I've given a lot of business advice here, now I need some.
 

Most of my comments have been about marketing. I need to know about some retailing mark ups. What does a manufacturer's rep make? What are the profit margins from importer to warehouse distributor to retailer?

I'm planning of taking a product from the importer to market. I will retail for awhile until I can get enough retail to do wholesale. If I land a big account, I will take the MR's usual cut.

What's the structure here? It's a garden product.

Milt - I appreciated your help and being a future newbie business owner I don't know what I could say to help you. So take this as a free bump and a thank you for your input. I hope it all works out for your benefit...

I shoot for a catalog wholesaler. Let's say they import a flower pot for $1. They mark that up anywhere from $3-$5--based on what they feel it can sell for at retail. The retailer then typically doubles their price.

Import for 1.85 Wholesale 2.25 Retail 5.25 This is for a snack/coffee product.

Milt, I hope this or something along these lines works out for you. Sort of a passive income - not having to directly work an hour for a set amount of money.

I appreciate your input, but that won't work.

I'll hazard a guess on my own question. MR's get any where between 5-10%. WD's get 20%. Retailers get 35-50% as brick and mortars. Swappers, flea market or other direct sales make do on maybe 15% less due to the lack of overhead.

I'd like to fine tune this with some real life examples, blind of course.

Working initially with the direct importer, I expect to buy at WD prices and I could sell to the retail market easily doubled or at min to 66%. But, I don't want to poison the well.
A smaller dealer network is in place now. I interviewed this company 3 years ago and they thought they were hot shcit. I've checked in on then regularly to see what progress they made.

Last December they begged me to come on, but I remember the put offs from the first years. Last week I went down there and found they finally had their stuff together. They were even playing hard line with me which is where is needs to be.

I told them to pull 10 grand of their product items that are on the spreadsheet as high volume movers and give me my best price. We'll see. Essentially, next week I will have 10K worth of product in "my warehouse" with no retailers but me.

I could offer them cheap, but I'd be screwing future dealers with out enough mark up for one more level.

This is where the manufacturers rep position comes in. I can take orders and not handle product the way it's set up. I just have a contract with the importer on how this works if I bring him a direct buyer. I'll tread softly into that agreement.

BTW, the "importer" just bought the factory. I have reason to believe that the supply will be consistent and receptive to new ideas.

Geez Milt, I would love to help you especially since you paid for brunch, but I ALWAYS buy high and sell low. So, If I could give financial advice you would have to do the opposite.

I've got a place for you in this, but you need a truck, van or trailer and like to work weekends when all else are out driving the Ortega.

I think soap in the mouth would be good right now. You are nasty.

but then again, I could use money.

So now, I just need our Wall Street and Harvard types to chime in and verify the mark up structure. I hate to sign on to a bad deal. My next serious meeting and deposit on product is tomorrow.

Wish I could help but it's my experience that mark up is industry/product specific. Electronics near nothing, clothing pretty good, furniture astronomical.

[QUOTE=stomachmonkey;4653613] Electronics near nothingQUOTE] What????

[QUOTE=Super_Dave_D;4653623] Depends on the particular product and if you are working out markup on COGs and retail margin v retail to consumer which is also influenced by purchasing power. A big box gets better margin due to volume purchases and in the case of your Walmarts, can actually dictate MSRP to the manufacturer.

Milt is talking manufacturer to retail (him) margin so he can figure his profit.

Regardless, there is more/less margin/markup/profit in some channels vs others.

My point is he needs to work his numbers with industry specific metrics, not the generalizations we can provide here without more detail.

I would say it depends on a few things. Do you have to pay for the items first? If you are passing it through with not much work, maybe 10%. If you are floating the cost for 30 days, you need about 25% and 60 days, 35%. If they are small items, markups need to be higher. We basically won't quote items under about $5000, since the work to reward ratio is too low.

From my years of retailing, all I can say is that the markup varied depending on the product sold. Animal feed was my lowest...10%. Pesticides and weed killers, 35-40%. Pet items were doubled...that was the gravy.

I've done a fair amount of multi-channel sales management, though never touched retail. Our winery uses distribution, but alcohol is a special animal.

Shame your timeframe is so short. What I generally do is find the right trade association and talk to someone there; or find their largest tradeshow and keep calling people from various companies and you will generally find someone that will help.

I'd guess that the wholesaler will mark up between 20% to 100% depending on carrying costs, support from the manufacturer, etc. The retailer will mark up similarly, but I'd hazard that 100% markup is common (getting to the Manufacturer's Suggested Retail Price). A manufacturer's rep typically does not enter into this process - they typically support the manufacturer (and take 10% to 30%). If you are the wholesaler and are paying someone commissions to sell your product, then it depends on if they are salaried, etc.

Sorry I can't be more help.

Milt,

Email me your # if you have time to talk after 9am in the morning. I don't like the rush of you signing by "X"

Milt

Those figures are about right but there are a lot of variables. In consumer electronics, an independent rep will earn 3% to 10% on any given product. The higher the volume, the lower the percentage. It also varies by product segment, life cycle etc.

As an independent rep, I barely talked about any product that was <5%. It had better almost sell itself. Those were demand products - but still low volume in the scheme of things. I got excited & made my money with the 9 - 10% ers. Those were the ones that I really had to sell.

Ian

First, thanks to all.

No, I don't sign until I know what I'm doing. As of today, the product is being offered to me at a 50% discount. I think I can bump the margin a little at the retail front. It's the in between deals that will get my volume up, but will cut into the gross. I can maybe sell to the industry (meaning the decorating trade, etc.) for up to 25% off my list. But to get any serious retail dealers, I will have to do better than that.

I suppose I'll have to work the supply side for additional discounts if volume moves up so I can have room for myself and the retailer to mark up enough. I don't think this product will go on the retail shelf at less than a 50% mark up, or more.

This is and probably always be a cottage business, no Walmart contracts in sight. ;) :D