As a retail store owner, you probably get requests every week, from people wanting you to stock their products.
I’m sure some are beautiful, some are not, and some, you just wonder what the person was thinking when they emailed you.
Picture your potential supplier. They have a product that they’ve spent months or years perfecting, sourcing samples, getting manufactured and now, its here. Or perhaps they’ve secured distributorship for an awesome new product. They want it to be in all the stores, because, let’s face it, they think it’s brilliant. Often, these suppliers are new to wholesaling and they’re learning as they go. As a retailer, you have a responsibility to your brand and your customers, to chose the correct products. Here are my top 5 questions you should ask potential suppliers before you even look at their products.
1. Products liability Insurance (PLI).
This is your top priority. No retailer should take on any product that doesn’t have its own products liability insurance What is PLI? It’s insurance that covers the manufacturer or distributor in the event that their product (or service) causes injury, death or damage to another person or business. As a retailer, I don’t want to be responsible for someone’s death/injury caused by a faulty product. And you can bet your bottom dollar, that should something happen, all claims will lead straight to you, if the manufacturer or distributor isn’t covered.
Unless a product has massive mark-up more than 110%, in these tough, cut throat, economic times, no one is going to want to have to gouge 10% of the total sale price to give to the government when they can't claim any input. It can be argued that a retailer can make their sale price anything they like, but at the end of the day, there is only so much tolerance in the general public for price differentiation. If a product has an RRP of $30, an online retailer (not registered for gst) might charge $29.99. The gst registered business (who probably has bigger overheads and gets a lot more traffic into their store) is going to have to charge $33 to make the same amount of money. As retailer, if you have a choice of two similar products, with the same RRP, and one was registered for gst and one wasn’t, which would you choose? When you ask this question, and get the reply “But I’m only new, I don’t earn/turn over enough to register”. Being registered for gst shows a retailer that a business is not some fly-by-nighter. The person is confident in their business being around for more than a few months.
3. Account terms
Some smaller suppliers won’t offer you account terms. You need to think about whether this product has proven track record and if it’s in your business’s best interest to have money tied up in an untested product. As a retailer, you must look at yourself as an agent for a product. You are going to be out there, actively promoting and selling this product. For many stores, account terms are a deal breaker.
4. Some sort of marketing plan
Now, very few retailers will ask this question. They think it’s getting a bit nosy, or it’s not there place to be asking about someone else business affairs. A suppliers marketing plan doesn't have to be uber professional, it can be sketched on a tissue for all I care, but I want to know how a supplier is going to drive customers to my store, or create a buzz around a product. Essentially, What’s in it for me, the retailer? If a potential supplier can't or doesn't know to how to promote their product, ask them to think about how they will can work with the you to get your product out there. Perhaps they could offer extra product for a giveaway, or offer to contribute to some advertising. There are many ways, that don’t have to be expensive. It just requires some creativity and openness.
5. Professional product shots
As a retailer, you have to protect the brand you’ve created. Your customers know, like and trust what you’ve developed. As such, you should set high expectations of what a supplier provides to you, and the products you sell should be presented consistently and professionally. Do you really want some shots taken on a mobile phone representing your what you sell? Are you prepared to put the money in to have a product presented to a level required in your store? There are of course, a lot of other things to consider before taking on a brand, but with all of my experience, these are the 5 questions I ask a supplier, before I get their product in for analysis.
Put this information somewhere on your website and direct potential suppliers to that page. This automatically creates a ‘barrier to entry’, reducing the requests you get to people who don’t think the first hurdle makes life too hard. If possible, have them fill out a form on your website with this information on it, which automatically gets emailed to you. You can set up a reply email that informs the potential supplier that you’ll get back to them in a set period of time. These questions are designed to help you wade through the requests that you receive and make your business more systemised and easier to grow. For more retail biz strategies, subscribe to the bringing business to retail podcast, where each week, I interview industry and through leaders for their take on life and business.