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Hello everyone, I was hoping to get some advice to help us in the next step of our business. Preferably from someone that has done this before.
My company sells beauty products online. Our average product MSRP is $65, while we actually sell the products for around $55 online.(Always have to have a 'sale' going on!) We have strictly sold our product ourselves online. We have never wanted to venture out and sell it to distributors because then a price wars happens and our $60 product will be sold for $30 in no time. We built our brand to be a 'luxury' brand, and sell our products for much more than the competitors. We are now selling hundreds of thousands of dollars every month of our product, and we have decided that our major problem is locus of control. We need to start broadening our distribution network so we are not relying on a couple internet venues for all our sales.
We are working with a B&M store that has 50 or so locations and is interested in buying our product. Her initial order would be around 1500 units between a select few of our products. The problem is we have NO idea what we can expect to sell it to her. We gave him our sample wholesale price sheet that was basically 40% off retail. After a good discussion with her, it was clear that the price was not right and even though she didn't say exactly what price they are looking for, it sounds like its around 60-65%% of retail.
Is this about right? This is the beauty field, so we still make great margins even after giving him 65% off retail. Thats not the issue. While this one order will generate a nice amount of profit in lump sum, it really isn't something we 'need' because its still small compared to our online sales. She says her locations don't sell online. However, If her company goes and posts it online competing against us, it will create a price war that will make us lose ALOT more than whatever we make off this sale (we had this happen once in the past with a different product). Of course on the flip side, this would be our stepping stone to expanding the company from a small business to possibly much larger.
So my main question is is 65% off retail about right when selling a beauty product direct to the retailer? Then my next one would be how to make sure they don't go behind our backs and post our products online competing against us. Lastly, any general advice of things to watch out.
I would really appreciate some advice from someone that has taken their product/brand from retailing it themselves to wholesale distribution.
My company sells beauty products online. Our average product MSRP is $65, while we actually sell the products for around $55 online.(Always have to have a 'sale' going on!) We have strictly sold our product ourselves online. We have never wanted to venture out and sell it to distributors because then a price wars happens and our $60 product will be sold for $30 in no time. We built our brand to be a 'luxury' brand, and sell our products for much more than the competitors. We are now selling hundreds of thousands of dollars every month of our product, and we have decided that our major problem is locus of control. We need to start broadening our distribution network so we are not relying on a couple internet venues for all our sales.
We are working with a B&M store that has 50 or so locations and is interested in buying our product. Her initial order would be around 1500 units between a select few of our products. The problem is we have NO idea what we can expect to sell it to her. We gave him our sample wholesale price sheet that was basically 40% off retail. After a good discussion with her, it was clear that the price was not right and even though she didn't say exactly what price they are looking for, it sounds like its around 60-65%% of retail.
Is this about right? This is the beauty field, so we still make great margins even after giving him 65% off retail. Thats not the issue. While this one order will generate a nice amount of profit in lump sum, it really isn't something we 'need' because its still small compared to our online sales. She says her locations don't sell online. However, If her company goes and posts it online competing against us, it will create a price war that will make us lose ALOT more than whatever we make off this sale (we had this happen once in the past with a different product). Of course on the flip side, this would be our stepping stone to expanding the company from a small business to possibly much larger.
So my main question is is 65% off retail about right when selling a beauty product direct to the retailer? Then my next one would be how to make sure they don't go behind our backs and post our products online competing against us. Lastly, any general advice of things to watch out.
I would really appreciate some advice from someone that has taken their product/brand from retailing it themselves to wholesale distribution.
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