[Comin'OutSwingin]

Dealing with Retailers…

I have been in talks with the owner of a chain of local urban wear stores about putting my products in his stores. Now another store is also interested and several issues have come up. I’m hoping someone here that has some experience dealing with retail stores can help me out here.



One of the main sticking points with the owner of the chain stores is hang tags. In some of our initial talks, we were talking around the same price with some of my shirts. Now he brings up having hang tags on the items. He wants me to furnish all products with hang tags attached. I am willing to do so, but obviously this will cost me more on my end, and he is not willing to go down on the numbers that we had been kicking around in our earlier talks.



What is the standard practice regarding hang tags? Who normally furnishes them? Should I put the MSRP on them?



The other retailer says they have a generic hang tag with their store logo on it where they also place the price, and it is not an issue with them at all.



Another issue is product placement. For lowering the price to them a bit, they say they can give me “pretty good” placement in the stores. They haven’t exactly said what that is yet, but something that they brought up. How does this normally work?



Also, I have a few different types of products, and different designs on them. I have t-shirts (men’s and women’s), caps, beanies, and sports jerseys (baseball and basketball style, football later hopefully). They are wanting to put all of them in the stores, but on different deals. They want pay for some things with their business credit card up front, some of the shirts and all of the caps they want on net30, some shirts on consignment, and all jerseys on consignment. Is this normal? I was wanting to stay away from consignment. I’ve heard some pretty bad stories about it. Even when everything is in writing, I’ve heard it can still be a pain to deal with. Also, I would imagine that I would be creating a lot of work for myself, just trying to keep up with all of the products set up differently. I don’t want to do a bad deal just to have my stuff in stores. Should I stick to my guns and say “whatever you get, it has got to be at least net30” or bite the bullet and do it there way?



I just don’t want to be taken advantage of just because they know I’ve never had to deal with these issues before. I’ve tried to find out as much as I could about this, but it has been difficult, so if anybody can help, it would be great!

 

[Preston]

Re: Dealing with Retailers…

Typically the manufacture (in this case you) provides all hang tags. You can get a tagging gun for around $30.00 and 5000 tagging barbs for $13.00. You can just get any thing printed up for tags unless they also want a UPC label on the tag. If that is the case, you will need to either join GS1 (formerly know as the Uniform Code Council or UCC) or purchase individual bar codes that can range anywhere from $35.00 to $89.00 each. You will need one bar code per product item number. You cannot just get a bar code font and make your own. These have to follow the guidelines set forth by the Uniform Code Council or UCC and must be issued to you, otherwise they will not work with the merchants scanners on the registers. All part of the cost of doing business. That reminds me, do you have at least $1,000,000.00 in liability insurance? I would not want to take the risk of supplying shops with products and not have it. Someone buys a shirt you provided and a baby chokes on it, you are going to get sued so its best to buy the insurance. You should be able to get product liability insurance fairly cheap for T-Shirts.

 

[lawaughn]

Re: Dealing with Retailers…

I use to run a retail store. When we dealt with tee shirts we paid net 30 for our main items and for the items that were backups we took on consignment. The back up items were there to fill shelf space with the main items sold out. We really didn't believe that we could sell these items fast and weren't willing to make a financial commitment to them until we knew for sure that they could produce income.

You really should only accept one form of payment per company. Record keeping will get to be a pain with the two separate forms of payment at one location. Plus you will have to make trips to the location to see if the merchandise is actually still there.

Also find out exact what placing you will have in the store. That will be your stop and only should be changed if the items aren't selling well in that spot or during a remodeling.

If you do go with the consignment method understand that it's a test drive. Figure out first how long both parties are willing to do this test drive before they have to make a commitment or you pull the items from the store.

Is the chain of stores all local or is there shipping involved?

You provide the hang tags unless they have manual cash registers.

 

[Comin'OutSwingin]

Re: Dealing with Retailers…

Thanks for the replies. It really helps.

I had already priced some tagging guns, and came up with the $30 range.

Preston, how much to join GS1? Do you know? I want to see if it would be more beneficial to purchase individual bar codes or just join. I'm going to have quite a few item numbers, with more to be added soon.

Also I've got the insurance. As a matter of fact, I used to sell insurance. Life, health, property & casualty. Independent agent. The day I registered my business with the state, I wrote myself a policy. Nothing like making money on yourself!

