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I am looking for some insight from any retailers out there into product pricing for selling direct to retailers.
I have a fishing product which I make and have been selling through various platforms direct to the public. There is limited/no competition and I have managed to sell 150 units in 1 year with reasonably little effort with regards to promoting the product. I am considering approaching retailers to see if they are interested in stocking my product, by retailers I am looking at contacting fishing store retailers mainly small one shop businesses.
I have done what research I can without contacting stores direct at this point. Margins would seem to vary anywhere between 25-50% Before I start contacting businesses I am looking to get some insight to what a retailer may expect/be willing to pay for a hobby/sports product. I currently sell the item for £15 + 3.50 postage, so there seems to be a willingness by the purchaser to spend around £18 for the product. If the RRP is £18 I am looking for thoughts on what a retailer in the hobby/sports sector would expect to pay. May be worth mentioning the product has no shelf-life limits. Thanks in advance.
No idea what fishing equipment mark ups are but here, bike parts are ~100% from distributor to retailer.
I'd assume the retailer would wa t similar margins on your product unless it's something that brings people through their doors that they can sell additional product to.
So, if Jo public can buy from you at 15 (MSRP/RRP), retailers might want to pay you 7.50. if you no longer sell direct and they can choose the retail price, you might be able to ask for more.
Yep about 100% and 90day payment terms. I know others who have lower cost bases and do about 50% and 30 day payment terms.
Depends on the product category and the volume sales.
For low volume I have to achieve 50% margin, so double cost plus VAT. Or x2.4.
So for £18 retail we would pay £7.50.
If I am confident of driving a significant increase in volume I can lower my achievable margin, but my bottom line is 40%, so cost x2.
Some product groups (food) have a lower margin expectation.
I am a buyer for a national group of retail stores, but probably not in the same industry as you, so it may vary...
All depends on quantities, whether they feel it is a guaranteed sell, selling a few bits online is very different to putting a product into shops. Can you reliably service people actually selling your product? How much shop space would it take up, does it have display/packaging? You need to almost forget the product, and create an opportunity for a retailer to make a profit.
Double plus vat is where you need to aim - be prepared to start out at 3x markup at those kind of prices to make it appealing, as your product is a punt. You would need to work out if there is enough profit in the product to get the raw material, give yourself and the retailer a profit, and sometimes it just doesn’t stack up as a viable product to wholesale. At £15 retail price you would be aiming for £6.25 wholesale and probably 50% margin so you are talking £4 at most of raw cost, can you do it for that and make it worth your while with enough volume? Will the product stand a higher retail price to enable you to make it more viable?
Obviously without knowing the product, cost base, likelihood of returns etc it’s hard to really say anything. It is a very big jump from a hobby business to even small scale wholesale, it’s bloody hard work getting out and selling to put it nicely. If you have to give 1/2 of each sale away to turn 150 units/year into 1500, that’s north of 10k you could spend putting the product in front of more people to sell at retail.
I’ve spent my entire working life on one side of the counter or the other - and I’m not going back to the wholesale side put it that way!
Margins in food retail are a bit different typically 20-25% so I've no idea about fishing....
But if it's a new product and a local supplier id be looking at sale or return for the first batch for my shop.