STYLE. Now you figure you need 30 styles just to look decent (and I’m sure the average shoe store carries much more than 30 styles), you’re talking about…. you can do the math. And even with shoes, many companies do case packs, something like 1 1 1 2 2 2 1 1 1, where you get 2 pieces of the middle styles. I hope you DEs know what I’m talking about (1 pair size 6, 2 pair size 8, etc…)

So as DEs, please keep this in mind when you establish your minimum orders. Look at how much money a retailer has to invest in each style and figure out if it is reasonable.

4 Responses to “Compromising with Retailers”

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Christy Fisher
November 25th, 2005
1:30 PM

You ROCK.. Thanks again..
I was stewing over the same parts of that post myself.. You put the realities together quite nicely.. THANK YOU!

og
February 25th, 2007
11:07 AM

I want to submit my designs to a retailer. However in order to do that, I have to figure out the wholesale price. How do I do that?

[…] look over the entries in the sales and marketing index. There you’ll find everything from negotiating with retailers to the top 10 buyer complaints. At the same time, you need to know why the relationship between […]

Donna
December 4th, 2011
8:26 AM

I got as far as “free samples” and it triggered memories of going to The Mart in LA to the Sat sample sale. Clothes weren’t free but darn close.

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