You’re not selling wholesale?

[MidwestLandlord]

Or, figure out what LTL will cost you and add that in.

And shop around for LTL shipping prices. I've seen some LTL carriers be almost double what others cost. ($5.38 a case versus $3 per case)

It's also worth it to ask your LTL carrier if they are using the cheapest freight forwarder, the cheapest regional carrier, and/or the cheapest local carrier.

I'll give an example. One of the LTL's I did out of Canada had lined up a local carrier that was in my states largest city because it had easy access to I-29. That city is 323 miles away from me! Why would a local deliver that far?!

We figured out it was significantly cheaper to LTL to that city, regional carrier to my city, than local carrier to my warehouse (as opposed to the local running 323 miles. I ended up cutting out the local and just picking it up myself anyway)

I'm in a rural-ish area so I've had to get a little creative to keep shipping down. The point is don't be afraid to ask questions and flat out ask if there is a cheaper way.

Also, piggybacking might be an option too (where they throw the LTL trailer on a rail car) It's significantly slower but I've found it to be much cheaper, especially when only doing 1-2 pallets.

For example, I gave my distributor FOB price of $39 and shipped $41.50. My freight cost $190.

THIS.

So much this.

Give your distributors both prices. It is common for distributors to have access to cheaper shipping options than you do. Don't give me only a delivered price when I'm 90% sure I could get it shipped for cheaper.

 

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[CareCPA]

Retail is antiquated and works 100% on checks.

Part of this is habit, and part is convenience.

The way traditional Accounts Payable departments work is as follows:
- The buyer creates a Purchase Order, this is entered into the accounting system and mailed/emailed to the vendor
- The invoice arrives from the vendor, this is received by the AP department and entered into the system.
- The AP department checks with the warehouse to make sure the items arrived. This is either a physical slip of paper, or is entered into the accounting system by the warehouse.
- Once all three parts of this match up, only then the invoice is scheduled for payment. Most companies are not going to pre-pay you for items. Too much risk, and too much cash tied up.
- Most AP departments run checks once a week, once every two weeks, or once a month. You'll probably start to notice a pattern as to when they arrive. The reason is, they can just take the list of all the invoices that have been approved and matched in the previous steps, and click "print."
- Most large businesses won't pay you by credit card. The amount of time it would take them to go in an enter credit card information for any real number of vendors would be ridiculous. Printing and mailing checks is substantially faster.

In the US, we haven't really caught on to ACH payments en-masse yet. A lot of times, you have to go into your bank account to schedule them. It's substantially faster to just pay by check.

 

[ZCP]

@Scot may be Skynet!!....... self aware about 2 years ago..... it may already be too late.....

 

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[MidwestLandlord]

I know a potential market for your product is convenience stores/gas stations, so @MidwestLandlord might have a better idea. As far as adult stores, I don’t have a clue what expected margins are.

C-stores typically want 40% at minimum, unless it is a name brand item that does tremendous volume (think Coke, Pepsi...and those usually have kickbacks where the initial invoice has a lower margin, but after kickback monies and shelving rentals it is much higher)

Of course that doesn't include vice products like alcohol, tobacco, and vape.

40% will be a hard sell though. Like I said, that's minimum. 50% is more realistic.

Net terms suck

So, my Hy-Vee account, our net terms are 30 day, but they seem to be paying me at 45 days. Which, as you can imagine for cash flow, is killing me.

While speaking with my broker yesterday, I asked him what terms he expected. For independent stores, net 10 days. This took me a bit by surprise.

He then explains for bigger accounts, he does 2% 10 Net 30. Which translates to, if you pay me within 10 days, you get a 2% discount. If not, you owe me the total balance by 30 days. This incentivizes then to pay early. Im going to try and work this (or a similar deal) out with Hy-Vee’s accounts payable Dept.

Safeway pays me in 45 days as well, even though I am 2% 10 Net 30 with them. 45 days seems to be typical for the larger chains. They've NEVER paid me in time to get the discount, and seemingly don't care either.

