business-legal Wholesale questions

[HellfireFarm]

Anyone selling wholesale to retail stores? I'm about to take that step and have a couple questions:

Pricing: What guidelines do you use for pricing? I have retail prices set for when I sell at markets and I would like to keep the store prices reasonably in line with that. I understand that the stores will probably decide the markup for themselves, but I'm thinking there are some general guidelines for that. So for example, if I charge the store $5, I can expect them to price it at $???

Order forms: I picked up from someone that it's typical to have order forms for the store to fill out. How do you get the orders FROM the store. Start with the assumption that they already want it - when they want to order, how do they tell you what they want?

Terms: COD? Net 30? Probably differs between retailers, but what's typical? I'm looking at small local "general" stores, and possibly local/regional grocery chains.

Lead time: When an order is placed, how soon are you expected to deliver? Tomorrow, next week, 30 days, etc?

Returns: Is it typical to allow for product returns? Will it hurt your prospects with some companies if you don't offer returns? Are restocking fees normal or is that not done at the wholesale level?

Thanks for the input! Looking forward to taking this step!

 

[salsalady]

Anyone selling wholesale to retail stores? I'm about to take that step and have a couple questions:

Pricing: What guidelines do you use for pricing? I have retail prices set for when I sell at markets and I would like to keep the store prices reasonably in line with that. I understand that the stores will probably decide the markup for themselves, but I'm thinking there are some general guidelines for that. So for example, if I charge the store $5, I can expect them to price it at $???

grocery stores generally use a 35% mark up for shelf items. Deli foods are 50% mark up. quick explanation for those reading for the first time-
If the for sale price is $1, then 35% of $1 is the store cut, 65% is the wholesale price. For Deli items, they take the item price and double it. For Deli items, that price would be the cost of the item plus any labor costs to deep fry, slice, cook whatever the item is.
how to get that price- if you figure out that your wholesale price is $4, the msrp would be $6.15
$4 / .65 = 6.15

Order forms: I picked up from someone that it's typical to have order forms for the store to fill out. How do you get the orders FROM the store. Start with the assumption that they already want it - when they want to order, how do they tell you what they want?

They can email orders to you if they are out of area. My fresh salsa is only in a couple local stores, I maintain stocking shelves (along with the store employees) as the salsa in refrigerated, and backstock is in the produce cooler. I decide when to make another batch of salsa. I am in the stores several times a week for regular grocery shopping so it is no bother to check the backstock, stock the shelf, etc.

Terms: COD? Net 30? Probably differs between retailers, but what's typical? I'm looking at small local "general" stores, and possibly local/regional grocery chains.

The stores I supply are 'local'. Even 2 are part of a larger chain, they deal with a lot of local products. I get a check in the mail within a week after delivery, or in the case of one store, I pick a check up at the store 2-3 days after delivery. I wouldn't deal with a store that put it 30 days out. Small processors can't and shouldn't, have to carry invoices that long.

A couple stores would do COD if I wanted to wait around for the bookkeeper to get to the office, dig out a check, process it.....
never mind, I'll just let them mail...

Lead time: When an order is placed, how soon are you expected to deliver? Tomorrow, next week, 30 days, etc?

I decide when to make and deliver salsa. Been doing this for ~30 years, I know the big sales times, (holidays, superbowl). For the bottled sauces, it is when I feel like making it. For Pure Evil, HEAT Hot Sauce emails their order. I try to get it out within 2 weeks.

Returns: Is it typical to allow for product returns? Will it hurt your prospects with some companies if you don't offer returns? Are restocking fees normal or is that not done at the wholesale level?

Salsa has a 30-day BestBy date. As it is a fresh refrigerated product, I watch stock and schedule production when the shelf is mostly empty. I try not to have extra, but there are times when product will go past the BestBy date. In that case I do pull the stock and give the store a refund on the next delivery. Been doing this long enough that there is rarely any overage. March is typically the one month that I might have anything expire. It is not BAD, and I often take the outdated to the food bank.

For shelf stable sauce, there should be no real reason to have to give a refund. I did have one production run that I used a different bottle and a couple of the caps didn't seal. I couldn't guarantee that all the bottles were sealed properly, so I pulled the stock. In the case of shelf stable products, it would be good to offer a refund assuming there will be very few times or reason to have to give a refund.

Thanks for the input! Looking forward to taking this step!

Invoicing- I use a 2-part carbonless generic hand written invoice. I bought a self-inking Name/Address stamp so I don't have to hand write the Texas Creek info on every invoice. (What can I say, inherently lazy...) When making the salsa, I don't have time to go into the office, fire up the computer, print out QB invoices, and then have to deal with going back and adding any returns....
Make the salsa, load it up and deliver it!
Once or twice a year, I will take all the invoices and enter it into QB.

If delivering bottled sauces or the Chipotle Dip packets, I do have time to do the QB invoice.

When delivering, the stores want someone to check it in and sign the invoice. Standard.

Good Luck on this next step!
SL

 

[The Hot Pepper]

Good luck!

 

[cloose]

I worked for the head office of a giant retailer for 18 years, and It all depends on the retailer and there are differences in large box vs local. I sell wholesale to a local grocery store (5 locations), and they manage around a 40% margin. Retail deals on margin which is different than markup, and it's generally around this.

Margin being: (sell price - cost)/cost, so in your example if you are selling to the retailer for $5, expect them to sell for $8-$9.

For mine, I sample at the stores monthly, restock, have a delivery receipt signed, and then email invoices to their head office, which is great as I can control shelf stock and product rotation. Invoice terms are 30 days which while not ideal is actually short compared to large retail where major brands aren't paid for 60-90 days. Within the industry in large retail there are also listing and placement fees that vendors pay to be in stores that can run tens of thousands of dollars per sku, but most large retailers now have local or small vendor programs that waive these.

I am working on some larger retail listings, which would then entail dealing with centralized category management and ordering, as well as distribution through their warehouses and supply chains. More hoops to jump through for sure, but larger scale this is what it would take.