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Selling handmade cards - Sale or Return
While we would all like to be able to produce our
work at an affordable trade price to enable us to deal with the
retail sector, you may find that you simply cannot do this and
make enough money on your products.
One way to increase your profits is to offer the retailer sale
or return, or a concession.
This would work very similarly to selling direct to the retail
sector, you would need to identify the correct type of business
that you would like to offer a concession to, and then find out
the name of the Buyer/Owner and once again you will be advised
to telephone the person first and explain who you are and what
you do, ask the person if they may be interested in a sale or
return concession on your products. I would imagine you will find
that most buyers will take a look at what you are offering as
there is no risk to themselves whatsoever in a sale or return
option.
However be very sure on what you are offering and be very clear
on how this is going to work for you and the retailer. As often
a retailer will attempt to take charge of what is going on, and
start telling you what is going to happen and how it works.
First and foremost you should be aware that a retailer does not
make as much profit on sale and return as he or she does on products
that they are purchasing at trade prices, they may tell you that
they need to make 100% + Vat, yet this is not for you, as you
know that the products will not sell at that price, the retailer
is being greedy and trying it on with you, he or she will know
that sale or return does not earn them 100% profit.
A reasonable return on a product at sale or return is 30% + Vat,
so you must take charge and tell the retailer the recommended
price you have budgeted for and that the retailer will receive
30 % commission on each sale.
How it works
You supply 300 handmade greeting cards on a spinner to the retailer,
The retail value of the cards is £2.95 each, as customers
purchase the cards the retailer takes the money which then passes
though their Till system.
Once a month you are allowed access to their premises to assess
your stock levels, you then count up how many cards have been
sold,
i.e. 137 cards have been sold, you then charge the retailer £1.75p
+ Vat x 137, a total of £281.70p.
The retailer has actually received £404.15 in money from
card sales so her profit is £122.45. For not doing anything
except allowing you some floor space in her shop.
Again it is advisable to get to know your retailer quite well
and have a trusting relationship, It will be necessary to have
an agreement ready that protects you from problems that may arise,
like theft, or not being given access to your products, also confirming
the business agreement between you and the retailer and the recommended
retail price and what commission is going to be paid, how long
the concession will last i.e. We work on one year agreements,
which means you get to leave your products in the shop for one
year.
It may seem as if you are not trusting your retailer by asking
them to enter into an agreement with you, yet this is perfectly
normal business practice and they will expect some type of written
agreement, if they do not want to sign an agreement it is advisable
to go elsewhere as they are probably planning on ripping you off.
This agreement needs to be signed by the retailer and yourself,
you are then protected and so is the retailer, both parties are
quite clear what business has occurred and how it will work, this
cannot be changed verbally by either party.
The retailer will also be happy to know that you are serious in
your intention and know what you are doing.
This is a good venture for you and the retailer as you have control
over the situation and you can ultimately get regular repeat business
instead of waiting for the Customer to reorder products, you are
able to replace sold items with other items of your choice, therefore
you can truly assess which of your products sell well and which
don't and need further work to make them successful.
It is advisable to change stock regularly for the retailer as
they do not want the same old stock sat around for ages as their
customers constantly expect something new, the stock must be moved
around. In many retail outlets the retailer will remove old stock
and store it out the back for six months and then bring it out
again as new stock, the customers see it again as new stock, not
knowing that it was in the shop previously.
Next Section: Tax Issues
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