Interest from a major chain - erhm, what next?

[Walkol]

Been following this, great news it appears, well in!

 

[Pish_Pash]

Thanks...yes, the wheels are well & now well & truly in motion (the UK-centric packaging I've had a major hand in creating is now at my supplier's printing company), it'll all be packed up & on a ship in a few time, to dock at Southampton in mid July.

Sale or return period begins about 6 weeks later.... I've high hopes.

 

[godoit]

just wanted to say congrats, its been good to follow

 

[Talay]

A great big slap on the back and a well done but I wonder whether you are not missing a trick here by trying to keep it all under your hat.

I fear some of the boat may have sailed as another pointed out but if you are to catch one of the larger lifeboats, perhaps you need to give up some control and percentages to someone or a group who can flood your product to market and achieve a sales run which makes a wedge of money in a short time rather than an ever slowing but higher percentage return.

Either way there is a finite life of the product but one way you can control to a degree and participate in solely or in partnership.

 

[Jeff Nev]

This was brilliant to follow - Loved the story! I hope my business idea turns out this way...

Working with Alloga pharma logistics to make it happen! They may only be a supplier but that's all I need!

 

[Pish_Pash]

So my shipment is now here.

Being 'wet behind the ears' ....it's the little nitty gritty stuff that bites you...one pallet delivered to my customer's distribution centre = £75 + VAT (yes, I can get pallet delivery a bit cheaper, but this shipment was a little more involved - I didn't want to mess the freight handler about by having another freight company collect), *BUT* my customer (a large UK nationwide retailer) only allows allocated 'timed slots' for delivery at their distribution centre ...so I mention this to the freight company "Oh, that'll be another £30" ......therefore £105 to get a shipment delivered that would have quite easily fit in the back of my MPV!!!!! (and only cost me £25 in fuel)

Theft! (but you live & learn...there'll certainly be a a little bit 'more fat' in the price when quoting the next large retailer I'm meeting next week!)

 

[MOIC]

This is just one step.

Many more to come.

You will soon understand that working with large multiple retailers will not allow you to breathe.

They know your costings inside out and will allow you to make a minimal profit.

No more than that.

 

[Pish_Pash]

This is just one step.

Many more to come.

You will soon understand that working with large multiple retailers will not allow you to breathe.

They know your costings inside out and will allow you to make a minimal profit.

No more than that.

Well I'm actually still spinning a profit on this deal ...but the real money is if the 'sale or return' trial goes well (& I think it will)...that'll be a kerching scenario (even if they only sell a couple of units per branch per week, it could add up to a chunky amount over the next 12 months)

I'm meeting another large (ecommerce) retailer next week - I initiated contact with them about one particular product that I thought would be best suited to them, but they then visited my website & are interested in several products. So, I phoned the buyer yesterday asking which products to take to our meeting, he says "Gimme a couple more days to have a look at your range to see what interests me & if it's too many, I'll come down to your showroom" ...I had to laugh/panic, there is no showroom, just a dining room pressed into service as my Global HQ! (here's hoping that he's actually only interested in a few products, so that I don't have to have that conversation!)...talk about wingin' it!

 

[MOIC]

Why don't you lay the foundation for supplying such retailers, if things continue.

An office, a showroom . . . . .

Keep it cost effective, by all means, but get professional to suit your customers.

Just my opinion, that's all.

 

[Pish_Pash]

Why don't you lay the foundation for supplying such retailers, if things continue.

An office, a showroom . . . . .

Keep it cost effective, by all means, but get professional to suit your customers.

Just my opinion, that's all.

I completely agree...but like any young business, I have to gain critical mass (or perhaps better described a 'escape from home velocity') - the other alarming aspect is that I happen to reside in London ...where a mouldy old shed with a shared toilet (like something out of trainspotting) will see me have to pony up £15k per annum!

