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NOTABLE! You’re not selling wholesale?

Scot

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To commemorate my 50th thread on the Fastlane Forum, I wanted to share a topic that is very core to my business.

It’s a simple concept.

If you sell on Amazon, but not wholesale to other retailers, you’re throwing away millions of dollars.

Let’s look at this.

98FFE036-908F-4486-9F2C-37DADA0B9A8E.jpeg

On this pallet is 900 units. This sale took about an hour worth of work. To date, I’ve sold 800 units on Amazon.

Let that sink in for a minute. In about 2 weeks time, with about an hour of actual work, and 37 short emails back and forth, I sold more unit than I did on amazon over 3 months time.

We talk about how Amazon is killing Brick & Mortar, but that’s simply not true. Wal-Mart, Target, Auto parts stores, grocery stores, clothing stores, and many others are not going anywhere anytime soon. And hundreds of millions of people shop at them daily.

Would you rather sell on 1 Amazon site or 5,000 Walmart stores?

Wholesale is the Scale part of the equation and if you’re not using that multiplier, you’re missing out.

Lastly, amazon businesses for sale on business broker websites are a dime a dozen. And multiples aren’t all that healthy. But one thing that does improve a multiple and more money on an exit, is a wholesale channel to your business.


Evaluate how your products can be sold to B&M. If you think your product is too generic to be sold in a store, it’s probably too generic to be sold on Amazon. Think of who your customer is, then think of where they shop. Those stores are your customer too.

If this thread shows enough interest, I’ll dig in deep to how to enter wholesale, get customers, get distribution.

Pick up the phone and start dialing.
 

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Hyrum

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If you sell on Amazon, but wholesale to other retailers, you’re throwing away millions of dollars.
I'm assuming you mean NOT wholesaling to other retailers. I think that's one of the great take-aways from your progress thread - getting into retailers isn't some insurmountable obstacle for us little guys. You just need to have a product people want, effort to find out who to talk to, and persistence to keep following up and overcoming their objections until they have no reason but to say yes.

It's not easy to get into retailers (as a retailer, I reject about 90% of the products I'm pitched to) and it will complicate your supply chain. But, as Scot said above, it is a huge advantage both while you're in the business and when you decide to exit.
 
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Scot

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This is amazing, I never thought of doing this. You're totally right. Any tips for entering wholesale?
Yep, I plan on putting together a guide for this thread later in the afternoon.

I'm assuming you mean NOT wholesaling to other retailers. I think that's one of the great take-aways from your progress thread - getting into retailers isn't some insurmountable obstacle for us little guys. You just need to have a product people want, effort to find out who to talk to, and persistence to keep following up and overcoming their objections until they have no reason but to say yes.

It's not easy to get into retailers (as a retailer, I reject about 90% of the products I'm pitched to) and it will complicate your supply chain. But, as Scot said above, it is a huge advantage both while you're in the business and when you decide to exit.
Whoops, typo, I fixed it!

Agreed, getting into retail is much easier than people think. But it all comes down to good quality product and product-market fit. If your product is mediocre and it doesn’t make sense for that retailer, there’s no reason why they should carry it.

Also, thanks for the Rep$
 

Merging Left

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There might also be opportunities in those Amazon businesses that are being sold on the broker sites. Buy them for the small multiples, add the wholesale channel, profit for a year and flip it... or hold it and grow. It could take out a lot of the guess-work and market testing of the process, if you have the funds.

Excellent point - following this thread.
 

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To commemorate my 50th thread on the Fastlane Forum, I wanted to share a topic that is very core to my business.

It’s a simple concept.

If you sell on Amazon, but not wholesale to other retailers, you’re throwing away millions of dollars.

Let’s look at this.

View attachment 19709

On this pallet is 900 units. This sale took about an hour worth of work. To date, I’ve sold 800 units on Amazon.

Let that sink in for a minute. In about 2 weeks time, with about an hour of actual work, and 37 short emails back and forth, I sold more unit than I did on amazon over 3 months time.