My supplier of woven labels is willing to give me a package deal on my woven & printed labels, and my hang tags & bar codes. I just hadn't anticipated the extra cost of having hang tags and bar codes printed up. But like you say, that's the cost of doing business!

lawaughn, the chain stores are all local. He's got 5 total, spread around the city pretty good.

Should product placement be written in the contract?

Thanks for the help!

 

[Preston]

Re: Dealing with Retailers…

Thanks for the replies. It really helps.

I had already priced some tagging guns, and came up with the $30 range.

Preston, how much to join GS1? Do you know? I want to see if it would be more beneficial to purchase individual bar codes or just join. I'm going to have quite a few item numbers, with more to be added soon.

Also I've got the insurance. As a matter of fact, I used to sell insurance. Life, health, property & casualty. Independent agent. The day I registered my business with the state, I wrote myself a policy. Nothing like making money on yourself!

My supplier of woven labels is willing to give me a package deal on my woven & printed labels, and my hang tags & bar codes. I just hadn't anticipated the extra cost of having hang tags and bar codes printed up. But like you say, that's the cost of doing business!

lawaughn, the chain stores are all local. He's got 5 total, spread around the city pretty good.

Should product placement be written in the contract?

Thanks for the help!

The fee depends. See:

http://www.uc-council.org/ean_ucc_system/membership/PCP/PCfaq.html.

May or may not be worth it to you.

 

[Comin'OutSwingin]

Re: Dealing with Retailers…

Thanks for the link!

I filled out the application. First year membership fee for me is $750, with annual renewal fee of $150.

I found out that each size and color of a product needs a separate bar code. So this will probably be the best way for me to go. I found a company that sells them for a flat $35, but they also have a $75 registration fee. But I'm going to need so many, especially with each size and color of the same item needing one, that it will most definitely be better for me to join.

Thanks again Preston!

 

[lawaughn]

Re: Dealing with Retailers…

Should product placement be written in the contract?

Thanks for the help!

I really couldn't answer that. We always gave a verbal promise and kept to our word.

 

[BEatMaKeR]

Re: Dealing with Retailers…

Comin'OutSwingin, I'm in the same boat. Thanks for asking this... Also, I'm concerned about wholesale pricing. Is there a standard % wholesale items should be sold to retailers vs. your MSRP?

Say a shirts sells for $28 MSRP. What would be the wholesale pricing you would ask these retails to pay on net30? And do they pay for shipping? Or do you as the manufacturer?

 

[BelHeirClothing]

Re: Dealing with Retailers…

Comin'OutSwingin, I'm in the same boat. Thanks for asking this... Also, I'm concerned about wholesale pricing. Is there a standard % wholesale items should be sold to retailers vs. your MSRP?

Say a shirts sells for $28 MSRP. What would be the wholesale pricing you would ask these retails to pay on net30? And do they pay for shipping? Or do you as the manufacturer?

what is net30? haha

 

[lawaughn]

Re: Dealing with Retailers…

Usually you charge 50% of retail. They pay for the shipping.

Net30 basically means that you the wholesale gives the retailer 30 days to pay their bill. It's basically credit.

 

[BEatMaKeR]

Re: Dealing with Retailers…

50%!!

Wow! That's allot. Minus the cost of the shirt manufacturing and that doesn't leave much room for profit margins. Unless your the retailer! haha!

maybe the MSRP minus your manufacturing costs = your profit margin. Then take 50% of that and that's your wholesale price perhaps?

 

[Comin'OutSwingin]

Re: Dealing with Retailers…

No, she had it right. That's the way it works.

50%!!

Wow! That's allot. Minus the cost of the shirt manufacturing and that doesn't leave much room for profit margins. Unless your the retailer! haha!

Don't forget, retailers have costs, too! Rent, being a HUGE one! They probably have higher insurance costs, wages to pay, advertising, etc.

That's why the costs are normally split. The manufacturers, especially smaller ones (us!) still probably make out better on the deal!

And obviously, the cheaper that we can produce items the better WE make out.

 

[lawaughn]

Re: Dealing with Retailers…

Let's do the math.