Alas, for now I'm just going to have to continue to duck & dive likeBarry McGuigan in his prime. As much as working from home has many downsides, I can get an awful lot done (& my commute is 10 seconds)

 

[beasty]

Just buy him lunch somewhere, probably get you more visits if they know they are getting a slap up meal if they come see you

Sale or Return (OK is it only me that sees the RETURN element here) Its great but there is no deal until they have decided it is a sale and not a RETURN (I cannot read this any other way)

 

[MOIC]

I completely agree...but like any young business, I have to gain critical mass (or perhaps better described a 'escape from home velocity') - the other alarming aspect is that I happen to reside in London ...where a mouldy old shed with a shared toilet (like something out of trainspotting) will see me have to pony up £15k per annum!

Alas, for now I'm just going to have to continue to duck & dive likeBarry McGuigan in his prime. As much as working from home has many downsides, I can get an awful lot done (& my commute is 10 seconds)

One word . . .

Servcorp

 

[Pish_Pash]

Sale or Return (OK is it only me that sees the RETURN element here) Its great but there is no deal until they have decided it is a sale and not a RETURN (I cannot read this any other way)

yes, you're bang on, but you let's imagine you have a known top selling product (albeit in an overseas market) on your hands, & that you've been granted 'temporary exlusivity' pending winning sales in the UK. Consider these two options....

1. You have no path in to a UK nationwide retailer with many hundreds of branches. Downside = zilch, Upside = zilch, no sales, supplier gets impatient & finds a better company instead of mine.

or

2. You agree to give a UK nationwide retailer £10k worth of stock on sale or return (incidentally, they actually wanted me to hand them £25k worth of stock - I baulked), they distribute to all their branches & see how sales are for 3 months. Downside = £10k (assuming they trash every single unit & refuse to compensate me!), upside = £100k estimated profit in the first 12-18 months.

Which option are you going to choose? (assuming you can afford to take the £10k loss on the chin)...to me it's a no-brainer.

Re Servcorp - I don't need just an office, I also need somewhere to store the stock securely...& there's no place like home for that at the moment!

 

[Sparx]

OP, great thread and I've enjoyed your story. Well done!

I noticed you mentioned having concerns re: marketing and advertising at the big store... Have you thought about doing your own little PR stunts? I.e. Facebook / Twitter get an announcement posted (try share it round family friends community) that your product is now stocked at 'X' your local retailer now. Try make it viral if you're lucky!

Or is it worth a punt approaching your local paper? Let them know the little business man (you) has hit it big with a top retailer. Are they interested in running a story on your adventure, if you'll give them some detail? It'll get you a lot of local PR for free hopefully and people will be looking out for your product(s).

Not sure how HotUkDeals work, but you may be able to post there too. Every little helps!

 

[MOIC]

yes, you're bang on, but you let's imagine you have a known top selling product (albeit in an overseas market) on your hands, & that you've been granted 'temporary exlusivity' pending winning sales in the UK. Consider these two options....

1. You have no path in to a UK nationwide retailer with many hundreds of branches. Downside = zilch, Upside = zilch, no sales, supplier gets impatient & finds a better company instead of mine.

or

2. You agree to give a UK nationwide retailer £10k worth of stock on sale or return (incidentally, they actually wanted me to hand them £25k worth of stock - I baulked), they distribute to all their branches & see how sales are for 3 months. Downside = £10k (assuming they trash every single unit & refuse to compensate me!), upside = £100k estimated profit in the first 12-18 months.

Which option are you going to choose? (assuming you can afford to take the £10k loss on the chin)...to me it's a no-brainer.

Re Servcorp - I don't need just an office, I also need somewhere to store the stock securely...& there's no place like home for that at the moment!

100k is an assumption.

Don't count your chickens . . . .

 

[Pish_Pash]

100k is an assumption.

Don't count your chickens . . . .

it's not an assumption, it's an estimate, but @ £1 profit per unit ...they've over 600 branches, with 3 sales per branch per week = 93,600 units sold = £93,600 profit, if they sell 4 units on average per branch then it's £124,800 etc (I sell 20pcs per week & I'm very small scale...I don't get much e-footfall)

 

[MOIC]

it's not an assumption, it's an estimate, but @ £1 profit per unit ...they've over 600 branches, with 3 sales per branch per week = 93,600 units sold = £93,600 profit, if they sell 4 units on average per branch then it's £124,800 etc (I sell 20pcs per week & I'm very small scale...I don't get much e-footfall)

Stop assuming!

