- Original Poster
- #1
In the case of using a distributor for getting your product onto retail shelves can I please ask for your experience on the following..
If you have a minimum order quantity to "retailers" which provides them with a 33% margin ie. 100 items = 33% margin.
You then choose to go with a distributor who in turn sells the 100 items to 100 stores each month.
If you are selling direct to retailers/offering them a 50% margin if they purchase 2000+ items -is it expected by the distributor that they receive the 50% discount as it is they who are taking 10,000 items each order, or can you insist that if the retailer takes orders within the 33% margin, then the margin is fixed at 33%. I suppose there is no way of knowing what the retailer is ordering as it is the distributor who will be dealing with the retailer and not you.
How do you distinguish/agree exactly what commission the distributor receives?
Ideally it would make sense that the distributor provides a monthly report on orders/discount passed onto retailers etc which in turn would reflect in the invoice issued by the distributor for their commission OR is it just as easy to grant the distributor the 50% discount, which they then sell to retailers, making their profits accordingly.
Options 1
Distributor charges 20% across the board on retail sales.
Must provide monthly report outlining sales/discount received by retailer.
If retailer purchases in 33% margin bracket, distributor earns £8,200 per 10,000 items
Option 2
Distributor takes 10,000 items at 50% discount.
Sells to retailers/ie 100-1000 items = 33% margin for retailer = 25% to distributor.
Working on this model we lose £1,740 per 10,000 items.
Many thanks
B
If you have a minimum order quantity to "retailers" which provides them with a 33% margin ie. 100 items = 33% margin.
You then choose to go with a distributor who in turn sells the 100 items to 100 stores each month.
If you are selling direct to retailers/offering them a 50% margin if they purchase 2000+ items -is it expected by the distributor that they receive the 50% discount as it is they who are taking 10,000 items each order, or can you insist that if the retailer takes orders within the 33% margin, then the margin is fixed at 33%. I suppose there is no way of knowing what the retailer is ordering as it is the distributor who will be dealing with the retailer and not you.
How do you distinguish/agree exactly what commission the distributor receives?
Ideally it would make sense that the distributor provides a monthly report on orders/discount passed onto retailers etc which in turn would reflect in the invoice issued by the distributor for their commission OR is it just as easy to grant the distributor the 50% discount, which they then sell to retailers, making their profits accordingly.
Options 1
Distributor charges 20% across the board on retail sales.
Must provide monthly report outlining sales/discount received by retailer.
If retailer purchases in 33% margin bracket, distributor earns £8,200 per 10,000 items
Option 2
Distributor takes 10,000 items at 50% discount.
Sells to retailers/ie 100-1000 items = 33% margin for retailer = 25% to distributor.
Working on this model we lose £1,740 per 10,000 items.
Many thanks
B
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