Sily Question but how does sale or return work

[smo]

I understand the concept of sale or return, but how do people go about administering it with invoices, goods going out and then coming back etc.?

 

[Christiane]

Make a note of stock left at the re-seller and give them a copy with their wholesale price, invoice them once the item is sold either when you collect the money or after. The stock is yours until sold so not sure where the confusion is?
C

 

[smo]

Surely you dont leave stock without invoicing them for it, what if they steal it or go bust?

I had invisaged invoiced when delivered, then if its returned credited back??

 

[CAEDAN]

I am assuming you have dealers which you supply to. In this case and item can go out SOR on a fixed term. In which case you can raise an invoice to be paid at the end of that term. If they sell, then they can either pay straight away (depends on what deal you have agreed with them) or just pay when the invoice is due, subject to you being able to sustain that. If they return, then the invoice can be voided as an SOR invoice (returned).

Stock management wise, the stock is yours until paid for, so there is no reason for it to leave your records so to speak - but it would need to be noted down as transferred in your stock system. This can be by setting up dealers on your records as 'branches' and sending the items IBT (Inter-branch tansfer) which will aid its' tracking if returned. You would 'hold' the stock - just not at your 'branch' as it were. This would bring the paperwork down.

It all depends on what systems you already have in place.

 

[beasty]

Sale or return is, YES we will stick it on our shelves and if it sells we will pay, if not we will return it.

Usually a small quantity and you just get them to sign something to say they hold it.

OR

HOW DOES IT WORK ANSWER TWO?

You could not sell your product into the store and now you are going to waste your time pi%%ing about trying to get it back or feedback on it.

Do not do it!

 

[Christiane]

SMO, sell or return is just that, if it doesn't sell, then the shop returns is (or you collect it most likely). They never pay upfront. The only sell or return that I can think of where the re-seller pays upfront is in the trade magazines/books. What kind of product is it? Craft items?

 

[smo]

HOW DOES IT WORK ANSWER TWO?

You could not sell your product into the store and now you are going to waste your time pi%%ing about trying to get it back or feedback on it.

Do not do it!

I'm not sure i follow :|

SMO, sell or return is just that, if it doesn't sell, then the shop returns is (or you collect it most likely). They never pay upfront. The only sell or return that I can think of where the re-seller pays upfront is in the trade magazines/books. What kind of product is it? Craft items?

Its aprons in this instance, designed for the consumer market. We currently sell direct through catalogues and internet but wish to offer it to local cook shops etc.

We dont have salesmen to travel around and wont be employing any as everyone hates salesmen! so the owners will deal direct with myself or my staff.

 

[owas]

A good example of SOR is, we had a few boxes of wooden toys that we couldn't shift online. Spoke to a lady in town who owns a toy shop. Over Christmas we gave her the lot without her having to pay any cost. She sold the eniter stock, and this week we went back, and collected the payment, which was cost price and a small percentage on top, she keeps the rest. The benefit is that we have cleared the stock, and she has made a profit without having to pay for the stock upfront. The negatives to this are this risk that she would stop trading, or break ins etc, and that we didn't sell them at full price.

 

[Christiane]

If it's aprons, then maybe you can sell them directly and don't mention SOR to them. If it is the shop who insists on SOR condition, then you have no choice, if you want to sell in their shop but you will only get the money if they sell, not before!

Just to add, it's a cash flow issue for shops, so they prefer taking the stock at no cost and give you the money once the item is sold.

 

[Lunazzurra]

We are a gift and card retailer who have placed SOR orders with suppliers before now. How it has worked for us in the past is that we get invoiced for the full amount once delivered. Then after an agreed period the supplier sends us a returns form for us to fill in listing any stock left. They then make arrangements for the remaining stock to be collected and once this has been checked against our submitted list they issue a credit note less a 20% admin charge.

This process is common amongst greeting card suppliers etc. but is usually limited to seasonal ranges i.e. Christmas, Easter and so on.

The example I've given above is how one of the biggest, if not the biggest, card suppliers in the UK does it, so it might be a good example to take.

 

[Philip Hoyle]

SOR means different things to different suppliers.

Some will invoice you and expect you to pay for the stock. Later they will then give you a credit note and take away the unsold items, probably at the same time stocking you up again with the items that are selling, thus another invoice to cancel out the credit for returns.

We had a convenience store and did this kind of SOR for batteries, ladies tights, pen sets, camera films, even home made fudge. I can't remember any items where the supplier left them for us and not expected us to pay. They were just normal sales with a promise that they'd take back and refund anything we didn't want/couldn't sell.

I remember this vividly because we were conned by the films supplier. He sold us a "package" of about a dozen films of about a dozen different sizes, i.e. 110, 126, 135 etc and a lot we'd never heard about but he assured us they were well used. Needless to say, we sold out of the 110/126/135 but he never came back so we were stuck with all the rest until they expired! Sod!

Just remembered, it was the same with local council lottery tickets when they first came out (long before National Lottery). We had to buy the books of tickets first and then you'd get unsold tickets swapped for new ones once they'd time expired.

 

[smo]

Thanks for the input everyone.

It seems I wasnt wrong in my way of thinking that SOR can work on invoice at delivery and refund/exchange unsold goods.

There is no way i'm putting my products into someones shop without any payment or security, the highstreet is far too wobbly to take the risk.

 

[Talay]

We are a gift and card retailer who have placed SOR orders with suppliers before now. How it has worked for us in the past is that we get invoiced for the full amount once delivered. Then after an agreed period the supplier sends us a returns form for us to fill in listing any stock left. They then make arrangements for the remaining stock to be collected and once this has been checked against our submitted list they issue a credit note less a 20% admin charge.

This process is common amongst greeting card suppliers etc. but is usually limited to seasonal ranges i.e. Christmas, Easter and so on.

The example I've given above is how one of the biggest, if not the biggest, card suppliers in the UK does it, so it might be a good example to take.

Does that work out better than just storing the stuff and barring the end of the world, selling it the following year ?

I'd have though you could drive prices down much further if you took on more of the risk.

Perhaps a neat balancing calculation but there must be a premium for returned stock over the 20% return fee.

 

[JamieM]

Thanks for the input everyone.

It seems I wasnt wrong in my way of thinking that SOR can work on invoice at delivery and refund/exchange unsold goods.

There is no way i'm putting my products into someones shop without any payment or security, the highstreet is far too wobbly to take the risk.

Aside Philip's post I have never known a retailer to pay up front for SOR stock. In the majority of cases it's not how it works.

Most retailers expect 30-60 days credit anyway so risk is par for the course. I agree with your point about the high street retail market though so it is sensible to mitigate your risk as much as possible.

 

[Root 66 Woodshop]

We've used a couple of SOR accounts before now, the risk for them is as people have said the company going bust or theft.

The bonus for the customer is that if it's SOR they'll do their best to sell the product as it's an incentive to sell it to get more "temporary free stock". As mentioned by Jamie, there are suppliers whom give 30-60 day credit, it's technically the same in reality the only difference is that at the end of the agreement they have to pay whether or not items have sold.

One of our safe suppliers dropped off 6 safes with us, we didn't pay a bean... then again despite pushing the products to potential customers we made a simple mistake of only taking on a keyed product... Everyone wants keypads these days

Basically not one safe sold, did they complain? nope - they came and took them all back after 3 months.

It's not always about the sale, it's about getting the brand name or product out there... if it's seen people can and will buy, if you don't get it out there how can they see it?