ALL of my independents are on NET 10, and not a single one has complained about it. All pay within 15 days, so it's a little sloppy. After 15 days I charge 2% monthly, I void all referral monies (I give $25 invoice credits for referrals), and suspend all deliveries until paid.

I have waved late fees for a chain with multiple locations though, where they paid on time for all but one location because that store manager kept losing the invoices/delivery tickets and the corporate office didn't know they owed me money. I solved that by sending a duplicate invoice for that location directly to the office for all of that location's deliveries.

 

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[CareCPA]

what is MAP?

Usually it's minimum advertised price. Keeps your retailers from undercutting each other, and maintains your brand's image.

 

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[Scot]

Margins Pt 2​

It took me more time than I care to admit how to figure out margins. I had been calculating markup for a while...

Simplest way to determine margin is this formula.

(Retail cost - wholesale cost) / retail cost = margin

Let’s punch that in.

19.99 - 14.99 = 5

5 / 19.99 = .25 which in turn is 25% (if you can’t figure out how to convert decimal to percent, I can’t help you there)

 

[amp0193]

Go to www.range.me and check this website out.

Whether this site, or Hubba, there will be a big shift for wholesale to move to sites like this.

Maybe start to cut out distributors as it becomes easier to go direct.

Or maybe Hubba/Range becomes the "big" distributor... like Amazon has FBA.

Wholesale is too old school and is do for a shake up

 

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[Scot]

I'm still awaiting payment from that company, but I have no clue how long this usually takes. Last week they said "it's getting processed". I asked to pay with wire transfer or ACH (whatever that may be). I just hope they don't send a check to Belgium.

Honestly, they’re probably sending a check to Belgium...

You should consider finding a service that has a US address they can mail a check to and have it deposited. Bake whatever fee that service charges into the wholesale cost.

It’s also very important to make your Net teens very clear from the beginning.

A couple tricks are 2%/30 Net31 aka pay me before 30 days, I give you a 2% discount. If you pay ok day 31, it’s full price. Or what my LTL company does, Net15 with a 15% fee added onto late payment. I wouldn’t try that one just yet, it’s lisble to piss off your customers.

 

[CareCPA]

I've been turned down now multiple times by big hardware stores (Menard's, Home Depot, etc.). I offered the same product at the same suggested selling price, with about 35-40% profit for them.

But apparently it's not enough for them. They say they get their products at a "significantly lower price".

I suppose those big players order lots of products at a very low price. Will aim on smaller players in the market now.

Have you asked them what price they need to make the order work? There may still be enough profit for you if they're going to place six-figure orders, even if the profit margin is slimmer.

 

[Scot]

Net terms suck

So, my Hy-Vee account, our net terms are 30 day, but they seem to be paying me at 45 days. Which, as you can imagine for cash flow, is killing me.

While speaking with my broker yesterday, I asked him what terms he expected. For independent stores, net 10 days. This took me a bit by surprise.

He then explains for bigger accounts, he does 2% 10 Net 30. Which translates to, if you pay me within 10 days, you get a 2% discount. If not, you owe me the total balance by 30 days. This incentivizes then to pay early. Im going to try and work this (or a similar deal) out with Hy-Vee’s accounts payable Dept.

 

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[MidwestLandlord]

I only expect that from a lazy automated email campaign.

Once I start sitting through the list and building a targeted calling campaign, I definitely expect the close rate to go significantly higher.

Just wanted to make sure you're thinking big!

I'm gaining about 2 retailers a week on that one brand in the same (ish) category, and your town has 40% of the population of my entire state...

 

[becks22]

This thread came at the perfect time for me. Wholesale exactly is the way I want to go with my product. Looking forward to reading more.

 

[Scot]

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.

 

[Scot]

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)

 

[Scot]

Whether this site, or Hubba, there will be a big shift for wholesale to move to sites like this.

Maybe start to cut out distributors as it becomes easier to go direct.

Or maybe Hubba/Range becomes the "big" distributor... like Amazon has FBA.

