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SWOT analysis

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  • 10-09-2014 10:05am
    #1
    msdoc
    Registered Users Posts: 42 ✭


    I want to expand my business and am thinking of the following.
    Import papers, package & brand them, use independent sales agents on commission basis to sell them in to retail units.
    Not saying that it is going to be a safe bet but I'm thinking that my biggest outlay is the cost of stock and storage of same. I am aware that getting payment will be an ongoing job and would propose that I only pay the sales agents once I get paid.
    I have already started reselling the papers to an online retailer and could directly target a few more of these.
    I'm basically looking for some critique/provocation.


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    #2
    kirb42
    Registered Users Posts: 168 ✭✭kirb42


    wouldn't do any harm to check this out first ,porter's 5 forces....

    http://en.wikipedia.org/wiki/Porter_five_forces_analysis


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    #3
    pedronomix
    Closed Accounts Posts: 997 ✭✭✭pedronomix


    What kind of papers? The logistics/distribution chain for these shops is via wholesalers.


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    #4
    thecommander
    Registered Users Posts: 2,537 ✭✭✭thecommander


    pedronomix wrote: »
    What kind of papers? The logistics/distribution chain for these shops is via wholesalers.

    Exactly. Any paper shop (e.g. Daintree) will have it's own suppliers, why would they go with you? A newsagents that sells paper will just buy from their wholesaler along with pens, rulers etc.

    What is different about your paper, and why would a store ditch the current supplier for you? Are you cheaper, or faster, or better quality?


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    #5
    msdoc
    Registered Users Posts: 42 ✭msdoc


    They are speciality papers - from India.
    I'm thinking more of the UK market, rather than Ireland


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    #6
    msdoc
    Registered Users Posts: 42 ✭msdoc


    thecommander wrote: »
    Exactly. Any paper shop (e.g. Daintree) will have it's own suppliers, why would they go with you? A newsagents that sells paper will just buy from their wholesaler along with pens, rulers etc.

    What is different about your paper, and why would a store ditch the current supplier for you? Are you cheaper, or faster, or better quality?

    These papers are new to the market. Daintree, or others, would go with me, or at least consider me, as I'm bringing something new that maybe they have had previous requests from their customers for.
    Sorry that I didn't clarify that the papers are different from anything else on the market.


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    #7
    pedronomix
    Closed Accounts Posts: 997 ✭✭✭pedronomix


    msdoc wrote: »
    These papers are new to the market. Daintree, or others, would go with me, or at least consider me, as I'm bringing something new that maybe they have had previous requests from their customers for.
    Sorry that I didn't clarify that the papers are different from anything else on the market.

    Then they should be very attractive to the established wholesale network too! The product range is probably far too niche to sustain a separate national sales/distribution operation.


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    #8
    thecommander
    Registered Users Posts: 2,537 ✭✭✭thecommander


    msdoc wrote: »
    They are speciality papers - from India.

    What's different about them? I'm a designer and do a ton of print. While most of it is on standard stocks, we do use speciality papers for invites etc.


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    #9
    msdoc
    Registered Users Posts: 42 ✭msdoc


    pedronomix wrote: »
    Then they should be very attractive to the established wholesale network too! The product range is probably far too niche to sustain a separate national sales/distribution operation.

    I don't think that I can go low enough on the price for a wholesaler to get enough of a markup.
    I was thinking of using sales agents who would normally call to craft shops and that they would add this to their portfolio. I would pay them commission on sales. They would typically carry a few lines of different products.
    What would a typical wholesaler mark up be? 40%


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    #10
    msdoc
    Registered Users Posts: 42 ✭msdoc


    thecommander wrote: »
    What's different about them? I'm a designer and do a ton of print. While most of it is on standard stocks, we do use speciality papers for invites etc.

    You couldn't print on them - they are embossed papers. They can be used for backing and to make wallets out of.


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    #11
    thecommander
    Registered Users Posts: 2,537 ✭✭✭thecommander


    msdoc wrote: »
    You couldn't print on them - they are embossed papers. They can be used for backing and to make wallets out of.

    Who do you see buying them?


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    #12
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    msdoc wrote: »
    I don't think that I can go low enough on the price for a wholesaler to get enough of a markup.
    I was thinking of using sales agents who would normally call to craft shops and that they would add this to their portfolio. I would pay them commission on sales. They would typically carry a few lines of different products.
    What would a typical wholesaler mark up be? 40%

    Probably 30% margin, although Im not sure about that particular industry, thats the margin I work off in wholesale distribution of other products. But you could go yourself to the wholesalers instead of paying sales agents to do it, then the numbers will probably work.


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    #13
    msdoc
    Registered Users Posts: 42 ✭msdoc


    thecommander wrote: »
    Who do you see buying them?

