You’re not selling wholesale?

[CareCPA]

I stated in my price offer that my payment terms are 100% to be paid up front. Nobody ever mentioned this, even though I told them several times I will deliver as soon as I have the money on my account.

Am I just being ignored here or do you think they might make an exception?

That description is standard AP procedures.
It all depends on what size organization you are selling to, and what their internal policies are. It's completely possible they will pay you 100% up front, it's just rare.

 

[Scot]

I've just had a somewhat small distributor/vendor enquire about my beauty product. I offered them 35% off RRP but they have suggested that they require 50% off RRP to make it work for them. Do you think it's worth accepting their offer or perhaps meeting them half way?

I'm somewhat hesitant to offer 50% off RRP as this leaves little profit margin for me (18% profit margin after VAT) but at the same time it's very little work for me (as they reached out to me) and it would be nice to get my first distributor in the bag.

What do you think?

First, do you have to pay VAT on wholesale? In the US, the end user is responsible for collecting sales tax, ie the store actually selling to the customer. Find out if this is the case in the EU, because it should be tax exempt.

35% is no where near enough for a distributor, they still need to have margin to sell to stores. 50% isn’t unreasonable.

I guess answer the question this way.

Are these new customers, new business you never would have had before?

Are you still making a profit?

If you answer yes to both, I’d say go for it. Find out the VAT thing and potentially add more margin in there.

 

[Yussef]

Great thread!

Currently awaiting payment for a near $8000 deal from a very big American company. I must say this happened quite coincidental.

I setup a website for my ecom brand and all of the sudden got their inquiry. They found my brand on Amazon and contacted me directly for +500 pcs of one of my products.

I could give them a much better price than the products I sell on Amazon and with still about 50% margin.

Now I'll add a "wholesale form" on my website and will definitely focus on more deals like that.

Have you registered for B2B sales on Amazon? Businesses that want to test you out on a trusted platform like Amazon before going to your private channel can quickly do that there and then build a relationship with you afterward.

 

[ZCP]

most of our larger customers have moved or are in the middle of moving to ACH. The stragglers of our bigger clients are moving to CC. Smaller companies will probably never give up sending checks.

Though we have managed to move a lot of clients to our online payment processing. They like the cc rewards. We get our money upfront instead of 90 days after completion.

 

[ZCP]

@CareCPA isnt that just like a cc on file type of account?
Try it with a few clients. We got initial resistance when we began changing our payment terms. Now some clients let us know we have a new project by making their deposit online before sending us info.

 

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[CareCPA]

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

Awesome!
I have a client who gets it the other way. His stuff arrives at Amazon, and he starts selling it before he even gets an invoice from the supplier. Who knew you could get terms for e-commerce?
I'm sure it's more prevalent when you have US manufacturers and suppliers. All those guys importing from China often pay the full amount before it even ships. Then they wait two months for it to get here.

Sorry to clutter your thread @Scot, just thought it was an interesting side discussion.

 

[Longinus]

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.

 

[Longinus]

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.

Yeah, I asked one and they simply responded that they cannot answer that question. Not sure if this person was a dick or it's unusual that a suppliers asks this.

 

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[CareCPA]

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.

Depending on how aggressive you want to be, and how badly they need your product, you can also implement a penalty if payment isn't in hand in 30 days.
Actually collecting the penalty could be just as difficult, unless you report to D&B or similar.

 

[MidwestLandlord]

I can hopefully get a 5-10 new customers out of this with relatively little work.

Surely you don't mean 5-10 new locations after all that?

I'm running about an 80% success rate on new retailers, in the same general category. I get 8 of 10 I approach. I'm selective on who I approach though.

So...in an area your size, you should gain much more than 5-10 locations (assuming you approach retailers that are a likely candidate, which may be hard to know without physically visiting the location first)

3 states, approaching mom & pop grocery, I would think more like 50+ locations gained. (let's say 10% of 500 total approaches to account for the type of marketing you are doing...i.e, not in person)

Also, your closing rate should increase as you adjust who you approach AND adjust your marketing to include the success your brand is having. The more locations you have, the easier it is to gain even more. (it's far easier to get your 20th location than it is your 2nd)

 

[Xolorr]

Crazy useful thread!

Applying all of this to my online store now
I'm going to follow the same process as you with the automated emails, except I'll send them out manually, purely because of the MailCheat(Chimp) footer, as well as I have very few stores to reach out to (+-15).

I'd like to know your opinion on the footer? It seems against mail chimp TOS to scrape emails, as well as it being VERY obvious to the person you're sending it to that it is an automated email. Going to investigate other options for this.

(I've deleted out all sensitive information, but it lists your email address and your address in the footer aswell)



My flow will probably follow this:
- Manually send out a templated email to stores.
- Schedule follow-ups (following your MailCheat(Chimp) flow) using a CRM
- Stores which show interest / buy wholesale will be added to a MailCheat(Chimp) list for promotion, education, media etc.
- Call all stores at the end of the flow, whether they show interest or not.