Wholesale is too old school and is do for a shake up

The only reason I see distributors still being around is because of two factors. Good distributors have sales reps, so they sell for you.

Also, shipping and delivery is difficult when you’re sending 15 lb cases of glass bottles. So, I honestly prefer to pay the distributor to handle that nightmare.

 

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[Scot]

What forms of payment do you accept?

I currently accept check our paypal, but I feel as if there are methods that I should add....

I accept credit card via Stripe api in my invoicing software.. but no one will ever use it.

Retail is antiquated and works 100% on checks.

 

[Greg R]

Awesome. Glad to know this exists and is utilized.
I've been out of the physical goods arena for a couple years. Back when I did AP, it was all paper checks.

Just got paid by CC from a vendor for a huge order before i even shipped! Those are terms I like!

 

[Scot]

@Scot
If you had a product that retailed for $7.49, what would your wholesale price be, for one unit?
Mind you, the cost of production is $1.21

I can only speak for grocery stores. Different store types want different margins.

$4.86 direct to store (delivered) - 35% margin for the store

$3.40 to distributor (delivered) - 30% margin for the distributor

I know a potential market for your product is convenience stores/gas stations, so @MidwestLandlord might have a better idea. As far as adult stores, I don’t have a clue what expected margins are.

 

[Scot]

As a follow up to that, I only expect this email campaign to have a 1-5% conversion rate. This was simply a “do a few hours of work for low hanging fruit.”

If you only have 15 targets you’re going after, you should be picking up the phone or going in person if you really want to convert these

 

[Paul David]

20,000 ? that sounds like alot to me how much dit it cost you?
Im new to the hole fb adds thing and need to look it up

At the moment i have 6000 from last 4 weeks which has cost me around £800.00 in facebook ads.
I'm running a free competition to win a 4 night holiday using tool called Upviral which encourages customers to share the competition on their social media pages in order to be given extra entrees into the competition therefore more chances of winning. Holiday is going to cost me around £800.00 on top.

Therefore it's going to cost £3000-4000 for 20,000 leads but long term it will be worth it.

If you have anymore questions please feel free to PM me. I don't want to take @Scot thread in a different direction!

 

[Scot]

Hi Scot, I'm not sure about what your product is

I mention very often in this thread what my product is and what market its in.. grocery.

Hi Vig, That must be a mystical photo with lots of hidden meaning. (On its surface it's also a nice pic.) Us newbies can always use a bit of inspiration so please share.

If you go back and read the thread, you'll see the picture he's referencing in the thread...

Go back and read the whole thread, because I feel like you're missing a lot of the points here.

Why would you try pitching to LL Bean or London Fog? They're brands, not stores. They don't wholesale other company's products. Unless you're referring to a private label deal, which this thread is not about, and I cannot provide any guidance on.

You don't wholesale to Amazon, so no need to pitch them.

Your ratio will be completely unique to your business. I prefer to have a higher ratio of brick and mortar vs ecommerce because of the logistical costs for shipping direct to consumer for my products. That's a decision you'll have to make yourself but can maybe base it on what other comparable companies are doing.

 

[Scot]

What's the channel for the manufacturers to get their product/brand into LLBean's store/catalogue?

I don’t know the specifics for this market.

I also didn’t know the specifics for grocery before last year.

I’ve laid it out here in this thread though. Start looking for people on LinkedIn with the title “buyer” or “category manager” then start emailing and calling.

Have you tried calling LL Bean and asking what the process is for a new vendor submission is? Have you googled that?

 

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[MoreVolume]

Just coming back in here to give props to @Scot
I went to work on creating a new wholesale plan after viewing this thread. New pricing, literature and samples.
I've reached out to retail stores in Australia and so far im 4/4

Wholesale purchases change the game for sure. 1 wholesale transaction can eclipse a whole week of internet sales

 

[AllenCrawley]

Im going to give them a few months, but @AllenCrawley has a new wholesale strategy and killer sales manager. He also has a large catalogue of products to sell too.