    Brides/crafters wanting to make wedding stationery
    Some examples here
    pinterest.com/HappyEverAfter4/embossed-papers/


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    #14
    msdoc
    Registered Users Posts: 42 ✭msdoc


    Deleted User wrote: »
    Probably 30% margin, although Im not sure about that particular industry, thats the margin I work off in wholesale distribution of other products. But you could go yourself to the wholesalers instead of paying sales agents to do it, then the numbers will probably work.

    I wasn't going to go to sales agents and they go to wholesalers. I was going to go to sales agents and they go to retailers


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    #15
    pedronomix
    Closed Accounts Posts: 997 ✭✭✭pedronomix


    And have a bunch of low sales value accounts plus all the logistics/distribution costs plus sales agents fees, if you can find any (a big if!) . Model does not work for me. If you want to step outside the industry norm you better have a range with both huge margins and sales potential


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    #16
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    pedronomix wrote: »
    And have a bunch of low sales value accounts plus all the logistics/distribution costs plus sales agents fees, if you can find any (a big if!) . Model does not work for me. If you want to step outside the industry norm you better have a range with both huge margins and sales potential

    Indeed. If these sales agents are going to be hitting small individual stores its too messy and too much work for little return. If you want them to hit big chains, your better off doing it yourself and saving that commission margin. Theres not that many of them to hit.
    Or as advised use the wholesalers to do that for you, a couple of pitches could save you a whole lot of pain and admin.
    Its also a risk getting the salespeople, because if you are fortunate enough to get them, if they are on commission only and not under your control most of the time, chances are its not going to work. From my experience commission only models only really work for the companies that are hardcore sales with all the bells and whistles that entails in terms of motivation and training.


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    #17
    msdoc
    Registered Users Posts: 42 ✭msdoc


    Could someone help me do the math? If the RRP is €1 (including VAT) what would a distributor sell for and what should/could I sell to a distributor for?


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    #18
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    If VAT is 20% then its 17 cents of the 1 euro. I dont know what margins retailers work with for newspapers, but I imagine its at least 40%. So 35 cents for the retailer. Then 30% for a wholesaler - 15 cents. So that leaves 34 cents for you. I'd say thats your ballpark. You'll have some logistics costs in there too I'd say you'd need to buy on a 50-60% gross margin yourself to make it work.

    Im sure theres someone in retail here who can confirm the margins on papers etc


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    #19
    msdoc
    Registered Users Posts: 42 ✭msdoc


    Sorry. I'm normally good with maths but have a brain block on margins

    Retails for €1
    20 c VAT
    40c profit for retailer
    20 c profit for wholesaler

    so after everyone has taken a cut there is 20c for me which has to cover the costs of goods and logistics etc.

    Does the wholesaler's profit look right? Spoke to someone and he said that he needs 40%


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    #20
    pedronomix
    Closed Accounts Posts: 997 ✭✭✭pedronomix


    Vat is 23%, so ex vat retail is 81.3c
    Retailer will want 50% MARGIN so his cost is 40.69 ex vat
    Wholesaler will want 40% Margin so you get 24.39 ex-VAT


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    #21
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    pedronomix wrote: »
    Vat is 23%, so ex vat retail is 81.3c
    Retailer will want 50% MARGIN so his cost is 40.69 ex vat
    Wholesaler will want 40% Margin so you get 24.39 ex-VAT

    Seems a lot for a wholesaler 40%, is that the standard with newspapers etc?


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    #22
    pedronomix
    Closed Accounts Posts: 997 ✭✭✭pedronomix


    Deleted User wrote: »
    Seems a lot for a wholesaler 40%, is that the standard with newspapers etc?

    they are embossed art papers not newspapers!!


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    #23
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    pedronomix wrote: »
    they are embossed art papers not newspapers!!

    You and your semantics Pedro :D

    But same point applies, I would say 40% is pretty high for a wholesaler


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    #24
    pedronomix
    Closed Accounts Posts: 997 ✭✭✭pedronomix


    For low value items I would say it is an absolute minimum! ( based on personal experience)

    I would never let facts get in the way of semantics, soo much more fun!!


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    #25
    pedroeibar1
    Closed Accounts Posts: 5,108 ✭✭✭pedroeibar1


    Semantics - where would be without them, a horse chesnut and a chesnut horse are quite different!:)
    I agree with el Rifle and Pedronomix above. For the sake of it let’s assume the margins available are adequate, and that the ‘agent’ will not do a banana to the source and cut you out.

    A key issue is marketing the product. When agents have more than one ‘principal’ it is very hard (read often impossible) to manage and/or motivate them on your product. If your product is really ‘special’ (high commission/unique/door-opener) it can work if each agent has a complementary range of products and your product is an ‘add-on’ – otherwise the sale cost will not be worth their while. (Why waste time trying to find customers and sell a product that is not remunerative in terms of ‘income per sale’?)
    You are correct to tie payment of commission to receipt of payment by you.


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