We talk about how Amazon is killing Brick & Mortar, but that’s simply not true. Wal-Mart, Target, Auto parts stores, grocery stores, clothing stores, and many others are not going anywhere anytime soon. And hundreds of millions of people shop at them daily.

Would you rather sell on 1 Amazon site or 5,000 Walmart stores?

Wholesale is the Scale part of the equation and if you’re not using that multiplier, you’re missing out.

Lastly, amazon businesses for sale on business broker websites are a dime a dozen. And multiples aren’t all that healthy. But one thing that does improve a multiple and more money on an exit, is a wholesale channel to your business.


Evaluate how your products can be sold to B&M. If you think your product is too generic to be sold in a store, it’s probably too generic to be sold on Amazon. Think of who your customer is, then think of where they shop. Those stores are your customer too.

If this thread shows enough interest, I’ll dig in deep to how to enter wholesale, get customers, get distribution.

Pick up the phone and start dialing.
Yeah I know a little about TWF myself.
 

Tom.V

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Way to go @Scot - moving product like it's going out of style!

Don't forget, people looking to buy in bulk often start their searching journey on Google or Bing. Targeted landing pages focused on wholesale or bulk <insert your product(s) here> with simple contact forms and contact info can be an easy way to accelerate this channel and have a net in place so they can come to you when you aren't dialing or sending emails. ;)
 

Patrickg

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This is timely for me thanks scot. I have a product and my next step after validation Is B&M because I agree. People jump to quickly. There are still people without internet folks lots of them.
 

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It's not easy to get into retailers (as a retailer, I reject about 90% of the products I'm pitched to) and it will complicate your supply chain. But, as Scot said above, it is a huge advantage both while you're in the business and when you decide to exit.
Sure it is!

You just need a big enough list and a good product.

If you're trying to sell fidget spinners to hobby lobby's within 5 miles of your house, than good luck.


If your product is like @Scot's, it sells itself once you make the phone call...


yes, complicates supply chain I suppose. More importantly though, it complicates cash flow. Too much wholesale, too early on, can be a cash-killer for sure.

But it goes back to having a good enough product.

If you have a good product, that no one else is selling.... you set the terms.


Wholesale is the long-term play. You take the smaller profits in the short-term, in exchange for building a sellable business that's worth millions later.


FWIW, do both. Having a B2C base gives you street cred and ammunition to approach retailers with.
 

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Scot

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Getting into B&M

As mentioned above getting into a store isn’t as difficult as it sounds. Business shows like shark Tank want you to believe that the process involves getting a meeting with a corporate buyer, in a large board room, and month of negotiations and contracts.

But reality couldn’t be further from that.

The first step is to find out what stores your product could be sold in. for some products that may be difficult. For others, like mine, the obvious answer is grocery stores. However even when you know who your customer is, not every single grocery store chain is your target customer. For example, Save a Lot is a lower Teir store which wouldn’t be a fit and Whole Foods is also too strict on their guidelines for my product.

That does not mean that you should only be targeting large corporate chains. I use the above meerly as an example. A friend of mine’s product is geared towards people who own guns, so his obvious target customer (pun intended) is gun store owners.

There are pros and cons to targeting independent retailers.

Pro:
  • Easy to talk to the decision maker
  • Flexible terms
  • Much easier to close the sale
  • Personalized attention
Con:
  • Distribution is a nightmare
  • Terms can be different for each store you get
  • Managing all the different accounts is a full time job


@amp0193 mentioned the best way to get started above. A lot of what I learned, was from him. So I give him a lot of credit for the next part of this post.

Once you’ve narrowed down who your customer is, you need to start finding out who they actually are. There are several ways to do this.

