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April's
Articles for Giftware News:
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Striking the Right
Balance Buying and Selling
The Week of September 10, 2007
Sales make the business go 'round. Good sales bring an importer
back for another collection from the same factory and a retailer
back for another season. Sell-through particularly full-price
sell-through is something that all parties are striving for.
Big sales are the talk of sales meetings at the wholesale level
and part of industry brag rights at the manufacturer's level.
Meanwhile, at the retail level we call out high sales to each
other and reward employees that make them.
But, what happens when a manufacturer and wholesaler oversell
and a retailer overbuys?
What happens when multiple companies oversell the retailer? What
happens when a company prepacks, and minimums and programs are
more than your retailer can handle? What happens when a super
salesperson runs your business? Or when the pressure to make sales
is so much that salespeople press retailers to take more than
they need?
What happens is the retailer does not come back.
What happens is instead of a long-term customer you have a two-season
customer, and now you need to get another one.
What happens is your product has become devalued as your customer
tries more extreme and outlandish ways to unload the goods.
What happens is the retailer may not be able to pay the bill.
What happens is the reputation of your company becomes industry
gossip for pushing unneeded merchandise on a buyer.
With the many changes in the marketplace in recent years, there
seem to be two trends at the wholesale level:
1. There are companies who are selling programs such as "fill
the fixture" and "buy the assortment" as a style of sales. These
orders add up fast, and with a much smaller number of clients
you can do significant business. Exclusivity generally becomes
an issue, and with that kind of volume, customers expect a territory
to themselves. These orders are easy to fill and easy to ship.
2. There are companies that give a fair amount of flexibility
in purchasing, taking into account different markets and populations,
long-term potential and the shop's ability to repay. These orders
tend to be smaller you need more of them to make your sales
goals and people may still argue over exclusivity, though not
so convincingly.
Having sat on all sides of this issue manufacturer, wholesaler
and retailer it is my opinion that short-term gains can cause
long-term pains. It is wiser to have the customer under bought
than have him crushed under unnecessary inventory. It is wiser
for the customer to sell out and be visiting you first next season,
than to have a client who won't return your calls and avoids your
sales staff. In the end, we need all players alive and healthy
to buy another day, sell another season, and become part of our
stable customer list.
This formula the crucial balance of top line sales and customer
retention is what it is all about, and there is a magic in this
somewhere. It is creating that balance that is challenging and
intriguing, and it says a lot about how we view our own businesses.
Here's to a happy future for the manufacturers, wholesalers, retailers
and most importantly consumers!
April Cornell
Burlington, Vermont |
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