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  • #989034
    Rey
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    Friends, I am launching a new health food product in Australia. One of the options to distribute initially is to sell on consignment. My product is not perishable so it can sit on the shelf for up to a year

    Could you please suggest:

    1. What is approximate range of commission seller charges (general rate in Australia – mainly Sydney ) considering RRP of my product is around $12 ?
    2. What are the usual payment cycles?
    3. Terms that the sellers would want me to follow (generally practised in Australia)
    4. Any other incentives to the sellers that is a normal practice

    Any other insights or your experience on consignment sales will help me a lot.

    Many thanks

    #1170141
    Jenny Spring
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    Rey, post: 197327 wrote:
    Friends, I am launching a new health food product in Australia. One of the options to distribute initially is to sell on consignment. My product is not perishable so it can sit on the shelf for up to a year

    Could you please suggest:

    1. What is approximate range of commission seller charges (general rate in Australia – mainly Sydney ) considering RRP of my product is around $12 ?
    2. What are the usual payment cycles?
    3. Terms that the sellers would want me to follow (generally practised in Australia)
    4. Any other incentives to the sellers that is a normal practice

    Any other insights or your experience on consignment sales will help me a lot.

    Many thanks
    Hello Rey

    1. Consignment is usually about 30%, but it varies and is negotiable with each retailer.

    2. negotiable. set it up with the retailer, but I’d ask for fortnightly.’

    3. consignment means that you accept responsibility for the goods, and still own them, even though they are on the shop shelf. If the goods are damaged at the shop, the retailer doesn’t have to compensate you.

    4. consignment itself is an incentive.

    By the way, consignment is a risky practice. Your stock is tied up, with no committment or incentive for the retailer to sell it.

    Be careful.

    Jenny

    #1170142
    Rey
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    Thank you Jenny for your inputs and heads up.

    It is one of the few channels to reach my targeted segment.

    #1170143
    affgar
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    Why do you want to go with consignment?

    Have you had trouble selling the products directly to health food shops or retail outlets?

    Good points by Jenny! :)

    #1170144
    Rey
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    affgar, post: 197475 wrote:
    Why do you want to go with consignment?

    Have you had trouble selling the products directly to health food shops or retail outlets?

    Good points by Jenny! :)

    I have not started selling yet. Identifying various channels to reach my targeted segment.

    #1170145
    affgar
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    Could you approach a few businesses with a trial proposal?

    Offer to let them stock your product on a trial basis (if you think they will sell), then they pay you when the products sell. This way you gain exposure for your product & sales it may generate without financial outlay.

    Obviously this comes with some risk, as does consignment.
    Some shops could reject consignment options becuase of the potentially lower profit margin. You will be better off if people buy your products outright & selling them, in the long term. :)

    Good luck.

    #1170146
    Rey
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    affgar, post: 197564 wrote:
    Could you approach a few businesses with a trial proposal?

    Offer to let them stock your product on a trial basis (if you think they will sell), then they pay you when the products sell. This way you gain exposure for your product & sales it may generate without financial outlay.

    Obviously this comes with some risk, as does consignment.
    Some shops could reject consignment options because of the potentially lower profit margin. You will be better off if people buy your products outright & selling them, in the long term. :)

    Good luck.

    Thank you for your advice. Pardon my ignorance, what is the difference between this approach to let them stock and pay when products sell Vs consignment ?
    Did you mean they pay for the entire stock upfront when they realise there is potential to sell?

    #1170147
    affgar
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    Offering shops/stores a way to sell your products without intial outlay is a nice way to get exposure for your products, as well as networking.

    Consignment often limits profit margins. For examply using the 30% average .. that means that a retailer has to sacrifice shelf space to only take 30% profit on the items sold. It will appeal to some people & suit some products for various reasons .. Including, that you might replentish stock & manage your own products, wear costs of breakages, theft etc …

    Many store owners would like to get closer to the 100% profit margin or above (depending on type of products, turn around & cost).

    So by letting a store owner sell your products without having to pay for the product outright lets them not wear the stock cost, yet they can still obtain desireable profit margins when goods sell.
    And then, once you prove that your products are good & that they will sell … the store owner will want to stock your products.

    That is when you can offer discounts for paying for products upfront or offer contract terms & conditions etc …

    It is very hard to approach shops & get them interested in an untest, unproven product, especially a no name brand or smaller, unknown company.

    The ideas I have put forward help negate those initial hurddles.
    If you have a good desireable product it will work well … If you don’t sell a single product in the trial, then obviously it is not a good tactic & could have a negative impact.

    Generally consignment appeals to shops, cafes, gallaries etc .. who want extended range or to value add space where they are not worried about how long products sit on shelves or on the wall. Or suited to places without limited space.

    Though having said all this .. there are a multitude of variations you could employ that would sit between the two clear definitions of consignment or wholesale sales for your product/s.

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