  1. Find a scraper program and have it search google map listings for certain keywords. For example “auto parts store in California” will scrape google and give you a list of all maps locations that resemble an auto parts store in California. Some software programs can even give you publicly listed emails addresses and phone numbers.
  2. Hire a VA to do the same thing a scraper would. This can be helpful when the email addresses aren’t so easily found. For my list, I had about 3 steps per store to get the email address. It was simple enough, but time consuming. So I paid a VA $10 for a list of 200 contacts.
  3. Buy a list. This is simple. Find a list buying service, and buy and appropriate list.
  4. Follow your competitors. Does your main competitor have a “find us in store” tab? Well, mine did. Easy as just finding the stores they’re in and calling the stores. You already know they’re interested in your product category, so it’s low hanging fruit.
The next step is two parts. Email and call. You can choose which order to do them, but I’ll tell you how I used them.

If you are dealing with a larger store chain, I found the email was the best. Again, @amp0193 taught me this one. A simple short email is the best.

Subject: Appropriate Person?

Hello,

Are you the person who makes buying decisions for the widget category? I am Scot, owner of Acme Co widgets and was inquiring about the widget section at your stores. If you’re not the correct person, could you please forward me to the correct person? Thank you!​
This is a great way to find the category manager or buyer for your product. This was how I found the buyer at Kroger, a 2,500 store chain. It only took about 5 emails before I had a call scheduled.

For smaller store locations, The best option is to simply call. People don’t realize this, but even store chain managers have the ability to make buying decisions for their stores. Call as many stores per day as you can and eventually you will develop a rudimentary script to follow. Get a simple CRM like Hubspot to track the stores you’ve called to keep notes and make follow ups.

Always close. If they seem even barely interested, ask them if they’d like to try a few units in their store. I’ve had customers that were on the fence answer yes to this.

- - -

More to follow, I’ll cover margins next.
 
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The game of margins

If you’re selling on amazon and following conventional wisdom on pricing, good news is you should be fine with margins for wholesale.

You have two tiers of pricing you need to take into account when selling wholesale.
  • Wholesale to retail
  • Wholesale to distributor

The biggest thing you need to find out before you start pricing out your products and selling is what expected margins are for all parties involved. Retail stores will expect a certain range of margin for them to take on the risk of selling your product. Distributors have overheard costs of shipping, delivery, and order taking and will also expect a healthy margin.

Margins will always vary by industry. For example, 20-30% margin is completely reasonable in the grocery category. But for other categories, may want we high as a 100% markup. Distributor will typically operate in the 20-30% range as well, but may vary on the difficulty of product to distribute ie refrigerated items or large/bulky.


Here’s an example of Distributor margins.

Widget A has an MSRP of $14.99

Store wants a 35% margin - $9.74

Distributor wants 30% - $6.81

So, you need to have your landed cost per unit below $6.81 to break even. $3.04 gives you 50% margin.

You may be thinking, if distributors take so much of my money, I’ll just ship direct. That may be the case in some scenarios but here are sone reasons why that may not work.

  • Store chain requires a distributor delivery or won’t order direct from you.
  • Shipping costs are prohibitive.
  • Your target customer are independent retailers, managing dekover to 100’s of unconnected stores is a logistics nightmare.
The second bullet point is why I prefer distributors. My product consists of heavy glass bottles. Shipping a fragile 15lb box is expensive. Per case, typically $12-15. If I can manage to sell 4 cases, I can get it to around $10/case. That destroys my margin. Because, your retailer is not going to pay shipping on top of that. You can certainly work shipping cost into the price you give them, but they better still get their margin they want. For my product it’s cheaper to send a pallet via LTL and give them 30% margin to deliver on their trucks.

So, in summary, depending on the logistics of your product, the net profit may be very close.

This is why it’s very important to get your product at the lowest price prossible. Wholesale eats your margins up. But, you make up for that through sheer scale.
 

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  • Store chain requires a distributor delivery or won’t order direct from you.
Mind if I chime in @Scot ?

Grocery stores get product 3 different ways.