 

[Pish_Pash]

I'm not assuming (all units might come back to me in tatters), but that's just the maths in play (i.e. because of the number of branches this retailer has), which coming back to my earlier reply, it's a worthwhile risk/reward ratio in my books.

 

[MOIC]

Re Servcorp - I don't need just an office, I also need somewhere to store the stock securely...& there's no place like home for that at the moment!

Servcorp + Storage . . . . If you are seriously thinking of growing your business.

A dining room and annexe can only go so far . . .

At some point, you will need to do it if you want to expand.

Timing, that's up to you.

 

[MOIC]

I'm not assuming (all units might come back to me in tatters), but that's just the maths in play (i.e. because of the number of branches this retailer has), which coming back to my earlier reply, it's a worthwhile risk/reward ratio in my books.

You are assuming the following:

The retailer will buy stock for EVERY store.

The profit to you will be the same.

You have not experienced their FULL discount structure, or their requirements.

 

[Pish_Pash]

I'm not assuming they will put in every store...I know they will put in every store (I've been discussing with the buyer) ...actually, that £1.00 profit is expecting that I'll have to give them further discount (this initial batch actually sees a greater profit per unit) ...also since quoting them sterling has appreciated about 8% against the currency I purchase in, so there's some fat there....if this trial goes well, then IMHO it probably strengthens my hand not weakens it, from a pricing perspective.

OP, great thread and I've enjoyed your story. Well done!

I'm not big on social media...but thankfully my overseas supplier has a good following...they ran a short facebook campaign about 6 weeks ago & my sales here spiked 100% ...upon seeing this, I told them to pull it & wait until this retailer has them on the shelves ...then re-run it again with "now available in the UK at Acme Corp" (name changed to protect the innocent)

I've done the hotukdeals thing ...a bit naughty really (but needs must).... I posted an 'ahem' deal on there about 18 months ago (& it resulted in 80 units being sold in a day vs the normal 1-2 per day at that time)...but you can't do that too often (you'd get outed), it's meant to be joe public spotting a deal & posting it for others!

re free PR...I take all your points, but I don't really want to advertise my situation to every burglar in the locality! (i.e. there a security implications, as well as wanting to fly under curtain twitchers radars!)

the retailer has all the photos, youtube videos, details etc about the product ...bearing in mind their scale, it'd probably a bit naive to think that I can add anything significant to the mix to boost their sales.

 

[MOIC]

I'm not assuming they will put in every store...I know they will put in every store (I've been discussing with the buyer) ...actually, that £1.00 profit is forecasting that I'll have to give them further discount (this initial batch sees a greater profit per unit) ...also since quoting them sterling has appreciated about 8% against the currency I purchase in, so there's some fat there....if this trial goes well, then IMHO it probably strengthens my hand not weakens it, from a pricing perspective.

One phrase . . .

Goal posts change (especially when working with large groups)

 

[Pish_Pash]

One phrase . . .

Goal posts change (especially when working with large groups)

completely agree (the yacht is on hold for now )...& the first first step is simply hoping for a successful trial period - fingers crossed...I'll keep the thread updated.

 

[MOIC]

Good luck.

I hope it goes smoothly.

 

[William Crum]

The best solution is that get adviced from professional and high qualified Accountant.

 

[beasty]

The best solution is that get adviced from professional and high qualified Accountant.

Read page 1 of the thread, this was covered in depth.

Never count your chips while you are still sitting at the table, until you have money in the bank it can still go tits up, a new company might come out of the blue and wipe the floor, a rival might buy a shit load and dump stock, your supplier might be bought out by a rival company, it might get recalled a million things COULD happen, i sincerely hope you do land this and can then tell us all what it is but Sale or Return always has two options and represents no commitment.

 

[Deleted member 59730]

600 stores means 600 different managers. Some might get behind a product, some might not.

I had a small, timid, quiet buyer in one store of a major chain order my product intelligently and did very well for me. In another bigger store in the same chain a big, loud and dominant buyer was so frightened of her area manager that she never ordered properly and sold zilch.

