Finding a distributor for a household product

Alako

Hi,

We have a product that we are hoping to bring to market, selling it on the shelves in major grocery retailers like Tesco, Dunnes etc.

We've been advised the best way to go is through a distributor, but does anyone know whom that might be?

It's a household cleaning product that would be positioned near black sacks and that. I found these guys in Cork:

http://www.green-circle-marketing.com/index.html

Does anyone know of any of the major distributors about?

Thanks a million,

Emily

The Guvnor

Who advised you to go through a distributor?

Apart from taking margin what will they do for you?

Can you negotiate with the multiples yourself and if successful look at how to get the product to the shelves.

If its a product that is not so unique, patented etc then a distributor may well be the way to go. If they have account already setup to supply these stores its much easier for them to introduce a new SKU. They also have the logistics infrastructure to support it.
But your going to need 30% margin off the wholesale price for the distributor to be happy financially and that can be a problem depending on the cost and selling price of your product

Alako

Hi all and thanks for your input!

We are but two people that have designed this product, and we are designers first and foremost.. our business and logistics knowledge we are finding out as we go along.

The product is the first of its kind, and although the technology is not really patentable, we are registering design rights and trademarks as we plan on bringing further products to market using the same trademark.

This product came about as part of a competition, and a couple of judges suggested we look at distribution, an ex-distributor I know also suggested the distribution route so as to capitalize on logistics frameworks already in place.

However, on top of the 35% taken by the retailers, another third by a distributor is looking rather unmanageable. So we will likely have to distribute ourselves initially before the hopefully lowering of costs will allow us to move towards distribution.

Any further thoughts and advice greatly appreciated.

Emily

Alako

Alako wrote: »

Hi all and thanks for your input!

We are but two people that have designed this product, and we are designers first and foremost.. our business and logistics knowledge we are finding out as we go along.

The product is the first of its kind, and although the technology is not really patentable, we are registering design rights and trademarks as we plan on bringing further products to market using the same trademark.

This product came about as part of a competition, and a couple of judges suggested we look at distribution, an ex-distributor I know also suggested the distribution route so as to capitalize on logistics frameworks already in place.

However, on top of the 35% taken by the retailers, another third by a distributor is looking rather unmanageable. So we will likely have to distribute ourselves initially before the hopefully lowering of costs will allow us to move towards distribution.

Any further thoughts and advice greatly appreciated.

Emily

Its going to be a steep learning curve im afraid! One important thing when bringing a new product to market is to look at the figures before anything is done and see can you 1. Allow 50% margin for retailers, 2. 30% off the remaining wholesale price for a distributor and 3. Your own margin after that which should be 50% at least otherwise its all work and no money. If your doing the sales yourself and cut out the distribution margin fair enough, but you need a min of 50 in there for the retailer.

Id be shocked if a retailer agreed to 35%, guys like Tesco are going to push you for even more then 50% I would expect. You may also have to compete for shelf space in this industry/market and pay listing fees. A distributor with existing relationships might be able to work around that but will be hard for you. Gotta have the numbers right, otherwise you'll be doomed from the start. I have a distribution company and this was the first lesson I learned. I had all these great products at the start but the margins were all wrong so I couldnt get any of them into stores. Took me a few months to figure it out and those margins are the first thing I ask about now no matter how good the product looks.

Alako

Deleted User wrote: »

Its going to be a steep learning curve im afraid! One important thing when bringing a new product to market is to look at the figures before anything is done and see can you 1. Allow 50% margin for retailers, 2. 30% off the remaining wholesale price for a distributor and 3. Your own margin after that which should be 50% at least otherwise its all work and no money. If your doing the sales yourself and cut out the distribution margin fair enough, but you need a min of 50 in there for the retailer.

Id be shocked if a retailer agreed to 35%, guys like Tesco are going to push you for even more then 50% I would expect. You may also have to compete for shelf space in this industry/market and pay listing fees. A distributor with existing relationships might be able to work around that but will be hard for you. Gotta have the numbers right, otherwise you'll be doomed from the start. I have a distribution company and this was the first lesson I learned. I had all these great products at the start but the margins were all wrong so I couldnt get any of them into stores. Took me a few months to figure it out and those margins are the first thing I ask about now no matter how good the product looks.

Great advice, thanks for that. We were actually in contact with someone from Tesco who gave us an estimate of 35%. I appreciate this could be more so I will definitely factor 50%.

Factoring in VAT.. I'm still trying to get my head around the system, is anyone aware of any sites that demonstrate what to do when accounting for VAT in pricing?

Apologies for my lack of knowledge and I really appreciate any advice!

DubTony

Alako wrote: »

Great advice, thanks for that. We were actually in contact with someone from Tesco who gave us an estimate of 35%. I appreciate this could be more so I will definitely factor 50%.

Factoring in VAT.. I'm still trying to get my head around the system, is anyone aware of any sites that demonstrate what to do when accounting for VAT in pricing?

Apologies for my lack of knowledge and I really appreciate any advice!

VAT is simple. The tax is added at all stages of distribution.
So when you sell to your distributor, the agreed price does not contain VAT and should be added at the bottom of the invoice. Your distributor will reclaim that on the VAT return. The distributor will add VAT to the price agreed with the retailer. Retailer will reclaim that, and then add VAT after markup to get the actual selling price.

In business to business transactions it is generally assumed that all parties are VAT registered and so pricing is determined and agreed without reference to VAT. It's only when a consumer buys the product at retail that VAT is included in the price.

enviro

I would advise to get yourself and your product(s) in front of the relevant buyers at the multiples as soon as possible. Be creative and persistent in your approach. Try stand out from the crowd.

Slotting fees are a possibility that you may have to factor in, gauge the reaction to the product first and see what you can negotiate from there...

Ensure you go in there prepared; know your product, the relevant market and the figures inside out! best of luck.