1) From their own DC. This is especially true of larger chains
2) DSD distribution. This is where a local distributor delivers direct. Think Coke/Pepsi/Bread
3) Via common carrier or FTL/LTL

Looking at this from a retailers point of view, why would they insist on a distributor?

1) Easier reclamation.

If a product doesn't turn, expires, or is defective...who takes care of that? With a distributor it is easier for retailers to manage reclamation of those items, as a distributor will normally just "take it back", which quickly free's up valuable space at the retail location.

With a brand using option 3, delivery via common carrier, reclamation becomes much more difficult. This is where a brand owner must give instruction for disposal or returns under the retailers reclamation process, and will have to pay a per unit fee.

2) DC and backroom storage

With a distributor (especially a DSD), the distributor acts as backroom storage for the chain, and they do not have to incur the expense of storing items (product doesn't sell from the backroom!)

They also save the expense of their own FTL's shipping those items from DC to retail location.

3) Cost of inventory on hand

A distributor also allows retailers to reduce the amount of money they have with inventory on hand. Keep in mind a typical large grocery store will do $100,000 + per day in sales. If they have a 30 day turn on hand (30 days of stock), that is $3m per location.

4) It makes operations easier.

Ever see a fedex truck pull up to the dock of a grocery store and unload the entire thing for brands delivered via common carrier? I've seen it dozens of times now, and wow, what a mess, my gosh.

Opening boxes, disposing of boxes, disposing of packing materials, breakages, labor to do all of that. Yuck.

5) Reduced vendor count

A distributor that carries 100 brands is ONE entry into their back office system. That's ONE check the book keepers have to mail. That's ONE entity to hold accountable and manage.

Now imagine all 100 of those brands were individual accounts?

There's other reasons, but those are the main ones.
 

amp0193

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There are pros and cons to targeting independent retailers.

Pro:
  • Easy to talk to the decision maker
  • Flexible terms
  • Much easier to close the sale
  • Personalized attention
Con:
  • Distribution is a nightmare
  • Terms can be different for each store you get
  • Managing all the different accounts is a full time job
80/20 rule.

80% of your sales will come from 20% of your stores.

Not every account is worth it. If they never re-order without 8 follow ups, and it's always the minimum possible order. Might be time to let them go.

Or get a sales rep or two to manage all the peripheral accounts like this to free up your time.

You don't want to be tied to *only* Kroger. That's a big lack of C right there.
 

AlonN

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This thread is pure gold.

I have a product in the Beauty category (on Amazon) and every once in a while Beauty salons contact me as they want to sell my product in their place.
I also got an email from a pretty big e-tailer based in the UK, but I had to turn down the offers since I couldn't find a good source to learn this process from.

I would highly appreciate if anyone could refer me to a consultant/Online course/Youtube vids/ ANY source that might help me learn this process further.
Thanks :)
 

amp0193

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This thread is pure gold.

I have a product in the Beauty category (on Amazon) and every once in a while Beauty salons contact me as they want to sell my product in their place.
I also got an email from a pretty big e-tailer based in the UK, but I had to turn down the offers since I couldn't find a good source to learn this process from.

I would highly appreciate if anyone could refer me to a consultant/Online course/Youtube vids/ ANY source that might help me learn this process further.
Thanks :)
Dude, turning down business instead of just figuring it out? Really?

I got into wholesale when I was invited to a private trade show for franchise owners for a big chain. I had 3 weeks to learn the entire wholesale process and tradeshow booth design. You think I turned it down? No, I just figured it out, and 3 weeks later I had 7 wholesale accounts.

Beauty - Sell to stores/dealers at half of retail. Make em pay credit card up front. If it's a large store or chain, offer them 30-day payment terms. Define a minimum order, like $150 worth of product, for example. If $150 is the minimum, then offer free shipping (or free product) on orders of $300.

That's literally all you need to know.

Having some sort of cardboard display is helpful, but not necessary to get started.

Making a fancy "sell sheet" with all of the above info can be helpful for reaching out to cold contacts, and makes you look more professional, but again, not necessary to get started.
 
