Wednesday, 11 August 2010

Supplying retailers

Moobaacluck is a relatively young business, not quite 2 years old and have made my fair share of mistakes.

A large part of my business is personalised artworks and wooden decorations; but I am developing a trade range for launch next April in Harrogate, which will still be handmade but each individual item should take less time to produce as I will be able to make them in batches. I will also be launching a small range of paper products.

 

The point is - each of these lines will I  need a different pricing structure. I  need to start somewhere and necessarily have to start costing and defining margins at the high end rather than the low because that is what came first.

Twitter is fabulous for firing off questions.  I'm very grateful to the people who RT ( retweeted) my question and of course to those that DM (direct messaged)

©Amanda Farren
Ella Announcements have a commendable approach; I really like the way Amanda clearly states what her terms are for supplying retailers. It is a confident message and everyone knows where they stand from the start. Thank you so much Amanda for permission to use your image and post a link to your site. You can follow "AmandaFarren" on Twitter too  Ella Announcements Trade terms  
And many thanks to retailer Angela Emery - MyFunkyParty for alerting me to Amanda 


I began my career on Notonthehighstreet.com where 25-27% on top of all packing and delivery costs is the norm. From what I can tell this is a normal commission for web only site.

The complication comes when you are supplying a shop that has a web site: what then?

Then the next stage: retailers, no website sales...

Retailers normally expect to double the price you charge them and then add vat; some actually make their retail price x 2.5 what you charge them and then add vat on top!! I found this to my cost when I was asked (before I had barely begun trading) to supply a major chain store in Norwich. My items were too expensive, not as well conceived as they are now and didn't sell. It was a strange situation whereby they made the order without even seeing some of the products and even asked me to come up with prints unseen. One day when I am more prepared I will go and see them again! These items were not personalised, although handmade so ought to have been a mid range product in terms of price.

The consensus with galleries seems to be a  50% +vat margin ; a jewellery designer tells me that she is in the wonderful position of supplying an independent shop specialising in local crafts who only take 20% and their website sales 25%.  (That partly answers my own earlier question) This same designer receives 50 % in a shop in the nearest city centre.

Another fellow Twitterer supplies samples of personalised high quality items to retailers at a discount for them to generate orders from. She tends to achieve 30% margins  but finds that there are shops that will not go that low, in which case she cannot supply them. 50% margins are just not worthwhile for an artisan personalised product.

It would be interesting to hear from any makers and suppliers to retail whether they achieve a 40% margin ( i.e making 60 % themselves). No one has mentioned that half way point -YES they have!! completely forgot! Nic - sorry. Nic always gets 60% - so retailer gets 40%. Just flung that in so)) :
which to me personally makes sense for hand crafted products that are not personalised but that are of very high quality in small quantities. I like things to be complicated.

As a top accountant I know said "Decide what you want and stand your ground - if they don't want you, you will find others who do" - thanks Mel. Really important to remember that.

Do you know any different? or would you be prepared to share your own experiences - whether seller or retailer?  I hope this "article" will help some one. Thanks :)

13 comments:

  1. We supply retail and wholesale... wholesale said we were too expensive.... I told them to take them sale or return and if on my return she had sold some she could eat her words.... Well she did! she takes 30% and and I take 70% She has sale or return on these terms which works well for us.
    Retail wise, I get some say its too much and fine they know their clientèle. But others order from me and come back time and time to restock.They are the ones I look after.... Stick to your prices, your time is worthy of your £££'s your very talented and each item is a little work of art :-)

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  2. Interesting blog post. I don't actually make personalised items to sell to retailers I make soap mostly but on the odd occaision I do make personalised items I only sell direct to the person who wants it. Most of my custom comes via twitter. I hope somebody else can help you better.

    Joy
    PS, when I used to work as Marketing and Events Manager for Made in Lancs Art and Crafts we found the norm for galleries was 100% mark up on items.

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  3. Hi
    Thank you for this, a useful post - I had been looking out for answers to your twitter questioning!
    I'm looking to start selling my stationery (which is handmade and could be personalised) to shops so this has given me a good start.
    Thanks again!

