Question

Topic: Other

How To Make A Good Deal W A Distributor

Posted by Anonymous on 5/1/2010 at 3:06 PM ET 250 Points
I have created a new product for the mass market. My company will be manufacturing the item. Before we were ready, we were approached by a distributor who wants to take on mass distribution for all the big box stores. This is a big opportunity for us but we want to be sure we are getting a good deal. He wants to go to contract asap. Can anyone help to fill in the blanks or point us to "standard contracts" that may be able to help us. Things of note:
#1. For an exclusive contract what kind of guarantees should he give us?"
#2. What is a usual turn around time from order to fulfillment?
#3. He has offered: 30% payment at time of order with full payment made before shipping. Is this normal, exceptional or bad?
Getting these answers would be a good start. I have more.
Thanks.




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RESPONSES

  • Posted on 5/1/2010 at 4:23 PM Accepted
    I am not the right one to answer your questions, but I have several clients who sell through big box stores, and I've heard their war stories. One thing you need to put into your thinking (and pricing) is the very punishing returns policies they have.

    Be sure you understand them and incorporate their effect into your pricing and your arrangement with the distributor.

    Another issue is the continuous training you'll want/need to provide for store personnel. Don't underestimate that, as it will directly impact sell-through, and ultimately distribution.
  • Posted on 5/2/2010 at 7:56 PM Author
    Thank you M Goodman and Karen for your quick and helpful responses.
    I have made a note to get into deeper discussions with the distributor about the training and the return policies of his retailers.
    I have also done a lot of research today on the distribution contracts available thru docstock.com. very helpful.
    I did contact a Score adviser online but tomorrow I am going to make an face to face appointment.
    I have not negated the need to have our lawyer run through these contracts. But before we turn them over to him we want to learn more thoroughly about the distribution business.
    Again, thank you both for your help.
    Penny
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