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Hypothetical Large Retail Chain Store Question


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This is extremely hypothetical.

I delivered a small order to a new retail store of mine and he mentioned that R@@T doesn't charge him for shipping. Mind you, that he has 6 huge display cases of R@@T candles. Which, I wanted to say to him, "Well, if you place an order for $10,000.00 with me, I'll give you free shipping too." But, I didn't. He was a nice little old man that owned a Do It Center Hardware store.

Anyway, so I started thinking, what the heck would I do if I had a large chain order, that did order huge order's like that. I know what I have to do to be able to handle that size order, but how would it be delivered without me having to use all of the profit just to get the order to stores all over the U.S.? Cuz, I'm pretty sure that they would expect free delivery.

Now, the big guys have their own trucks to do this and absorb some or all of the cost of the delivery. Anybody have any ideas on how a situation like this would be handled?

It is hypothetical, but it may be in my very near future, that is why I ask and it is kinda important.

THANKS

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I don't think the "big guys" have their own trucks for delivery. They contract out with trucking lines or delivery services like UPS. If your orders are large enough and regular enough, you can negotiate prices that would be lower than what an individual with a one-time shipment would be able to get.

The folks at Root, Yankee, etc. can offer free shipping because they make soooo much more than you are able to. Large candle companies are able to buy their supplies soooo much lower than you can becase they can buy directly and buy in massive amounts. Hypothetically, if Root sells a candle for $21, and you sell a candle for $21, Root might only have $2 invested, where you might have $8

You're probably right. His large order did qualify him for free shipping. I bet if he only ordered $500 he wouldn't get free shipping.

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Thank You

I am going to have to do some investigating, if the need arises. I don't want to jinx myself, but there's a possibility of a large account for me. So, I am trying to find my ducks, so I can put them in a row.

Thanks Again, I appreciate any and all help.

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It's a good question to think about. You're in the realm of what I call "real wholesale" there, with real bulk, like sock said. Many times that's what you need to be able to absorb those costs. Maybe the next step up in buying will give you some extra wiggle room.

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I give all my wholesale accounts free shipping.

My 2 biggest accounts are in CA- I am in NY. Just price your products accordingly. If you use Fed Ex or DHL it is very doable. People will always think they are getting a deal when the "free" word is in the equation. As long as the customer understands the terms- its a win win situation.

Meaning they must order at least xxx per order. :wink2:

Or whatever is comfortable for you.

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That isn't even the ½ of it.

A recent inquiry from a large natural chain type store just got ahold of me and get this - wanted BOGO on all of my wholesale. Yep BOGO on everything.

Sure, that would be a wonderful order (it was in upwards of $50,000.00), but after crunching the numbers? Profit out the window.

Nice to be in business for yourself where that one little word can get you out of a lot of trouble.

(NO)

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I was thinking that I would have more money to play with for overhead because I would be purchasing in bulk. See, here's the situation.

I have a Sales REp that makes 15% of orders that she brings in. Well, she went and was able to get us a "Send us your product and we'll go from there" with a store that has 250 stores nationwide. Can you say "Holy Cr@p!!!" So the shipments would be abundant (At least 250 of them)

So, I am thinking, ya know I can do this.

I need to purchase in bigger quantities to lower the cost of the product and take that to compensate for the new overhead. Well, then I think, if the big guys offer free shipping for orders such as this, why would they choose my product if I can't offer the same.

I already purchase my jars by the pallets (3, this last time)

I can get a lower cost on Soy Wax.

I can try to achieve the Bulk FO's, but how do I stick with the same one's I have, when I do not know who their supplier is?

I am looking into BULK votive boxes.

Wicks & Dye should be a total cinch.

And then, you have to have all of the info on your candles professionally printed, not to mention the labels. (Currently my labels are pretty professional with my little ol' laser printer, if I do say so myself-but just thinking of doing that many labels just makes my printer want to run and hide)

So, you cut down on some costs and acquire new costs, how the heck can I afford to pay for the shipping.

Sorry, this is so long. But I'm at a point, that when the Buyer asks me a question, I do not want to look like I'm new at this game and not be able to answer.

My 8 oz candles are $4.00/wholesale it costs me now $1.75 to make

My 24 oz candles are $10.50/wholesale and costs me $5.50 to make.

Can I up my cost to $5.00 & $11.50 to absorb the shipping? If I can do that without everyone saying, "What the HECK", then I say maybe that's my way.

I soooo appreciate everyone's help in figuring this out with me.

I have tried to attach pictures, not sure if they'll work.

OH, AND I FORGOT TO MENTION, THE EXTRA MONEY I WOULD BE PAYING OUT IN SALARIES. WHEN I GET POURING, I CAN POUR, BUT I CAN'T POUR THAT MUCH!!!!!!

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As I read over this thread, a couple of questions come to mind.

1. What is considered keystone for retail candles? I know that gifts and home accessories are generally 2 or 2.5. So would candles fall under these categories, or is there another preferred category that I'm not aware of?

2. How is the issue of displays handled in this industry? Are manufacturers/wholesalers generally expected to provide them?

The reason I ask is because my experience has been in the art/fine craft & jewelry industries, so I'm curious to see how these issues are handled within the candle industry. These things certainly have an impact on determining wholesale prices and competitiveness.

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Whatever you do don't forget about the employees you will have to hire. Sometimes that alone can tack on more than you think.

Example: My soap was $5.67 per loaf to make when it was just me. Now that I have a store and employees, it went up to $9.25 per loaf - that is just to cover costs, no profit on this at all.