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amp0193

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Allow me let you in on a little secret...

The magic of wholesale is in the follow-ups.

Are you organized enough to consistently follow up until you get the results you want?

*hint* It's not that they don't want to talk to you... store owners/buyers are extremely busy. Those who can follow-up, and stay on the buyer's radar, will win.

Here's the one tool that's taken my follow up game to the next level: Streak for Gmail.

No extra CRM to manage. No separate tool or website that I have to enter data into. I'm literally in Gmail every day already.

Step 1: Send an email.
Step 2: Use the streak sidebar to set a follow up date.
Step 3: Streak reminds you to send them an email on that date.

So simple... and it's the only CRM that I've been able to stay 100% on top of.

I don't remember what it cost, but it has already made me thousands of dollars in sales in the 6 weeks or so that I've used it.

It's really a no-brainer. Even if you aren't doing wholesale.


p.s. Streak support told me integration into the gmail phone app is coming soon. That will take Streak from a 10/10 to a 12/10.
 

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AlonN

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Dude, turning down business instead of just figuring it out? Really?

I got into wholesale when I was invited to a private trade show for franchise owners for a big chain. I had 3 weeks to learn wholesale and tradeshow booth design. You think I turned it down? No, I just figured it out, and 3 weeks later I had 7 wholesale accounts.

Beauty - Sell to stores/dealers at half of retail. Make em pay credit card up front. If it's a large store or chain, offer them 30-day payment terms. Define a minimum order, like $150 worth of product, for example. If $150 is the minimum, then offer free shipping (or free product) on orders of $300.

That's literally all you need to know.

Having some sort of cardboard display is helpful, but not necessary to get started.

Making a fancy "sell sheet" with all of the above info can be helpful for reaching out to cold contacts, and makes you look more professional, but again, not necessary to get started.
Thank you so much!
This is the first reply that I post on this forum and I already learned much more than I did in the past two weeks.

I'm a big supporter of the "just dive in" approach, but unfortunately, I've encountered too many obstacles when trying to set it up myself, such as:
-Where do I ship it from? (For this one I started using a 3rd party logistic center)
- How do I take care of the shipping? Do I simply use UPS?
- What do I do with returns?
-Do I change the price depending on the location of the buyer?
- Payment method is a bit tricky since I'm not a US citizen
- How do I prevent the buyers from selling the item on Amazon?
- Since English is not my native language, it's difficult making the sale via phone (for this one I started hiring an English speaker that can take care of the communication)

I do make progress but I feel it's too slow. That's why I'm looking for a good source to learn from
 

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-Where do I ship it from?
Doesn't matter.

How do I take care of the shipping? Do I simply use UPS?
Doesn't matter

What do I do with returns?
Accept and refund.

Do I change the price depending on the location of the buyer?
No.

Payment method is a bit tricky since I'm not a US citizen
Figure it out. Charge them through Shopify. However.

How do I prevent the buyers from selling the item on Amazon?
Only sell wholesale to shops with a physical presence. *Maybe* to a large online shop. Tell them no Amazon or other marketplaces. Drop them as an account if they violate this.

Since English is not my native language, it's difficult making the sale via phone
So do email. My last business I had 120 stores, and 90% of them I never spoke to on the phone.

I do make progress but I feel it's too slow. That's why I'm looking for a good source to learn from
You're in the right place ;)
 
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@AlonN even though I’ve made this thread, I am by no means an expert in Wholesale. I’m posting things as I learn them. But thankfully we have guys like @amp0193 and @MidwestLandlord who have strong wholesale experience as well.

Do you know how I learned to do this? I said yes, and figured it out. Talk to the customers, ask questions. With my first distributor, I was worried about looking like an amateur, but I was more worried about messing up my order or screwing up my cash flow. So, I asked him a bunch of questions.

It’s all trial and error. I’m still figuring out the best ways to ship and fulfill my product without losing money. My first 15 stores, I either lost money on sales or barely broke even. But I learned a lot from those accounts and that knowledge will pay dividends.

