WHAT IS A SALES REPRESENTATIVE?
Independent commission-based sales representatives, more formally referred to as “manufacturers’ representatives,” or more commonly, just “reps”, are a dominant force in many industries, and especially the wholesale gift industry.
Unlike wholesalers or distributors, who take actual possession and ownership of merchandise at discounts from the wholesale price, reps are a contract sales force representing the company or companies they work for. Typically they are paid a percentage of the wholesale price on the accounts they open, or to all accounts in their exclusive territories, the month after an invoice is paid by the retailer (wholesale account).
It works like this:
A) Reps travel (and/or run a showroom in a gift mart) and present merchandise for the lines they represent.
B) If an order is taken, the information is forwarded to the manufacturer, who then ships the merchandise, subject to the manufacturer’s terms and conditions.
C) After payment is received, the manufacturer then cuts a commission check to the rep, usually the month following payment.
Standard commission rate in the gift industry is 15%, although some companies pay more or less than the standard amount.
Sometimes distributors also hire reps, although usually the commission rates are lower, in the 10 to 12.5% range. Because distributors carry a lot more products, and usually offer catalogs and other sales materials, the lower commission still results in excellent income to the rep, due to larger average orders.
For gift shops, purchasing from a rep offers many advantages, including:
A) You get service right to the door of your establishment, and a dedicated advocate if there is a problem with your order or customer service issue with the manufacturer.
B) You never pay more for the onsite services of a rep, the wholesale costs are the same. If you find that a company is trying to get you to go around the rep for a lower price, you are working with a disreputable company, and you should contact your rep immediately with the information.
On the other side of the coin, retailers who try to go around the rep, and request a better deal, are operating unethically.
Remember that reps, just like employees and spouses, vary widely in commitment, follow-through, and service. Please give your rep a chance to serve you before making snap judgments based on a lousy past experience.
HOW GIFT STORES GET THE MOST FROM THEIR REPS!
A) Share with reps about your store, your goals, your vision, and the motif or specialty of the store, and who your customers are. This will help your reps make effective suggestions about what lines or products you might consider adding to your inventory.
B) Communicate clearly with your rep about preferred months, days of the week, and time of day for them to stop by. Also, explain whether an appointment is necessary — but do not be unreasonable. Since reps are paid on commission, they must visit a lot of accounts to make a living. If you make things difficult, you will not be a valued customer, and will not get the best service. And if you make an appointment, KEEP IT! Or call in plenty of time for the rep to alter plans or re-route, to make effective use of limited sales time.
C) Reps usually offer a number of materials for you to review on various lines and products. Keep a binder or notebook of the lines you carry, and another one for the lines you are considering. Tape or staple the rep’s card to the notebooks or the section of the notebooks relative to the lines they represent. This will save you a lot of frustration when it comes time to re-order, as most reps visit their customers one to six times annually, with an average of three or four stops a year.
D) If the rep offers a newsletter or email newsletter, GET ON THE LIST! You will benefit from many potential perks, including “last chance before” price increases, closeouts, news items relevant to gift sales, new product announcements, new lines, gift show dates, and merchandizing tips.
E) If you have concerns about an order, or an order did not arrive when promised, call your rep IMMEDIATELY! Many times small manufacturers fall down on the job, get overwhelmed, and fail to properly notify you when problems or backorders occur. Both you and your rep have a vested interest in seeing you succeed with the rep’s lines, and communication is the key.
F) If you are disappointed in your rep’s performance, make an honest, but kind, communication about what the deficiency was, and how you would like things to work in the future. While not every request can be met, reps are there to serve you — but if you don’t share your expectations, meeting your needs is much more difficult.
G) Pick your rep’s brains for ideas and suggestions about what might sell in your store. Reps are potentially a significant resource for gift retailers who understand their value, and develop close working relationships. Because reps call on hundreds of accounts, they understand more about trends in the industry, and what is selling and why, than you do as one retailer. While you are not expected to execute all, or even any, of their recommendations, if you are not using them as a resource for your business, you are missing out.
H) One area of “sleeper” business you should request information about from your rep, is what lines most retailers choose not to buy, but experience a high re-order rate for those that do carry the line. These products tend to be good gift items as not many stores carry them, yet consumers seem to like them.
Hiring the right people to rep your products: here are some tips on finding the best salesperson or distributor for your business.