After you catch your stride, would you mind posting an overview of what’s working thr brand?

For sure. I will be posting a new progress thread on the Inside soon.

 

[QDF]

Bump.

I just wanted to say, if there's only one thing that you take from this thread, it should be this: follow up.

Received a wholesale inquiry a year ago. Talks died out several times. Kept following up, and just received my first PO from them.

Received another wholesale inquiry last month from someone with 2 locations, exchanged a few emails, and then never heard back after I sent them my wholesale application. Just followed up with them and offered some free "test" units, and they were more than happy to take me up on the offer.

I haven't even actively sought out wholesale accounts yet.

For sure. I will be posting a new progress thread on the Inside soon.

Looking forward to this.

 

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[dabelge]

Just listened to this podcast. They talk about direct to consumer, ebay, amazon and wholesale to brick n motor. Very good discussion of strategy and hedging your "bet"

Millionaire Interviews Podcast

Episode 77

 

[silentownage001]

Loving this thread. I'm working on my first wholesale customer as well. I called yesterday and the lady took my message for the person responsible.

It's a local restaurant and I thought about walking in, but decided calling to set up a meeting was more respectful.

Best part? I was so nervous, but the phone call ended up being pretty easy.

 

[CareCPA]

...

Also, when you give a price per piece, does that include shipping costs to that company or do you quote this separately?

When you give your distributor a wholesale price, offer them two prices. FOB and shipped. FOB means they arrange to pick it up and is typically a lower price. Or, figure out what LTL will cost you and add that in. For example, I gave my distributor FOB price of $39 and shipped $41.50. My freight cost $190.

 

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[IGP]

Part of this is habit, and part is convenience.

The way traditional Accounts Payable departments work is as follows:
- The buyer creates a Purchase Order, this is entered into the accounting system and mailed/emailed to the vendor
- The invoice arrives from the vendor, this is received by the AP department and entered into the system.
- The AP department checks with the warehouse to make sure the items arrived. This is either a physical slip of paper, or is entered into the accounting system by the warehouse.
- Once all three parts of this match up, only then the invoice is scheduled for payment. Most companies are not going to pre-pay you for items. Too much risk, and too much cash tied up.
- Most AP departments run checks once a week, once every two weeks, or once a month. You'll probably start to notice a pattern as to when they arrive. The reason is, they can just take the list of all the invoices that have been approved and matched in the previous steps, and click "print."
- Most large businesses won't pay you by credit card. The amount of time it would take them to go in an enter credit card information for any real number of vendors would be ridiculous. Printing and mailing checks is substantially faster.

In the US, we haven't really caught on to ACH payments en-masse yet. A lot of times, you have to go into your bank account to schedule them. It's substantially faster to just pay by check.

ACH is only available in the US. And it has widespread usage every day.

Direct deposit is ACH. Online bill pay is ACH. Anytime you can scan a check or take a picture of a check to deposit, that's ACH.

ACH is WAY faster than paying by check. You can have funds typically within 48 hours. Paying with a check can take 7-10 days to get funds.

Source: I was part owner in an ACH processing company before we sold it in 2006.

 

[CareCPA]

ACH is only available in the US. And it has widespread usage every day.

Direct deposit is ACH. Online bill pay is ACH. Anytime you can scan a check or take a picture of a check to deposit, that's ACH.

ACH is WAY faster than paying by check. You can have funds typically within 48 hours. Paying with a check can take 7-10 days to get funds.

Source: I was part owner in an ACH processing company before we sold it in 2006.

Ah, I may have been unclear in my description.

ACH, in my experience, is not used as much in the US as it could be, because many companies find it faster to print checks. This is due to a combination of old/clunky software, old/clunky AP processors (yes, the people), and just habit.

I'm not saying it isn't faster to receive money, I'm saying the systems I've seen that people used took more time thank clicking "print" in the AP software.

If ACH is just as fast as checks to create from the AP side, then there is a lack of education in the industry.

 

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