 

[Scot]

Update:
Just closed my first wholesale deal, T- 4 hours after reading this thread.
Great one @Scot ⚡️

BOOM. Good job taking action!

Rep+++

 

[amp0193]

Im creating a new wholesale information sheet, and confused as to what terms to use.

Are there official terms for:
- Wholesale Discounted Percentage (the % that the product is discounted by)
- Markup Margin (% margin for the store)

?

I've got 5 columns: Wholesale, Retail (or MSRP), MAP, Profit, and Margin.

Really all you need to get started is Wholesale Price and Retail Price.

 

[Paul David]

Such a great topic!
Iv learnt so much here and it has given me new ideas.
Right now Iv just started with FBA and I am expecting my first shipment to arrive at amazon on november 30th.

Im really exited to try out whole sales as soon as i have validated my market!



I feel we are at a simar spot only I havent started FB adds yet, why start before your product launch? I was planning to do it as soon as my product is avalible so my customers dont have to wait.

I have started building an email list via facebook ads so that as soon as the inventory hits Amazon i will already have a list of 20,000 targeted customers who i can offer my product to immediately at discount price. This will increase Amazon rank via sales and also reviews.

Previously when i have launched products on Amazon i have waited to build a list until the product is in Amazon. One of the other reasons for launching this new brand is that my other products are in different niches which makes it harder to cross sell. I have to build new lists each time. This brand is going to be ultra niche targeted.

As Amazon gets more saturated it becomes harder to launch products on Amazon. It's therefore very important to have a pre-sold list of potential customers.

 

[Scot]

How do you finance it?

When i figure out this $1billion question.. I’ll let you know haha

You mentioned you’re in Holland, so that changes my answer. I would say the best instrument for funding is a Line if Credit. In the US, it’s possible to get a Line through the Small Business Association. I have no idea if your government or the EU have any similar programs. See if there are any methods for a government agency to subsidize your business loan/Line of credit.

will the stores really pay for a product they have to wait 2 months to arrive? (1 month manufacturing + 1 month transport)

No, they won’t. Check back early in my thread, most of your customers will pay on terms. Essentially, they’ll place an order, you send it, and they pay it after a set amount of time, i.e. 15, 30, 45, 60 days.

You won’t find any stores that are willing to prepay for essentially dropshipping. Especially since you’re a completely unknown brand/risk.

You will need to have inventory already manufacturered and in your warehouse to ship once you get the order. 1 month lead time is pushing it. The only exceptions to this are if you are a brand new product that the customer knows you have to produce specifically for them. But that will only work for the first order.

 

[amp0193]

1 wholesale transaction can eclipse a whole week of internet sales

AND it's recurring revenue.

 

[Scot]

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?

 

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[Azure]

Agree! And speaking of this does anyone have any experience of selling to hotels?


Sent from my iPhone using Tapatalk

I do, in the food/janitorial category.

In my experience it has been more hassle than it's worth due to things like credit terms, incredibly low margins and an absolute difficulty getting paid in general - but I'd be happy to answer any questions you have.

 

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[JonnyC]

What I would like to know is how do you start whole saling? How do you finance it?

Im starting with my first brand with amazon FBA, when I get that ball running and know there is demand for my product ill contact stores to sell whole sale to.

But how do i finance it? will the stores really pay for a product they have to wait 2 months to arrive? (1 month manufacturing + 1 month transport)

Im just starting off so i dont have the liquidity to pay upfront and in Holland my i have to pay off my credit card at the end of every month so i cant use that unless i want to pay massive rent + iv got a small maxium limet.

I also have a morgage on my house so i cant just lend extra money from the bank too.

How do you guys do it?

This is a really late reply but I figured late is better than never...

We were approached by a very large retailer recently and had to solve this problem ourselves. We aren't using this solution yet, but I did learn about it. It seems the solution is what's known as invoice factoring. You need decent margins to make it work, but here's an outline:

1. You receive a purchase order from a retailer for $5,000;
2. You send them an invoice for $5,000 with net 30 (or 60, or 90...);
3. You "sell" the invoice to a factoring company which will charge you a % interest rate per month you need the factoring;
4. The factoring company pays you ~80% of the invoice value right away, so you get a transfer for $4,000 within a few business days of issuing the invoice;
   
5. You receive the remaining 20%, less the fees, after the retailer has paid the invoice to the factoring company, say like $500 assuming you paid a total of 10% in fees.

Benefits: Cash right away, not in 3 months. Allows you to get on top of your inventory and not miss any sales. This solves probably one of the largest operational issues for growing a wholesale distribution channel, which is funding the growth itself.

Downsides: The fees can add up for long payment terms. Large retailers expect 60 to 90 days usually, so that could cost like 10 or 15% of your revenue (assuming a 3 to 5% per month fee), which is why it's important you have good margins.

