To approach retailers (wholesale accounts) or sell our products ourselves

[fprat]

We are new start up company and are not sure which direction to take: e.g. sell to our products to retailers (via wholesale accounts) or sell them direct to the public ourselves via our website.

We are currently doing both, but have found that b/c we have had to increase our prices, due to the retail focus, we are not getting direct sales from our customers. Retailers are also not stocking our product as they believe the product will not turn over as much as other products and they do not have the floor space.

If anyone can help with this topic we would be greatly appreciated, and how do you convince retailers to stock your product when they are pressed for space.

[SallyM]

What is it you are selling?

[Fergal]

Welcome to Business Advice Forum fprat.

Why did you have to increase your prices "due to the retail focus"?

Retailers are primarily driven by sales and profit. If your product will sell for them and they can make a profit on it, they will most probably be happy to stock it. Shelf space is a difficulty when you approach any retailer. The retailer will be asking him or herself what product will I remove from my shelf in order to stock this new product. You need to be able to demonstrate to the retailer that your product will be more profitable for them than some of their existing lines.

I've heard of some pretty sharp practices by existing food and drinks producers, when they face new competitions. These companies will sometimes give huge discounts to retailers in return for the retailer agreeing to not stock the new entrant's product. E.g. for every case they sell to a retailer they give four cases free, provided that the retailer doesn't stock the new product. It is very difficult for new companies to compete with that type of unfair competition.

Sometimes it helps to stay under the radar for a while and hope that the established competitors do not become aware of you until you too have established some foothold in the market.

Have you thought of any incentives that you could offer to retailers. You might consider offering some product for free (e.g. 3 for the price of 2) or offering the product on a sale or return basis.

Do you know how your competitors' products are doing, are their sales increasing or decreasing?

You suggest that you are not happy with direct customer sales from your website. Is this because you are not getting enough visitors to your site or is it because the visitors that do arrive on your site are not buying?

[Nazreen]

I think it would be good to focus on one thing first: either sell directly to customers or sell to retailers. Not both. The reason I said this is that if you sell to both, then you will then be competing with your retailers. If I was one of your retailers selling your merchandise, I will also be very angry if you compete with me. Since you're the one who manufacture your products, you'll be in a better position to give a better price/offer to customers.

[fprat]

What is it you are selling?

Pet strollers for the aged, injured, recently operated etc. But also for the pamphered pooch.

[Fergal]

Pet strollers...

That's a new one on me, I never knew such a thing existed.

What's your opinion on the advice and tips you have received in this thread.

Once you have 5 posts you can advertise for free in our Member Ads (http://www.businessadviceforum.com/forumdisplay.php?f=11) section.

[fprat]

Welcome to Business Advice Forum fprat.

Why did you have to increase your prices "due to the retail focus"?
Because we want to sell to retailers at wholesale prices say $99, when we previously sold our strollers for $150 by the time you add freight their margin on a high priced product is low and basically not worth the effort. So we had to increase our prices from $150 to $200 and are finding that people are no longer buying from us...and unfortunately neither are the retailers. So are stuck in a rut.

Retailers are primarily driven by sales and profit. If your product will sell for them and they can make a profit on it, they will most probably be happy to stock it. Shelf space is a difficulty when you approach any retailer. The retailer will be asking him or herself what product will I remove from my shelf in order to stock this new product. You need to be able to demonstrate to the retailer that your product will be more profitable for them than some of their existing lines.
How can l demonstrate this? Statistics, e.g. 1 in 5 dogs have athritis, etc.

I've heard of some pretty sharp practices by existing food and drinks producers, when they face new competitions. These companies will sometimes give huge discounts to retailers in return for the retailer agreeing to not stock the new entrant's product. E.g. for every case they sell to a retailer they give four cases free, provided that the retailer doesn't stock the new product. It is very difficult for new companies to compete with that type of unfair competition.
Just great, hopefully we go under the radar.
Sometimes it helps to stay under the radar for a while and hope that the established competitors do not become aware of you until you too have established some foothold in the market.

Have you thought of any incentives that you could offer to retailers. You might consider offering some product for free (e.g. 3 for the price of 2) or offering the product on a sale or return basis.
We once offered 50% off, which is below cost for the first order, but no one budged! I was thinking about offering the stroller on consignment but then thought we may have troubles if the stock is stolen. I may say something like pay half now and half once it is sold. ??