How are you going to visit 600 stores to get 600 managers on your side?

 

[Twinkle Toes]

It's all a bit Jackanory isn't it?

Let's do the sums.

10k into at least 600 branches = £16 of stock per branch.

£1 profit per item would suggest a item value of about £4 to retail at £9.

So that's four units per branch. Sorry no chain is going to deal in such minute quantities.

Four units in a chain is of no value regarding predicting future sales. Any chain would expect to sell more than four low value units per day.

Now let's just presume this story was real and all the stock is sold on day one (which it would have to if they were going to place further orders). Suddenly the op has to come up with £10k of stock on a daily basis. Presuming the chain pay three months from invoice, which is the norm', he has to fund £900,000 plus distribution and import costs.

I'm surprised so many have fallen for this thread.

 

[Paul Kelly ICHYB]

William Crum - How will an accountant help in this scenario?

Atmisbob - most retailers use automated stock control systems and the store manager does not have a say - they get the stock and are told where to put it. HOwever, we still have no idea what the product is and who the lucky retailer is!

Richard Head - your assumption looks good! Even if the product costs £1, that would be 16 per store, which, on a ow value item does not sound a lot and does not take warehouse replenishment stock into consideration!

 

[Deleted member 59730]

Atmisbob - most retailers use automated stock control systems and the store manager does not have a say - they get the stock and are told where to put it.

Over 30 years experience of dealing with managers in multiple stores I can tell you that store managers made a huge difference in sales of my products. Baked beans perhaps but if its anything unusual it helps to have a friendly manager.

 

[Pish_Pash]

It's all a bit Jackanory isn't it?
I'm surprised so many have fallen for this thread.

You can think what ever you want, it's most certainly not jackanory. (do you really think I'm sitting here kicking my feet against the kerb thinking "I know, I'll spin a yarn for UK business forum")

As I say they wanted to order £25k's worth for the trial ....I baulked & stuck to my guns with my offer of £10k... if the trial is successful, yes, they will want to order in far greater quantities....btw I never once said I'm expecting the stock to be sold on day 1...remember, it's a 3 month trial. I am however expecting the trial to be successful. I'm well funded & this is my supplier's flagship product, so he can supply large quantities if required....I actually predict my biggest headache will be the lead time...if the trial goes well over the first couple of weeks, then replenishing via sea takes 7-8 weeks, bringing replenishment in by air is prohibitively expensive.

Supplying them with £10k of stock on a daily basis is in the realm of cuckooland...they will never require that much replenishment ...I don't know yet, but I I would imagine they'll order in blocks £25k amounts...but more frequently (vs saying "Well, they sold well, let's order £100ks worth)

The shipment was available for collection yesterday at Southampton...I went down & collected 5 boxes for my own local stock (with the remainder being delivered by a freight company to my customer), the boxes I collected are still in my hall (I've yet to make room for them in my chocka dining room - which looks like Del Trotters flat), in the photo you'll see I hastily opened up one inner carton ...this is because the packaging was a re-design done by me to suit the customer's requirements & I wanted to make sure there weren't any howlers....




Some cynical people eh?

 

[Twinkle Toes]

Go on, what's the product and where will I be able to buy it?

What chain is expecting it to take three months to sell half a dozen units?

Sorry, your figures just don't add up. Presuming it's £10k to you (not the retailer) and you're making 50% margin, which is unlikely to a chain, that's still only £33 of stock per shop. I used to have a couple of shops and I wouldn't have messed about with such small quantities!

How much are you paying them for prominent display space, or will you product be at the back of the store on the bottom shelf?

 

[Pish_Pash]

What chain is expecting it to take three months to sell half a dozen units?

I'm not saying who the chain are...but their buyer for this product is risk averse...hence them wanting the sale or return. I am risk averse too, hence only handing them £10k vs the £25k they wanted. This is why the numbers look odd at the moment...they've a lot of branches, but I was only prepared to give them £10k to start with (else, they may not promote well, or abuse the product & I end up with a whole load of unsellable goods on my hands)

Sorry, your figures just don't add up. Even if you're making 50% margin, which is unlikely to a chain, that's still only £33 of stock per shop. I used to have a couple of shops and I wouldn't have messed about with such small quantities!

