I was recently reminded by my business friends, Mckenna Hallet and Carolyn Edlund about the importance of Creating Partnerships with Your Retailers. (NOTE: We talked a bit about this in one of my recent post: Selling Wholesale vs. Selling to End Consumers.)
Retailers take a big risk when they first buy your products — will they sell? will their customers like the new items? can they spare the shelf space? …. Lots of things go through the store buyers mind before they actually place their orders. And that is just the tip of the iceberg.
Unfortunately, many gift makers are appalled when they find out how much a retailer marks up products someone else made! Of course, you will find this true in nearly all retail businesses: most of the price you pay at check-out is the cost of distributing and presenting the item to the end consumer.
For example, a few years back a candle maker I represented, decided to retire. I looked high and low for a new company to replace her. Several different candle companies contacted me, so the prospects looked good. But when I asked each to send me a wholesale/retail price sheet, I was shocked by what I received.
One gal I ran across made beautiful candles. I wanted to represent her, but her wholesale price was 80% of her retail price! And this was not atypical. Eventually, I did find a producer whose pricing structure would work, but it took a long time …
With all the investment of time, supplies, and raw materials that go into a gift or gourmet product, it’s hard to appreciate that a retailer needs to double your wholesale price to stay in business… but that IS the general rule of thumb! Again, gift stores operate mostly on the basis of “keystoning” or at least doubling the wholesale cost(s) to get to a retail price.
WHY SO MUCH? After all, you put in the time, bought the materials, and made the product, right? Don’t they just stand around at the cash register and ring up the booty as crowds roll in and out?
Please understand that even a SMALL gift store may operate with several thousand dollars a month in overhead. For example they pay for space rent, employees, utilities, janitorial supplies, advertising and marketing for your products …. and that is just to keep the doors open!
Having said all that, here is some of the highlights Mckenna wrote in the Artsy Shark article ….
… I have written in hundreds of posts on many dozens of platforms defending the need (increasingly so!) for a solid 2.5 mark-up for so many shopkeepers nowadays….
… Empathy for the retailer’s struggles rewards us in so many ways. When we ship to them and give them our awesome creations and give them plenty of room for marking up, we get re-orders. And then we get another and another. We can cultivate a relationship with one client and keep a steady income going for years.
Retailing requires finding a buyer for every item purchased. It is an enormously difficult task to properly display and sell items from hundreds of vendors let alone to source those items in the first place….
Are you creating good solid partnerships with your retailers?