    Sophie (Cards by Sophie)

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  4. Interesting blog. I own a Gallery and take 20%-30% depending on item and on sale or return basis. I also produce my own ranges so sell wholesale to various shops/galleries/boutiques whos mark up including VAT is around 2.35% to 2.7%.

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  5. It's a perplexing balance ~ your time vs what people will pay at the counter ~ it's so dependent on product/customer base.... interesting blog. Basically I start with what I want and then add on - usually 30-40% depending on where it's going. Just love it when my customers come direct - they get so much more for their pennies! xxx

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  6. I supply my ranges on standard wholesale terms - i.e. the shop doubles and adds vat 2.35 is the multiplier I believe.
    This seems harsh on the maker (me) but having done retail for a while I now appreciate that shop/staff/rates/tissue/bags/risk of unsold stock etc. etc. cost a lot of money so I now regard it as fair.
    Sale or return and drop ship have different margins as the risk is with the maker and not the seller.
    I don't do much personalised work through shops - when I do I stick with the same margins as they have got the customer - they sort out the subject matter/text, take the risk and pay the postage.
    What I don't do is make things cheaper buying from me direct as I don't think that is fair on my stockists.
    Its a minefield but most wholesale businesses stick to the standard rate unless doing sale or return or drop ship.
    J x

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  7. This is a great post, thanks for updating on the twitter questions you tweeted earlier this week.

    I will link to this in the future when writing about aiming to supply retailers.

    Thanks
    Zoe

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  8. Great blog post Gabs. I think the thing to think about with selling handmade personalised items via retailers, is that the retailer does not have to buy stock up front. It is therefore not a risk for them to stock your products and because of this I believe 30-40% is a very fair margin for them.
    A x

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  9. A great post - will definitely be printing off for future reference! It can be a real minefield and if the retailer bites your hand off you don't know if it's your products or your (too low)prices they are really going for!

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  10. great comments, thank you all...
    Keep them coming! Gabs x

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  11. really interesting to read. thank you for posting it. i spend time making and designing my bags and always struggle to get the price right. in the end i go for instinct and i ask my family for their opinions then go for it. haven't sold to retail much but had 2 experiences. one where shop did 30/70 sale or return and one where retailer wanted me to sell to her wholesale for 50% of my price. i make mostly one offs so i stuck to my guns and refused the latter. glad i did.
    like your blog. niiiice.
    reddskingyal x

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  12. Hey you, just been catching up on posts! glad my rec of Ella Announcements has helped :)
    Keep me posted about your plans to wholesale etc your beautiful products in future!!!
    Yours colourfully, Angela x www.funkypartysupplies.co.uk

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  13. Gabs, I started off with handmade greeting cards and wedding stationery and did the tours round shops/galleries in Norfolk. I told them the price and they doubled it to sell, often working it by doing sale or return, which with the low quantities they wanted at the time (I was very small biz!) ended up not being worth my time driving to see them to stock up. BUT it was a huge learning curve and well worth doing as it made me value what I was doing more and rethink how I needed to function.

    It's always incredibly hard to stand your ground when you've created something but it is (as you're always told) incredibly important - it's easy to lower your prices but VERY difficult to increase them when you realise you've not priced correctly.

    When being creative you do need to keep the passion and when you know that you're not getting enough money for a job you soon lose that and focus on how it's not what you wanted.

    So I would say definitely stand your ground. Perhaps even create a price list for your main products and give the suppliers that - then it's much easier to say that's the price - no budging.

    You could even offer a discount to those that pay up front rather than sell on a sale and return basis - encourage an reward people who stump up the cash first but still offer the SOR for people as then you're not cutting your ties with the smaller retailers or people that want to try your products out before they commit.

    I know you sell on Twitter & FB etc but how about producing your own shop website to sell direct - you'll make many more pennies that way... If you brand your items you'll be the next Kath Kidson in no time! ;)

    You are incredibly talented and I have no doubt that you will do very well from it.

    Soph
    x

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