Long story short, just do it. Learn as you go.
 

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@AlonN even though I’ve made this thread, I am by no means an expert in Wholesale. I’m posting things as I learn them. But thankfully we have guys like @amp0193 and @MidwestLandlord who have strong wholesale experience as well.

Do you know how I learned to do this? I said yes, and figured it out. Talk to the customers, ask questions. With my first distributor, I was worried about looking like an amateur, but I was more worried about messing up my order or screwing up my cash flow. So, I asked him a bunch of questions.

It’s all trial and error. I’m still figuring out the best ways to ship and fulfill my product without losing money. My first 15 stores, I either lost money on sales or barely broke even. But I learned a lot from those accounts and that knowledge will pay dividends.

Long story short, just do it. Learn as you go.

Did you start wholesaling with one product, or did you wait until you have a few under same brand?
 
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Did you start wholesaling with one product, or did you wait until you have a few under same brand?
I only have 1 launched right now. However, I’m waiting for the rest of my line to launch next month before I push for more stores.
 

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I only have 1 launched right now. However, I’m waiting for the rest of my line to launch next month before I push for more stores.
Nice, I am in the same boat. I am just trying to figure out if I should build more of a brand website seperate from Ecom site that sells my product.

Have you had any kick back about selling online in your website?
 

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Great thread! Thank you for the wealth of information.

I’ve been reaching out via e-mail and have not heard a response from them. I sell a niche product that can sell in brookstone, Home Depot, or even furniture stores. I usually just email in the general contact e-mail as I don’t know where to find the store owners e-mail address. How did you go about finding their e-mails?

When you quote them a price does it include shipping? My product retail for $29.99. I can sell for $15 and still make $7. However, it’ll be tough to make it work if I have to pay shipping via LTL. Each of my product is roughly 10 lbs so shipping is quite expensive (relative to the product price).
 
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Nice, I am in the same boat. I am just trying to figure out if I should build more of a brand website seperate from Ecom site that sells my product.

Have you had any kick back about selling online in your website?
Are you hoping that a brand website will sell your product wholesale? Because it won’t. The only thing that sells wholesale is picking up the phone.

And selling on your website should always be viewed as a positive. It’s oroof of sales and brand loyalty.
 
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Great thread! Thank you for the wealth of information.

I’ve been reaching out via e-mail and have not heard a response from them. I sell a niche product that can sell in brookstone, Home Depot, or even furniture stores. I usually just email in the general contact e-mail as I don’t know where to find the store owners e-mail address. How did you go about finding their e-mails?
Why are you starting with the big fish first? Have you contacted local Ace hardware stores? They’re independent owners and can make store specific decisions. My local Ace is loaded with random crap that I know is local.

You know how many cases I’ve sold over email? ZERO. Every single case I’ve sold retail has been via phone. Even my big distribution deal was started with a phone call, the details finished via email.

Find a google maps scraper and start building lists of independent Ace Hardware, any mom and pop hardware stores, independent furniture stores. Call them.

As for the big fish. Call their headquarters and act dumb. “Hey do you by any chance have the contact info for the category manager of the widget section?”

When you quote them a price does it include shipping? My product retail for $29.99. I can sell for $15 and still make $7. However, it’ll be tough to make it work if I have to pay shipping via LTL. Each of my product is roughly 10 lbs so shipping is quite expensive (relative to the product price).
Ouch. Yeah, you’ve got to drop those margins HARD. Because of the weight of your product, you’re going to get killed with shipping. My cases weight 14.5 lbs. I need to ship 4 in one giant box to get anything close to economy on my shipment, which is still $10/case. Realistically, you’ll need a distributor to do the lifting for you, but that costs margin. See if you can get your COGS down a couple more dollars through scale and you can probably survive the distributors cut. (I have no idea what expected margins are in your industry. If they’re 50+ % then, that’s going to be difficult)
 

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