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"Distribution %?" Topic


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641 hits since 11 Jun 2017
©1994-2017 Bill Armintrout
Comments or corrections?

Wargamer Dave11 Jun 2017 6:02 p.m. PST

If someone creates a product that is good enough to be carried in the FLGSes, does anyone know what kind of wholesale discount they need?

Also does anyone know what the wholesale discounts are for distributors like Alliance in the USA or North Star in the UK?

Personal logo The Virtual Armchair General Sponsoring Member of TMP11 Jun 2017 6:27 p.m. PST

Generally, a re-seller buys at a 40% discount for hobby items (and don't ask me how that got started). A Distributor gets a 60% discount.

Don't expect to make any money as a manufacturer unless you can sell by yourself, or get a sweetheart deal from another retailer.

TVAG has always been a sweetheart for many products produced by others.

TVAG

Pythagoras11 Jun 2017 6:55 p.m. PST

It depends how much you buy from the distributor, as an FLGS. They have charts and graphs and you get a bigger percentage the more you buy. But, the info in the previous post is roughly accurate.

Personal logo Dye4minis Supporting Member of TMP12 Jun 2017 1:27 a.m. PST

Word of advice: Unless the Distributor is made to buy in case lots, sales to a distributor is not worth the effort. In order to make it worthwhile, you should establish a minimum order based upon what "worthwhile" is to you. The Distributor needs to be working for you in that they are making sales to other retailers. Does you no good if your stock just sits in their warehouse. (If you are small, that happens a LOT!)

Direct to retailers is tricky. Again, you need to set a minimum order to qualify for the 40% discount (usually at $100.00 USD retail). This is small enough for most stores to keep stock on the shelves. That is what they do for you in exchange for that 40%--show off your product to whomever walks by where your items are in their store. If you are lucky, the store may actually have an employee that will direct customers to your product(s) and actually "sell".

Going direct results in the most profit for a small manufacturer, but if the general customer base has little or no knowledge of your products, it will take a longer time for your goods to "catch on" , assuming the products have sufficient value for the money in the eyes of the customers. Unless you advertise, expect slow sales.

Build the demand for what you can produce, first. Nothing worse than having stock on hand but no sales or great demand but no sales due to waiting on product to fulfill orders with.

Good luck!

v/r
Tom

RobSmith12 Jun 2017 7:54 a.m. PST

When I ran Great Hall Games I would not stock any items that offered less than a 40% discount. I usually did not mind a minimum initial order being a bit higher than the minimum restock order.

In a discussion with a successful minis manufacturer some years ago, he observed that to sell the product in retail establishments going through the distribution chain (the so-called three tier system), the retail price needs to be 10 times the cost to manufacture (including raw materials, packaging, and production labor). So, if the final product costs you $1.00 USD, then it needs to be priced at $10.00 USD for the final retail price.

Seems like a lot, but remember, the retailer will pay $6.00 USD for it and the distributor will pay $4.00 USD. Out of the $4.00 USD you get you will need to pay all your overhead (rent, utilities, insurance, taxes and fees, additional labor costs of sales people, customer service, accounting). Also, those costs do not include the development costs (paying the designer, sculptor, mold making, art work, etc.). All of those have to be made back in the profit and then hope there is some left for your salary!

Wargamer Dave12 Jun 2017 12:30 p.m. PST

Thank you for your detailed responses! I appreciate it. We will have to consider being profitable with 40% of the end selling amount and price accordingly. Still early days though!

VVV reply14 Jun 2017 3:49 a.m. PST

Wargames is a high margin business to account for the low volume of sales – people don't need wargames products, is our job to make them want the stuff.

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