Do you know how your competitors' products are doing, are their sales increasing or decreasing?
Their prices are significantly lower than mine, even as low as $60, but their product doesn't look as good as ours.

You suggest that you are not happy with direct customer sales from your website. Is this because you are not getting enough visitors to your site or is it because the visitors that do arrive on your site are not buying?
No, you must have misinterpreted what l said. I would love for people to buy direct from us, as this will generate a higher return, but thought to focus on retailers (silly me) and now think that if l turn around and say na sorry we are going to be cheaper than you, the will get cut and never buy from us again.


Thanks for all your tips, much appreciated.

[fprat]

That's a new one on me, I never knew such a thing existed.

What's your opinion on the advice and tips you have received in this thread.
Very good thank you.
Once you have 5 posts you can advertise for free in our Member Ads (http://www.businessadviceforum.com/forumdisplay.php?f=11) section.

Look forward to receiving more advice.. :)

[Fergal]

fprat sorry for the late reply, I was out of the country for just over a week.


How can l demonstrate this? Statistics, e.g. 1 in 5 dogs have athritis, etc.

Do you by any chance have a flagship retailer that you can use as an example case study. E.g. we have a retailer in x town / city and they have been selling x units per week making a total weekly margin of $x's?

Statistics are a good idea, especially if you have figures that suggest there is a strong demand for your product.


I may say something like pay half now and half once it is sold. ??

Sounds like a good plan, you could try it out on some retailers and see how they respond. You may decide to tweak the offer once you've had some feedback from retailers.

Would you mind sharing a link to your website with us, obviously there's no problem if you'd prefer to keep it confidential?

What level of sales do you need or want from your business? For example if you only need to sell five units per week you might want to focus solely on generating sales from your website, at this time. If you need to sell much larger quantities you will probably need the support of retailers.

Have you considered selling your product on eBay or through an online retailer like Amazon?

Are you manufacturing the pet strollers yourselves?

[fprat]

fprat sorry for the late reply, I was out of the country for just over a week.



Do you by any chance have a flagship retailer that you can use as an example case study. E.g. we have a retailer in x town / city and they have been selling x units per week making a total weekly margin of $x's?
Yes, but no one is really buying consistently. They are all interested but don't necessarily come back regularly.

Statistics are a good idea, especially if you have figures that suggest there is a strong demand for your product.



Sounds like a good plan, you could try it out on some retailers and see how they respond. You may decide to tweak the offer once you've had some feedback from retailers.

Would you mind sharing a link to your website with us, obviously there's no problem if you'd prefer to keep it confidential? Prefer not to say here but if there is a private email l can send you the link.

What level of sales do you need or want from your business? For example if you only need to sell five units per week you might want to focus solely on generating sales from your website, at this time. If you need to sell much larger quantities you will probably need the support of retailers.
Yes, l need to do this.
Have you considered selling your product on eBay or through an online retailer like Amazon?Ebay is great, but margins are very low, everyone wants a bargain there. Not Amazon yet.

Are you manufacturing the pet strollers yourselves?
No, they are imported from China.

[simplyjo]

Considering that you sell Pet Strollers, it is likely that the community interested in such products is very niche. Affiliate marketing might be one good way to go ahead.

[Fergal]

...Yes, but no one is really buying consistently. They are all interested but don't necessarily come back regularly.

Perhaps you need to be a little more proactive and keep in regular contact with them. Make follow-up calls and contact, don't wait for them to contact you.


Prefer not to say here but if there is a private email l can send you the link.

Maybe you could please PM me (http://www.businessadviceforum.com/private.php?do=newpm&u=1) with the link.

You have received feedback from retailers as regards the price that they need to sell the product at, in order for it to be profitable for them. If this price is too high you need to give this issue some serious thought and analysis.

Is there anything you can do to reduce the price that you sell to retailers at - maybe you can source the products at a lower cost? Are there features on the product that are adding to cost but that are not valued by customers, could these features be removed in order to reduce costs? Can you differentiate or package the product in any way, so that your customer perceives it to be of higher value - perhaps an additional feature that they value or something like a guarantee / warranty?

These are all just ideas that you might like to consider, it would be difficult for us to prescribe exactly what you should do without a full knowledge of your business.

Please reply back to let us know your thoughts.