A Small Retailers Perspective


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Ordering Policies


Once you have developed your product and are ready to merchandise it through specialty retailers, how do you determine what your ordering requirements should be? You need to balance carefully the ease of getting an order from the retailer at all with the need to ensure that they purchase enough of what you sell to make a presence in their store. Some factors to consider in making your decision:

How varied is your product line? If you are offering a single product at a single price point, you may wish to specify a fixed-quantity order amount that will work for both initial orders and re-orders. Typically an order in the range of $100 wholesale will work (assuming your product sells for less than $100). If it is higher-ended, you may wish to require a minimum of two or three units.

If you have a more varied product line, you may wish to set both a minimum order amount and a minimum number of units-per-type. This way, the lower the price point of the item, the greater the quantity they need to purchase. Once a retailer is carrying your products, you may loosen up on the re-order dollar amount, but retain the minimum-quantity requirement. This will allow the retailer to easily restock your best-selling items without having to wait for slower-selling items to move also. They will also be more willing to take special orders for products they may not regularly stock because they won't be confronted with a large order requirement.

You may also wish to proforma sample orders for various mixes of your merchandise. The retailer can review your suggested combinations and find one that appears best for their store -- thereby placing a more informed order than if left to their own to figure out the facets of your product line.

What's the physical size of your product? The larger the product, the fewer a store needs to create the same impact. Also, the more space an item takes up in the store, the fewer the retailer will want to carry due to floor-size limitations. Unless your product has a proven track record, few retailers will be willing to commit more than a few linear feet to your display.

Put simply, you want to work with the retailer to present your product in its best light. If you have a family of products and want the retailer to carry the whole family, consider providing them with custom-made display pieces that will enhance your product and ensure that the retailer has a spotlighted area for their display.

In some instances, manufacturers will provide these fixtures free of charge. But in most cases, they sell them to the retailer at cost or agree to offset the cost of the fixture with additional merchandise using the retail price against the fixture cost. Then, by the time the retailer has sold the product at retail, they've recovered their fixture investment.

Display pieces work especially well if your product requires anything other than typical shelf space to be displayed. For example, hanging items like bells and pots show best when hung and, if you provide the retailer with a wood tree or the like, they are more apt to be displayed hanging.

Display fixtures also give you some control over how the retailer presents your products and how the public sees them. It can give you a more consistent image from store to store so your customers learn to recognize your products quicker.

And, once the retailer has a display piece, they will work extra hard to keep it full and will allocate a constant space to your product. If they use their own generic display shelves, you're apt to find yourself being bumped or condensed to make way for other displays as time goes on.

Some manufacturers try to set sliding scale pricing on their products, which allows the retailer to buy at a lower price when they purchase in higher volume. This may work if you are targeting larger retailers, but if you have your sights set on the specialty retailer, this is not a good approach. What this translates to in their terms is that they will be forced to pay more than the larger stores for carrying the same items and therefore will have to price higher to the customer. If you want to offer price incentives, do so across the board, for example, by giving cash discounts for prompt invoice payment.

In summary, keep in mind that you are working with the retailer to present and sell your product. Be flexible and responsive -- trying to get product into the store and out to the customer as reasonably and efficiently as possible. If your ordering requirements are too lax, you may end up with a lot of stores carrying too little product to be effective -- but if your requirements are too rigid, you may prevent the small retailer from being able to develop a customer set.

Specialty retailers work best with personalized service and this often requires being able to meet individual customers' needs for products they don't normally stock. If your re-orders are too high, this venue is not available -- and both retailer and customers suffer. Before committing to an order policy, test it out on a few of your customers and compare it to what your competitors offer, And once the policy is in place, don't be afraid to bend it when the situation warrants.


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