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How to work with retailers when you're online based business?

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  • How to work with retailers when you're online based business?

    Hey guys,

    Quick question here.

    So I'm about to launch my own nutra supplement company that I've been working on for a long time now, I've already had a local location want to carry my product. I'm wondering how people usually structure these types of deals as I've only worked with online only based business. Owning my own brand and product is already next steps for me and I know I want to go into retail at some point and this will only help with possible sales and word of mouth but I need to know how to structure this type of situation. Do you sell them a case of product up front on a wholesale pricing and then let them sell it for retail? If so what do supplements usually sell for wholesale if they retail for say $50?

    Thanks in advance!
    Last edited by tc89; 05-30-2016, 03:34 AM.

  • #2
    Always going to want to negotiate price as high as possible.

    The more online traction you build and brand you build the higher $ you can command. Retailers what the sought after stuff in their stores.

    That's how Louis Vitton can sell for $1,000's etc

    Now with no branding or not very strong branding your typical supply chain looks like this.

    Manufacture for $50
    Sell wholesale for $100
    MSRP is $200

    Obviously this is t a hard fast rule but gives you an idea.

    A lot of this old model is being eroded with direct to consumer based prices from manufactures selling on Amazon, eBay and direct to consumer.

    we've had a slow steady shift to this model over the last 10-15 years.

    That's why as a marketer it's ideal to focus on brand and non-comodotized products. In the end comodotized products are going to be a race to the bottom.


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    • #3
      Originally posted by smaxor View Post
      Always going to want to negotiate price as high as possible.

      The more online traction you build and brand you build the higher $ you can command. Retailers what the sought after stuff in their stores.

      That's how Louis Vitton can sell for $1,000's etc

      Now with no branding or not very strong branding your typical supply chain looks like this.

      Manufacture for $50
      Sell wholesale for $100
      MSRP is $200

      Obviously this is t a hard fast rule but gives you an idea.

      A lot of this old model is being eroded with direct to consumer based prices from manufactures selling on Amazon, eBay and direct to consumer.

      we've had a slow steady shift to this model over the last 10-15 years.

      That's why as a marketer it's ideal to focus on brand and non-comodotized products. In the end comodotized products are going to be a race to the bottom.


      Sent from my iPhone using Tapatalk
      Thanks for the insight Jason!

      What would you do in a more high margin arena? Think fitness and nutrition, where margins are huge, if something you sell for $100 online (your cost is $10), would you sell it to the retailer for $50 wholesale? I think internal direct response ad campaigns will help with negotiation as it brings more eyeballs and also can cross promote them if need be. For me it would just be a small source of revenue as the main source will be from internal efforts.

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      • #4
        Do you sell them a case of product up front on a wholesale pricing and then let them sell it for retail?
        Yeah typically by case or pack and depending how they handle inventory control, the product might need a UPC and the case or pack might need a scanable code as well. Is it a local branch of a chain of stores or an individual store? They will probably expect terms as well. I'd start with payable upon receipt (of the product) and let them tell you if that doesn't work.


        What would you do in a more high margin arena? Think fitness and nutrition, where margins are huge, if something you sell for $100 online (your cost is $10), would you sell it to the retailer for $50 wholesale? I think internal direct response ad campaigns will help with negotiation as it brings more eyeballs and also can cross promote them if need be. For me it would just be a small source of revenue as the main source will be from internal efforts.
        I've sold a bunch of stuff to retailers, mostly big box retailers, but no supplements/nutra. This might be more work than it's worth if you are not planning to do much retail, but it's likely that most of the competitors on the shelves will probably have more overhead built in as well as Reps and Distributors so don't go too low. I would contact a Mfg Rep and/or a Distributor and tell them you have primarily sold online, have an aggressive promotion plan, want to expand into retail and you are looking for their services (mostly true . They can help you understand the landscape of the market, tell you what margins the retailers are working on in your category and you can figure it out from there.

        Your ability to promote online is a big plus for you. Many retailers have no clue how to do it or how much it costs so you can keep prices up, but it's also fair to say that usually retailers don't want to sell your product, they want you to pull through market it and they want customers to come buy it so hopefully that will work.

        You can find rep groups in retail trade magazines or ask the retailer you are talking with if they have reps or distributors that they like. There are quite a few supplement distributors out there.

        Good luck!
        Ideas are everywhere, it's execution that's in short supply.

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        • #5
          Originally posted by Eric View Post

          Yeah typically by case or pack and depending how they handle inventory control, the product might need a UPC and the case or pack might need a scanable code as well. Is it a local branch of a chain of stores or an individual store? They will probably expect terms as well. I'd start with payable upon receipt (of the product) and let them tell you if that doesn't work.




          I've sold a bunch of stuff to retailers, mostly big box retailers, but no supplements/nutra. This might be more work than it's worth if you are not planning to do much retail, but it's likely that most of the competitors on the shelves will probably have more overhead built in as well as Reps and Distributors so don't go too low. I would contact a Mfg Rep and/or a Distributor and tell them you have primarily sold online, have an aggressive promotion plan, want to expand into retail and you are looking for their services (mostly true . They can help you understand the landscape of the market, tell you what margins the retailers are working on in your category and you can figure it out from there.

          Your ability to promote online is a big plus for you. Many retailers have no clue how to do it or how much it costs so you can keep prices up, but it's also fair to say that usually retailers don't want to sell your product, they want you to pull through market it and they want customers to come buy it so hopefully that will work.

          You can find rep groups in retail trade magazines or ask the retailer you are talking with if they have reps or distributors that they like. There are quite a few supplement distributors out there.

          Good luck!
          Awesome Eric!

          Really appreciate your advice as well.

          For this angle I don't think I'd want to touch big box right now but more so just local locations if they reach out which happened already (LA so plenty of space and consumer money)

          Since it's online based there are no UPC codes as of yet, what would be the biggest hurdle with that? Do most expect it, even small local locations?

          "This might be more work than it's worth if you are not planning to do much retail, but it's likely that most of the competitors on the shelves will probably have more overhead built in as well as Reps and Distributors so don't go too low." What do you mean by going to low?

          Thanks in advance Eric!

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          • #6
            Probably only if they scan items at the register or maybe inventory control, just ask them. I buy bulk UPC codes at http://www.cheap-upc-barcode.com
            I'm not sure if small retailers would need it but if you add it to Amazon you will so might be worth doing it.
            As for going too low, if you think about all the costs you have now and price accordingly, then in the future decide to start using a rep and/or distributor, you don't want to price too low now and not have room for them and have difficulty increasing with customers. Also, if your competition is pricing based on using reps/distribution, and you don't, you might be leaving money on the table that you could get. Hope that answers the question, I'm typing on my iPhone


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            Ideas are everywhere, it's execution that's in short supply.

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