It’s a 100% MARKUP, but a 50% gross profit margin. A 100% gross profit margin would be selling something you got for free.

Since I’ve mostly been writing about the negative aspects of being a DE and a retailer (here’s my latest post), I need to put emphasis on the other side -the advantages of selling retail. First, you can show your entire…

I’ve seen that some stores want to be able to sell back unsold product. Is this something that is very common? And is this one of the AND THEY’s that you were talking about? It seems to me that it might be doable for some DE’s, but not for others. What does one do with product that has been bought back after being on display? Can you resell it? Or is it lost?

I’m trying to respond to some comments, and some are becoming so long, they will be separate blog entries.

But: it is only really feasible to take back merchandise if you have a longer selling cycle to your line (thus it will still be saleable if you take it back) or have the distribution channels to rid yourself of the inventory you buy back or swap out. Or you just make a lot of money and can afford to.

I have normally only seen swap outs from DEs that sell to department stores (and thus allow that) or DEs very eager for business. In other words, it’s not incredibly common.

There is a fine line between selling to retailers and financing a retailer’s inventory. And if you’re buying back or having such extended terms that you get paid after the selling season is over, you’ve really just gotten hoodwinked into consignment.

I have heard DEs who could not get paid by stores and the store said, well okay, come get your stuff. They had to go in and pick up their shopworn, high priced items. They were bullied into “consignment” and the store got away with it because the DE was new and inexperienced.

“Paying stores to carry your line” is a good way to end up not making any money. If your line is good, and truly good (in the eyes of retailers and not you and your friends) and you’re reliable, then you should not have a problem getting some level of retail distribution.

Now one way to get sell through stats as a DE is to do trunk shows, small fashion related sales events or other venues where you can talk directly to your consumers and get feedback. It truly is a good way to test market your line and get your consumer feedback and sales data. But you must be in the right venue because I see too many DEs going to the wrong market to sell and getting useless feedback. If you are truly confident and have a good line, I think a few retailers would take you up on your offer to have a trunk show so they can find out firsthand how well your brand sells.

I’ve seen that some stores want to be able to sell back unsold product. Is this something that is very common? And is this one of the AND THEY’s that you were talking about? It seems to me that it might be doable for some DE’s, but not for others. What does one do with product that has been bought back after being on display?
Can you resell it? Or is it lost?

Hmmm…as a retailer, I think I only worked with two companies that would “buy back” unsold items. And both were companies with proven sellers. I think that’s a great example of “And they…”.

With exchanging merchandise, it often worked like this:
I’d buy three cases of product; a case of whatsits, a case of widgets, and a case of gizmos.
Often, a month later I had sold all of the widgets, and people were asking for more. But maybe I only sold two or three widgets, and NO gizmos. With merchandise exchange, I’d box up all of the unsold gizmos, and half of the widgets. And I’d get another case of widgets, and sometimes half of something else if they’d break a case -some companies won’t, and that’s understandable. If they wouldn’t break a case, I’d take a credit for the extra widgets. With buyback, it would be much the same.

Usually, the items are resalable. In fact, I think most companies have pretty strict terms for what they’ll take back -nothing shopworn, no stickers, no writing, etc. They can simply acknowlege their products didn’t work for me, and resell it to someone else. And I can try again if they come up with something new or if my demographics change.

BTW, sorry if the format of this post is funky. Reply forms kill my browser, so I have to cut-n-paste.

I’ve found that retailers are extremely busy people and have budgets that limit experimental purchasing. They love the products, but that isn’t always enough. Star-up DE’s have a more difficult time persuading retailers to make the first purchase because they don’t have any sell-through statistics yet. So it’s a slow start building up a reputation brick by brick.

I’ve seen that some stores want to be able to sell back unsold product. Is this something that is very common? And is this one of the AND THEY’s that you were talking about? It seems to me that it might be doable for some DE’s, but not for others. What does one do with product that has been bought back after being on display? Can you resell it? Or is it lost?

First, retailers quickly learn that everything on the shelves is “eating”. It can’t sit there forever costing rent, utilities, labor (even if just being dusted everyday, that time adds up to $$). The stuff has to sell, and it has to at least make back the money it has cost -the inital price, the shipping cost, and the space & other stuff it “ate” while in the store. And that doesn’t even account for shrinkage -items damaged or stolen.

As was stated, there’s never a shortage of stuff to sell. Ever. There are enough venders hawking products to fill a warehouse everyday -good, quality, nice stuff that anyone would be proud to own. But the retailer has to pick and choose according to what his (or her) customers will buy, and NOT according to what he or she likes.

I quickly discovered that I would sell a cheap, poor quality item to the same customer three times before that person would step up & buy one that cost more but would last longer. I learned “fad” items will sell faster and for better prices than well-made less trendy items -everytime. And no sale was guaranteed until after the return period. People will buy it, take it home, use it, clean it…and return it. And then, even if the item was resaleable, I was often stuck with an “orphan”. That is, having one of something on a shelf when all the others left a week ago….

Someone asked what is the “And” that will make a retailer buy. For me they were:

Guaranteed sales -if the item doesn’t sell a particular percentage within a set time, it will be replaced -for free- with something else.

A guarantee to repair or replace an item that is damaged. If they’ll do that without the customer having to send it directly to them -or worse, to someplace I’ve never heard of- so much the better.

Liberal payment terms and small initial minimum orders. For a retailer, paying for a truckload of something unproven, can be the kiss of death. Once you’ve bought it, you’re stuck with it. Throwing it away is a total loss. And once you begin marking stuff down to get rid of it, you’ve created a monster -people will wait for the sales, and won’t buy at full retail unless they’re forced to.

Letting me know ahead of time if they’re out of something. There’s nothing worse than running an ad -which has to be ready in November, for a product that’s supposed to arrive in December, then not receiving the merchandise on time. Not only does it cost me the price of the ad, but it makes my customers feel like they’ve been baited. And, if that’s not enough, I have ‘holes’ in my shelves where that product is supposed to be.

Last thing – I HATED manufacturers who sold directly to the customer. I dropped some of my biggest and best products when they started selling on the internet to anyone who happened to click.

First, they usually offered a better discount I ever could -or even sold directly at my cost- leading my customers to feel I was overcharging.

Second, they knew much further in advance when things were going to be available, or when a particular item was running low. This guaranteed their customers were never stuck waiting -and I suspect they were filling the individual orders first, and then allocating the leftovers to the stores. So NO store would or could have the same variety of products that anyone else had. At best, a customer looking for a particular item might have to visit two or three stores to find it.
Third, they simply stopped supporting the stores the way they had before. They no longer cared if they sold a dozen items to Jones, because they would eventually sell two dozen to individuals, and they could afford to wait. They didn’t have the same pressure to always have new products or to keep the inventory moving.

I’m sure there’s more…but that’s what comes to mind right away. :)