Wholesale / Distributor / retail

[Multi-store]

Hi All,

Lets imagine you sell jeans. Your jeans are great, you wholesale them to jeans sellers in the UK.

Then, a distributor comes along and says, hi, i like you jeans, im interested in distributing them exclusively in Australia.

What kind of % discount would you expect them to be looking for? If they want exclusivity, how do you determine the value of them?

any exp in this field would be great

 

[oldoakey]

I would tie in any deal with quantity and leave your self room to get out should they not hit a yearly turnover figure.

You have to think that if they want your jeans then maybe someone else will and if you have given exclusivity to them for the whole of Australia then they could have you over a barrel.

I would set minimum order quantities that you expect from them on a 3 month basis. That could be your opt out if they cant do the turnover you need.

Have pricing structured to quantity ordered so that if they want the full 10% off they have to take full 40ft containers etc.

I would also tie in payment terms to discount, eg 5% off for quantity and a further 5% if paid within your terms eg pro forma payment or 7 days whatever you think works for you.

 

[GraemeL]

What kind of % discount would you expect them to be looking for? If they want exclusivity, how do you determine the value of them?
t

% discount doesn't matter. Give them a net price so you make the margin you want.

Would you sell to Australia without them approaching you? If not, give them exclusivity for a limited period of say 3 years. If you would, dont give them exclusivity without a sales target.

G

 

[Multi-store]

I would tie in any deal with quantity and leave your self room to get out should they not hit a yearly turnover figure.

You have to think that if they want your jeans then maybe someone else will and if you have given exclusivity to them for the whole of Australia then they could have you over a barrel.

I would set minimum order quantities that you expect from them on a 3 month basis. That could be your opt out if they cant do the turnover you need.

Have pricing structured to quantity ordered so that if they want the full 10% off they have to take full 40ft containers etc.

I would also tie in payment terms to discount, eg 5% off for quantity and a further 5% if paid within your terms eg pro forma payment or 7 days whatever you think works for you.

Thanks for your input. We never do settlement terms unless we have no choice. but the rest is good advice.

 

[Multi-store]

Would you sell to Australia without them approaching you? If not, give them exclusivity for a limited period of say 3 years. If you would, dont give them exclusivity without a sales target.

G

Think you've nailed it for me there. Sales target is the key if do want exclusivity. Next question is how to you determine the sales target, but im sure i can figure that one out.

Cheers

 

[Moneyman]

Absolutely. You need a sliding scale of discount to quantity. but that is quantity over the year not quantity on each order. The more they up their turnover the more they save.
You also need to have a long term contract with sales targets so that you can drop them if they are not upto scratch.

 

[cromiem]

I am a distributor in the UK for some branded products. The distributor generally gets the worse deal and each country has different expectations.

In Australia I know a couple of distributors in fashion and they generally work on at least 100% markup through the chain.

But in the UK we cannot achieve this. Quite often if a distributor option is not viable look at agents for a country so they earn a set percentage for bringing you sales.

 

[Multi-store]

I am a distributor in the UK for some branded products. The distributor generally gets the worse deal and each country has different expectations.

In Australia I know a couple of distributors in fashion and they generally work on at least 100% markup through the chain.

But in the UK we cannot achieve this. Quite often if a distributor option is not viable look at agents for a country so they earn a set percentage for bringing you sales.

Thanks for this. As a distributor, image you knew that i wholesale my jeans at £12 - What kind of deal would you be looking for? 10%, 20%? Obviously you'll be after as much as you can get but where would be your starting point?

 

[The Paws]

We are UK exclusive distributor for some pet products, and expecting 30-50% margin so that we can wholesale the goods to UK retailers and everyone can still making healthy profit. Different industries work on different margin through.

Let say your jeans RRP at AUD20 (assuming no GST). Your Australia distributor will wholesale the jeans at AUD12 so that their retailers can make 40% margin (if selling at RRP). And, your distributor is expecting to make a profit of, say 40% margin, which mean they will not pay more than AUD7.20. And that AUD7.20 is including shipping, duty, tax etc which could make up of 20-30% of the total.

I hope you find the maths interesting

 

[The Paws]

We are UK exclusive distributor for some pet products, and agreed with cromiem that the distributor generally gets the worse deal. Different industries work on different margin through.

Let say your jeans RRP at AUD20 (assuming no GST). Your Australia distributor will wholesale the jeans at AUD12 so that their retailers can make 40% margin (if selling at RRP). And, your distributor is expecting to make a profit of, say 30% margin, which mean they will not pay more than AUD8.40. And that AUD8.40 is including shipping, duty, tax etc which could make up of 20-30% of the total.

I hope you find the maths interesting

 

[Lentinus]

Dont forget that the Aus RRP for your jeans may have NO relation to the UK RRP - different market, different needs, different perception of value.

 

[Deleted member 158328]

I'd go in at a fixed price, payment up front with a minimum order quantity at around 60% of the UK rrp.

(Bear in mind that clothing in Oz is blooming expensive and your distributor is likely to get hammered by import duties etc.)