How Many Products Retailed from Website Wholesaled to Retail Shops?

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12 years 10 months ago #19516 by Toast
My business is ladies' clothing & accessories which I shall be selling to retail outlets.

The clothing will appeal to ex-pats overseas as well as others overseas.

At a recent business course (follow up session with advisor) I was told the retailers won't like me having a website to retail from & I shouldn't do it. Surely we're beyond that kind of thinking. I realise I would be their competition, but then so is the next shop in the next town.

There are heaps of products out there which are retailed from the website but are also sold wholesale to retail outlets. Some even have their own retail outlet in a building so that's a double-whammy.

Wet & Forget comes to mind. I'm sure there are dozens more.

What do you think?

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12 years 10 months ago #289360 by ronnie
Having worked in a company with the same issues I shall offer the following..... The company I worked for sold high end expensive, fashion coats and knitwear. They did have a website, but it was for information only as their retailers were not happy with the thought of them being in direct competition.
They also run a "factory outlet" shop at the front of the factory. They only sell seconds or overruns thru there for the same reason.

Now, I also have a website, where my products are available for sale. If I was selling to retailers at a level which was providing a reasonable income, I would be inclined to change my website to that of an information only site and point potential customers to my retailers.
Much as how it would be nice to do both, I think you have to decide which one provides an income and stick with it. If that is your retailers, just have an information only website and trust your retailers to provide you with an income.
If you look after your retailers, expect some loyalty back from them. They may offer your products thru their own websites.

But the information you have been given is, unfortunately, quite correct.

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12 years 10 months ago #289369 by wiredkiwi
Hey toast,

I come up against this all the time (I build websites for a living) and often a good compromise that both the wholesaler and retailer can live with is affiliate sites. If your retailer(s) have sales via their website, get them to give you a percentage of sales generated by your web site when you refer them to the retailer. And vice versa if your site will be doing the selling.

One of my clients had so much trouble with her retailers she actually created a new label specifically for online sales, and kept about 20% of her line out of stores and sold it online under the online label.

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12 years 10 months ago #289916 by Toast
Interesting. I'm doing courses through Trade & Enterprise & I broached the subject with another of the trainers who runs a business advisory service in Wellington. She was said she knows of several ragtrade situations where they do both.

As long as you charge retail price on the website & not undercut the retailers, it is no different to being another shop.

Also, my products will appeal to ex pat NZers overseas. I can't see the retailers taking the time to push their website in that direction unless they've got other tourist type things.

I'm going to contact some of these ragtrade ones with both & ask them about it. Starting with Hokianga Hats - I see their website sells to the public & it states trade enquiries welcome - strict minimum of 10 units per order (stops the public buying at wholesale rate).

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12 years 10 months ago #289920 by Seaside
Just out of interest (and sorry to hijack this thread, Toast), but if you sell products via a website but are thinking of approaching retailers (which I am toying with), what's the standard discount for wholesale?

So if I sell my product online for, say, $10 direct to the consumer, what would the shop down the road expect to pay for it?

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12 years 10 months ago #289932 by sssnake
If I may add my two cents here :)

I work for a tourism company, as such we rely on 'agents' to sell tickets for our tours. We also have a sales office in situ but up to 45% of sales are through 'agents'

They are on a blanket commission of 20% and I think (I'm not in the sales side of things) there is a performance bonus, something like more than ten sales the commission is increased

On the other side of the coin, as a purchaser, or consumer if you like, in my daily job quite often I will find a product online which I will endeavour to purchase direct from the supplier to cut costs, but more often than not the price will be the same as a discounted price (trade) through an agent. Given that I have no problem approaching an agent querying why I can buy direct at a cheaper price if I find that the case, my job is to operate my department as cost effectively as possible for the company I work for. I think the bottom line is to be consistent, whether someone buys from you or your agents the price should be the same when retailing


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12 years 10 months ago #289948 by Toast
Thanks sssnake. Agree that price must be the same as retailers.

Seaside - the price is best worked upwards to the retail price. I have just gone through the costing exercise with a professional althought I had done it before.

Add up all the materials to make the item, in my case: fabric, binding, trim, miscellaneous (price tag, plastic hanger for tag, labels etc), inward freight for the materials aforementioned, cost of cut & sew = cost, add on overheads (total of rent, power, phone, car, insurance, etc etc over the year divided by the number of products you wish to sell in a year - I've apportioned mine for different amounts depending on the value of the item), then add the profit you wish to make. This should bring you to the wholesale price which you would sell it to the retailers at. Retailers in the ragtrade tend to put 100% on top of the wholesale & then add GST. Outwards packing & freight goes in there somewhere.

This is a rough guide & there are other ways of doing it but very much need to make sure you've built in enough to cover all your costs and then to make a profit as well. I haven't included absolutely everything either. When you do it, you can understand why people are getting stuff made in China!

When I cost something I always think back to when the price freeze came in (early 1980s) & a woman who had started a deli in Auckland hadn't included the paper for salami etc to be put on, paper bags for selling & a whole lot of essential things that went with the selling. She was stuck with her pricing structure for the length of the price freeze (can't remember how long it went on).

I'm sure you'll get lots of advice on this from others on LSB. I'm doing courses funded by Trade & Enterprise which are free of charge. You can choose which courses to go to; most are 4.30-7.30pm, some are several weeks & some only one session. They have some excellent trainers & also offer a free one-on-one hour session with the trainer at a later date - excellent as you can tailor the learning to your business.

Good luck.

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12 years 10 months ago #290036 by wiredkiwi
Sounds like you have a perfect online market Toast that the retailers you supply can't match online. Go for it!

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12 years 10 months ago #290084 by Toast
Mmmmmmm - I would only need to ask a retailer what efforts they were making with promoting their website & I think I would be ahead of them, particularly overseas (I have to get a website yet, of course!).

I would also be asking them how they go about training their staff to answer the phone (what to say) & what to say to customers when they ask questions about my products.

See my post today re customer service!

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12 years 10 months ago #290102 by mikenz
Hi there, I've also considered looking into the retail side of things and was also told it's not really appropriate to supply retail outlets and sell online also.

I think a lot of it would depend on the sort of retail store and who you are dealing with. If I have a few products at a local surf shop down the road they are not going to be too concerned with me selling online either, but a nationwide chain is likely to be a different story.

However it can also become two seperate full-time jobs, running the online business and looking after your retailers. You have your products like Coca Cola, who pay for all the advertising of their products to the consumer, but for the retailers. Would you have to do this aswell? I guess that is something you would arrange in the contract and pricing?

If your products are available nationwide, but the retail stores stocking you aren't, I don't see any problem still selling online. It wouldn't be so fair though if you were undercutting their prices. If they want an exclusive deal though, there is no reason why you can't charge a premium on their price. Also what happens if they are not selling enough of the product for you, and you feel you could do better selling yourself online?

It's definitely nice getting those big bulk or retail orders, but as you showed with your costings, they can get very tight and start attacking your margins. About 90-100% markup is generally retail stores like is what I've been told.

Good luck with that, I'd be interested to hear how you get on and what you decide to do, please keep us upto date.

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