 

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[Scot]

This all reminds me of another question I wanted to ask everyone here. What are your application processes like for opening a wholesale account? Old-school PDF, digital forms, something else? What info do you require?

I don't really have a specific process for this at the moment. I want to appear as professional, while making it as easy and fast as possible for someone to complete, and at the same time gather enough info to weed out all the deadbeats.

It really depends on who you customer is. If its a large retail chain, they're going to have their own very detailed and involved process, that you will have to conform to.

If you're selling to independent retailers... @AllenCrawley or @amp0193 you guys have more experience here.

 

[Walter Hay]

If the total value is worth $2,000 or more you could get him to pay via escrow.
Escrow.com have reduced their fees on small transactions.

I like escrow because the buyer has to pay before you deliver, and provide you precisely meet the terms of his order, the escrow company will pay you when you have proof of deleivery or if to Argentina, proof of shipment.

Just beware of the risks in relying on a requirement to get his signature on a delivery document. Styluses used to sign delivery gadgets could well result in a signature so distorted that it would not stand up.

Not only that, but most delivery people couldn't care less if Mickey Mouse signed.

Walter

 

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[Scot]

@Vigilante I wanted to tag you on here as well. With your past life experience as a corporate buyer as well as selling wholesale at your last business, you probably have some awesome and unique insights.

 

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[ZCP]

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

Get stop making excuses. Start making progress. Post here. Reach out to people on the forum. Get to work.

 

[amp0193]

Agreed. Was has your experience been with these platforms?

I've never really used them. Just dabbled with the last business.

 

[AllenCrawley]

Please let me know when you have the guide up and going ! Please !

Check posts 14 and 16.

 

[CareCPA]

@CareCPA isnt that just like a cc on file type of account?
Try it with a few clients. We got initial resistance when we began changing our payment terms. Now some clients let us know we have a new project by making their deposit online before sending us info.

I have my clients setup on recurring billing for the most part, so it's almost the same thing. I assumed it would be a little different here since the amount getting charged to them would be variable.

 

[Longinus]

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

Small update: got their check today in my mailbox (indeed, in Belgium).

 

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[Scot]

Surely you don't mean 5-10 new locations after all that?

I'm running about an 80% success rate on new retailers, in the same general category. I get 8 of 10 I approach. I'm selective on who I approach though.

So...in an area your size, you should gain much more than 5-10 locations (assuming you approach retailers that are a likely candidate, which may be hard to know without physically visiting the location first)

3 states, approaching mom & pop grocery, I would think more like 50+ locations gained. (let's say 10% of 500 total approaches to account for the type of marketing you are doing...i.e, not in person)

Also, your closing rate should increase as you adjust who you approach AND adjust your marketing to include the success your brand is having. The more locations you have, the easier it is to gain even more. (it's far easier to get your 20th location than it is your 2nd)

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.

 

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[Scot]

Crazy useful thread!

Applying all of this to my online store now
I'm going to follow the same process as you with the automated emails, except I'll send them out manually, purely because of the MailCheat(Chimp) footer, as well as I have very few stores to reach out to (+-15).

I'd like to know your opinion on the footer? It seems against mail chimp TOS to scrape emails, as well as it being VERY obvious to the person you're sending it to that it is an automated email. Going to investigate other options for this.

(I've deleted out all sensitive information, but it lists your email address and your address in the footer aswell)

View attachment 21527

My flow will probably follow this:
- Manually send out a templated email to stores.
- Schedule follow-ups (following your MailCheat(Chimp) flow) using a CRM
- Stores which show interest / buy wholesale will be added to a MailCheat(Chimp) list for promotion, education, media etc.
- Call all stores at the end of the flow, whether they show interest or not.

As far as MailCheat(Chimp)’s TOS.. what mama don’t know, won’t hurt her. Since you’re sending to 15 ish emails, the odds of one or more reporting you for improper emailing are super rare.

If you dumped 1,000 emails, yes.

However, plain text emails may not be a bad idea either. An app like boomerang for gmail sets auto reminders to follow up. It all depends what you want to send via email.

If your end goal is a phone call, using emails to make this a warm contact, then I’d just plain text via regular email.

 

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[Xolorr]

As far as MailCheat(Chimp)’s TOS.. what mama don’t know, won’t hurt her. Since you’re sending to 15 ish emails, the odds of one or more reporting you for improper emailing are super rare.

If you dumped 1,000 emails, yes.

However, plain text emails may not be a bad idea either. An app like boomerang for gmail sets auto reminders to follow up. It all depends what you want to send via email.

If your end goal is a phone call, using emails to make this a warm contact, then I’d just plain text via regular email.

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

Did the 15 plain-texts after I replied to this.
I then went to gym for an hour, and I've had 3 responses of people interested already.

I know its small fish compared to what you guys are doing, but baby steps!

Thank you Scot!
Rep+

Now it's time to seal the deal

Btw, I'm using Zoho Mail (Because its free for a custom domain email), and it has some great features built in. I use the templates and the reminders, yet to explore the rest.