Why are you fixated on this first tranche numbers ...yes, the stock will be thinly spread across all their branches for this first tranche (incidentally, they wanted a month to allow distribution to their branches before the trial begins) ...but if the trial is successful, the replenishment pipeline will be constantly whirring.

 

[Twinkle Toes]

You really need to work on your marketing strategy. Frankly "I not saying what my product is or where you can buy it" just isn't going to work

 

[Pish_Pash]

You really need to work on your marketing strategy. Frankly "I not saying what my product is or where you can buy it" just isn't going to work

& frankly, ukbusinessforums is not deemed my key area for product penetration!

I'd rather keep the details private...if I fail, I fail in private (i.e. I am but just a collection of ascii characters on a forum)...I'm just posting the trials & tribulations for others to read...they don't have to, but it's stuff you don't see (for example, the timed delivery slot that I hadn't factored in....more loss of profit) that might make others a bit more prepared when pricing up.

 

[The Byre]

You really need to work on your marketing strategy. Frankly "I not saying what my product is or where you can buy it" just isn't going to work

It works for me!

Being identifiable on some forum is not always a good idea. I made that mistake once on a technical forum and we even got abusive telephone calls from a few nut-jobs!

 

[Twinkle Toes]

It works for me!

Being identifiable on some forum is not always a good idea. I made that mistake once on a technical forum and we even got abusive telephone calls from a few nut-jobs!

Fair point. No reason he couldn't identify the chain though, or say at least what type of product it is. Because although he claims to be posting to help others from his experience's, it's worthless without knowing which market he's in.

Sums don't add up away, so it's irrelevant.

 

[Breaking Good]

Sorry, your figures just don't add up. Presuming it's £10k to you (not the retailer) and you're making 50% margin, which is unlikely to a chain, that's still only £33 of stock per shop. I used to have a couple of shops and I wouldn't have messed about with such small quantities!

To be fair to the OP, he deserves the right for us to assume he is telling the truth!

It sounds like a good journey so far, nothing ventured nothing gained. Hopefully the trial will go well!

 

[Twinkle Toes]

To be fair to the OP, he deserves the right for us to assume he is telling the truth!

It sounds like a good journey so far, nothing ventured nothing gained. Hopefully the trial will go well!

I'm not saying he's not got a trial, what I can guarantee though is his product isn't going into 600+ plus stores, not on the "facts" he's given.

 

[Pish_Pash]

Fair point. No reason he couldn't identify the chain though, or say at least what type of product it is. Because although he claims to be posting to help others from his experience's, it's worthless without knowing which market he's in..

I would never be so bold to claim I'm actually helping others, readers can take away from this thread of my journey what they may...I'll add to the thread when milestones/problems occur (as it goes just hit a mini one, worthless to the thread, but that aside ...my timed delivery slot for this morning - their Distribution Centre refused to take the pallet in because the driver didn't have *all* the information they required ....result = a frantic bit of phoning around. Thankfully, they are now unloading - I'm a bit miffed about this as it makes me look rank amateur - which I am, but in this case such a moniker isn't justified! - I furnished the 3rd party freight company with everything) ...the point of this thread, is that I'm small fry wingin' it ...hopefully, it'll all come off...if there's one thing for those in a similar situation to take away from this discussion, is that it is possible for small fry to supply the big players.

I know from my own situation how low things can feel endless/fruitlessly plugging away, trying to get a shoe in the door ....so if you like this is also a 'keep the faith' type thread.

it's worthless without knowing which market he's in..

Worthless? I would disagree Dick...there's scant information out there about one/two man operations interacting with a large UK retailers ...it's likely they engage/operate in broadly the same way (similar requirements...e.g. ISO certification etc), so I don't think knowing the specific the market I'm operating in is so key (I'd love to actually scream from the rooftops about the product & retailer - so that you all go & buy one, but like I say, privacy trumps a few extra sales gained from declaring that info here!)