You have a shirt that retails for $25
You sell wholesale for $12
It cost you $5 to make
Profit $7 per shirt hopefully sold in bulk with a 36 being the least that they can buy.

 

[lawaughn]

Re: Dealing with Retailers…

No, she had it right. That's the way it works.



Don't forget, retailers have costs, too! Rent, being a HUGE one! They probably have higher insurance costs, wages to pay, advertising, etc.

That's why the costs are normally split. The manufacturers, especially smaller ones (us!) still probably make out better on the deal!

And obviously, the cheaper that we can produce items the better WE make out.

Plus the retailer may have to carry that design for a while until it sells out. You will get your money upfront or in 30 days.

 

[BelHeirClothing]

Re: Dealing with Retailers…

okay so one of my retail stores has bought an alotment of 300 shirts, my msrp for the shirts are 67 for the higher end line and i wholesale at 35... is doing net30 like consignment or is it apart of retail wholesale purchasing?

 

[lawaughn]

Re: Dealing with Retailers…

With Net 30 days once they shirts are accept they usually can't be returned unless they are defective in some way.

Some wholesalers give the retailer 15 days to make any returns. So if they don't return them in the time that you have set for returns then you know that in 30 days you are due the full amount of the bill.

With consignment they can have them for 30 days and say " Hey only one sold come and get the rest". They may want to hold onto to them a little longer to see if they sell. Your don't know what's going to happen with consignments.

If your going the consignment route. Specify how much time the shirts will sit in the store and who is responsable for return shipping charges if any. Also, make sure that you have a way of telling how many shirts sold in the given time and when the payment for those sold is due.

 

[BelHeirClothing]

Re: Dealing with Retailers…

With Net 30 days once they shirts are accept they usually can't be returned unless they are defective in some way.

Some wholesalers give the retailer 15 days to make any returns. So if they don't return them in the time that you have set for returns then you know that in 30 days you are due the full amount of the bill.

With consignment they can have them for 30 days and say " Hey only one sold come and get the rest". They may want to hold onto to them a little longer to see if they sell. Your don't know what's going to happen with consignments.

If your going the consignment route. Specify how much time the shirts will sit in the store and who is responsable for return shipping charges if any. Also, make sure that you have a way of telling how many shirts sold in the given time and when the payment for those sold is due.

NICE THANKS VERY MUCH!!!!!!!!!!!!!!!!!!!!!!!!!! FOR ALL THIS INSITE!!!!!!! I LOVE THIS FORUM! YOU PEOPLE ARE AMAZING!

 

[BelHeirClothing]

Re: Dealing with Retailers…

With Net 30 days once they shirts are accept they usually can't be returned unless they are defective in some way.

Some wholesalers give the retailer 15 days to make any returns. So if they don't return them in the time that you have set for returns then you know that in 30 days you are due the full amount of the bill.

With consignment they can have them for 30 days and say " Hey only one sold come and get the rest". They may want to hold onto to them a little longer to see if they sell. Your don't know what's going to happen with consignments.

If your going the consignment route. Specify how much time the shirts will sit in the store and who is responsable for return shipping charges if any. Also, make sure that you have a way of telling how many shirts sold in the given time and when the payment for those sold is due.

and no im not taking the consignment route, that stuff is hard.. we are doing wholesale i was just check if net30 applied to wholesale selling as well..

 

[BEatMaKeR]

Re: Dealing with Retailers…

Is there any place that has these contract net30 terms? Like a sample form someplace? I know with graphic designers there are generic forms online you can download. That would be a nice starting point.

Also, what is stanbdard practice with retailers as far as minimum order lots for wholesale? For a new line like myself, I want to get into retail stores. But I don't want to over quote my minimum orders. So what should I say is a minimum retails can purchase on net30. Doesn't sound like consignment is something I should consider. Too much work tracking down sales and stores inventory. Plus you have "shrinkage" to think about (theft).

Speaking of which. With 30 days net you said they can tell you within 15 days to come get your stuff. But what about theft? If 3 shirts get stolen. They only sell 1. What do you they owe you?

 

[lawaughn]

Re: Dealing with Retailers…

You have to work out the theft issue yourself. If you do consignment specify that for whatever amount of shirts that you don't get back sold or stolen that they have to pay for.

The minimum is up to you. We always did 36 per design but some people only due a dozen or 50. You decide.