My advice? Get yourself an accountant you trust and have him/her run the numbers. If anyone will be truthful and honest with you - they will & some of them will even do it for free (or product!)

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That was another thought of mine. Big companies will create a package deal that includes displays and offsets it with shipping. Or something like that, I never understood what they mean by offset. You're paying, whether it's for the display or for the shipping.

Anyway, I think that I would like to offer displays, have a manufacturer cut me a deal for 500 or so, and order them as needed. But, I would still have to pass the cost onto the customer.

Here are a few companies that do the following

Bridgewater has a price on everything. I do not see that they offer displays for free.

Their displays include, bin, oval sign, 6 shelves & 3 terrace displays for $400.00 These are the big sturdy looking displays.

Just an oval sign is $20.00

They charge $8.00 for a poster.

They charge for shipping. They give a freight allowance $300-$499, 3% of merchandise amount. $500-$999, 5% of merchandise amount, $1000-$1699, 7% of merchandise amount and over $1700.00 gets free delivery. Freight allowance does not include the displays.

Now Swan Creek Candle Co does the following

They offer programs such as this one

96 - 2 oz Shakers (Their candles are in the sugar shakers)

96 - 4.5 oz Shakers

72 - 7.5 oz Shakers

96 - 9.5 oz Shakers

5 Solid Wood Bin Displays (Which you pretty much put together to creat one display)

1 - Swan Creek Candle Co. Sign

1 - Easel Display with brochures to educate customers

$1564.00

Also, Program Partners receive Exclusive Territory, Priority Shipping, and Free Displays. (A Program Partner must order $2400.00 a year of the Sugar Shakers)

Individual pricing of their candles

2 oz Shaker $2.50/CAse of 12

4.5 oz Shaker $3.50/Cse of 6

7.5 oz Shaker $4.75/Case of 6

9.5 oz Shaker $6.00/Case of 6

If I add up the above program, it comes to $1494.00-THIS DOES NOT include the cost of the display, sign or the easel display (I couldn't find the price of those items). So, they are pretty much $70.00. (Which isn't too bad considering the look of the sign and displays)

It just says that Priority Shipping is given to Credit Card Accounts. So, unless you spend $2400.00, shipping is not free.

DOES ANYONE KNOW WHAT ROOT OR YANKEE DO FOR THEIR DISPLAYS AND/OR SHIPPING?

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Also, Program Partners receive Exclusive Territory, Priority Shipping, and Free Displays. (A Program Partner must order $2400.00 a year of the Sugar Shakers)

That comes out to 200.00 per month - which is nothing even for a small wholesale account. Plus they get exculsive territory rights and free shipping plus free displays? Wow. That is actually a good deal from a store owner perspective. There has to be a catch somewhere.

I think this whole thing could be a wonderful opportunity for you. But I agree with Jenny~ run the numbers down with an accountant. Hiring employees is going to raise your costs significantly. Doing that kind of volume in shipping alone cannot be done by one or two people.

I hope this all works out for you- it sounds very exciting!

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THANK YOU

Doesn't this all make you wonder, how the heck the big companies did it. Did they magically start out big? I know Yankee was started by one man in his garage. Then, when he sold the company to a China company, the candles started to lose their quality. But, how the heck did he do it. Where is that Mr. Yankee, I have some questions for him!!!! ;)

This is crazy!! a 250 store account is a huge deal and what most of us want for our business or more. But, when we really look at it, is it really? So much more responsibility, overhead costs, payroll costs, etc. I could go on forever. We may get our name in every household in the country, as we end up living in a box on the street!! I dunno, my head is spinning. I want this deal, I really really do. But it's one of those things, that you don't really know what numbers you're looking at until they say "Okay, here's what we want and need", then you can start to figure everything out.

I have always said, "My candles are going to be bigger than Yankee". That's my dream, now how do I do it cheaply???:wink2:

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You're at the spot of growth that's like a cliff. To make the next step takes a lot of resources that you haven't been able to support yet. DH and I were just talking about this yesterday - smaller cliff than you're talking about jumping off but still... :)

This is where you have to be careful - many companies need to borrow $$$ to finance their expansion, and that can work great, or get you into trouble.

I expect with higher volumes you might need to move your margins down. We all love to be able to price somewhere between cost * 2 and SRP/2, but at that volume you might not be able to.

I predict you're going to get a LOT of practice with Excel in the near future :)

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I am new to candle making but I just have one suggestion. Take a breath man! Just remember if you think too much about the business side of things your wonderful products will suffer for it, remember to smile and enjoy what your doing or what is the point anyway? Keep it light, keep it fun and it will all work itself out in the end :P

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It's funny that you post that today, because today I was "Having a Panick Attack"!!!! I am talking to my Sales Rep, about all the "We Need To's" and the "What if they's" and my heart was just skipping beats and beating way too fast, all at the same time!!

I had to package up a sample box for the Candle Buyer and I swear to you, my heart was filled with nervousness, anxiety, hopefullness, everything you can think of. I could feel the butterflies in my stomach, and I was all by myself in the candle room.

But, I'm over it now. I am sending her package off tomorrow after FedEx drops it off to her, it's all up to the candles to do their jobs!!:whistle:

I still haven't figured anything out, but I think I'm going to wait and see what the Buyer says first, before I end up in the hospital over nothing.

Thank You for everyone chiming in here, and if anyone has anything else, please keep posting.

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