Biz Miss

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My Distribution Deal November 10, 2008

This week I sucked it up and contacted a distributor.  I had been avoiding it for a long time because I didn’t think I could afford it.  After all, most distributors take about 20% of your wholesale price and I was doing fine on my own getting local stores to carry Sweet Meats.  I even had stores from other cities, states and countries contacting me about carrying my products.

But then I hit a wall.  I had a hard time finding stores outside of San Francisco that would be appropriate for Sweet Meats.  Those that I did find rarely responded to my cold calls (or cold e-mails) introducing my products.  Even those stores that contacted me weren’t responding when I followed up with line sheets and order forms.  I was spending many hours each week trying to drum up new wholesale business, which is only getting harder the more the economy tanks.

So I contacted a distributor.  For the past two years I’ve been getting his wholesale newsletters, so I know how hard he pushes for his clients.  He was also a customer of mine a couple of years ago and several of my sisters-in-plush use him, too, so I know he’s honest and reputable.  His 20% commission definitely takes a big bite out of my profits, but I figured I’d end up paying that much in warehouse storage before I sold everything anyway.

Our conversation was incredibly simple.  He already knows my products, and I already know his company, so there was little needed in the way of introductions.  What I didn’t know, however, is that his is not a drop-ship business.  He warehouses all of his clients’ inventory–for free!  This made the deal infinitely sweeter. I currently pay about $150/month for storage (it started higher, but has gone down as my inventory has decreased).  That means that I’m not losing any money at all on his commission for the first $750 in monthly sales.  I don’t know if such a set-up is the norm, but if I had known, I can tell you I would have called this distributor six months ago.

The lesson?  If you’ve just started your own line, there’s no harm in calling a few distributors and comparison-shopping.  There might be savings in the deal that offset an otherwise unafforable commission.  Now that I no longer have to worry about my wholesale accounts I can focus my time and energy on my retail business, which pays twice as much per sale.  Win-win!

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3 Responses to “My Distribution Deal”

  1. Vicky Says:

    That sounds great! I’d love to hear how it works out. We have been looking for reps and distributors as well. Are you be open to sharing his name?

    Your “Sister in Plush”<:

  2. bizmiss Says:

    Hi Vicky,

    Thanks for your comment. Unfortunately my distributor only handles designer toys, like limited-edition Japanese vinyl figurines and plush monsters. He doesn’t really handle the kids’ market at all. My advice would be find a similar product to yours and Google the company/product name along with the word “distributor” and see what you get. You could also find a non-competing product that sells in the same stores you want to have carry Pilloroos and see if they’ll share their info. Have you already looked into trade groups and publications for the toy industry? There are a few distributors who list their info there. If you visit http://www.toysource.com/resources/trade/ you’ll get a list of groups by country. These guys: http://www.wthra.com/members.html are based in CA and have some members that are trade reps, like these folks: http://www.insidepassagereps.com . Hope this helps!

    Lauren

    • Paige Says:

      Hi Lauren,

      I just discovered you tonight and am so grateful for all the helpful information you’ve shared! Thanks! I’ve been in business (full time) about a year and a half and have faced all these challenges. Not that I wish these challenges on anyone else, but knowing others are having similar experiences is very comforting… (like stores that contact YOU not following through after you send wholesale info). I just got a distributer who is on her first sales trip with my samples and my toes are crossed that I can say goodbye to the dreaded cold calls! Good luck and I look forward to following your future posts!

      Paige
      http://www.paigerussell.com
      blog: http://www.paigeandmodern.com


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