Gift Rep Sandy

Archive for the ‘Marketing Channels’ Category

Positioning Your Sales Representative Business, although not an open conflict situation, is important indicator to the way you are treated within the sales channels.  Not only do you need the trust and respect of your vendors, you also need the trust and respect of your buyers.

To position your services as one of the players in the marketing channels is very important.  You can loose value to your buyers if you seem to be an outsider playing in or during the buying process.  Listed here are a couple ways to encourage this positioning:

•    Treating each sale as though the buyer is purchasing your personally manufactured products.  In other words, you are taking ownership as a sales partner with each vendor your represent.  After all, these are not abstract products you are representing.  They are products and companies you care about.

•    Showing your buyers you bring value to their buying experience.  If you give your buyers the best service you can give, they sense your dedication and see your value.  Also, buyers are more likely to order with you, as someone they know and trust, rather than ordering direct from the vendor or from another sales rep.

One of the more frequent questions I receive, especially from smaller stores who are not familiar with working through a sales rep, is concerning price structures.  “Will this item cost me more if I buy though you?”  Because distributors often charge a high price for products they distributor and deliver, some buyers assume that a sales rep’s position is similar.  Also, many buyers are unaware that the producer is paying the sales rep to service their account.  (I think buyers are conditioned to be skeptical about getting something for nothing!)  Personally, I needed to educate some of my buyers about my role and relationship between them and the vendor – stressing that I am a service company working to make their buying experience fun and easy.  Once again, I reinforced my role in the marketing channels.

This concern can also be an issue you need to sell to your producers.  Many start-up companies especially, may not understand your important role in the channels of distribution.  Producers have told me:  “Why should I pay you to sell my products when I have done all the work?”  This question tells me they do not understand the gift market nor understand the value my role is within that market.  After all, it takes several years to compile and develop relationship with buyers from dozens or even hundreds of gift stores.

More selling and marketing conflicts:

Selling through Distributors vs. Direct Lines Sales Conflicts occurs when representing an individual producer whose products are also offered by the distributor you represent.  In order to have greater coverage of their product line, a vendor may agree to have a distributor, who services a large region, offer their products.  Distributors often pay a lesser commission than direct line or ‘sub-rep’ sales, but on the other hand, a distributor adds new lines and products to your offerings.

Show Rep to Territory Rep Conflicts occur when one rep has a certain territory, but a buyer from that designated territory buys product at a gift show held in another territory.  Producers often have reps in other areas who may exhibit at gift shows in their region, and buyers often visit gift shows in different areas to find new and unique products for their store.

Website Rep to Territory Rep Conflicts, similar to the show rep vs. the territory rep, occurs when one rep has a website and sells to a buyer in a territory serviced by another rep.

Vendor House Accounts vs. Territory Rep Conflicts.  If you are a sales rep who services your territory very thoroughly, it is common for a vendor’s house account to want to buy from you.  You are already in their store taking orders for other lines, so the buyer finds it easy to place orders for producers who consider them as house accounts.

Vendor Product Conflicts.  When represented numerous different product lines, conflicts happen with your vendors concerning specific product lines.  Most common conflicts can include the following:

•    Product overlap between vendors
•    Exclusivity of products or product lines

Gift Stores vs. Mass Market Conflicts.  As noted in early chapters, gift stores are upset when a product is found both their store and in a mass market outlet.  By nature, gift stores like unique products with high-end packaging not found in other retail outlets.  If a consumer sees a item in a large chain store, discount outlet or grocery store chain, it changes the perception of that product from a unique item to one that is purchased anywhere at anytime.  A gift stores do not wish to portray this kind of image to their customers!

Listed below are some of the conflicts you can encounter during your sales repping of various different companies

Rep to Rep Conflicts occur when a producer hires two or more reps having overlapping territories.  If a producer decides not to designate an assigned or exclusive territory to their reps, this is a common occurrence and causes conflict when trying to determine which accounts belong to which rep.

Rep Group to Independent Rep Conflict occurs when a producer is interested in having a larger rep group, who covers several states, represent their products rather than hire an independent sales representative.  Although, at first glance this solution looks like a better option for the producer, I found larger rep groups generally don’t saturate the territory like an independent rep.  In other words, if a sales rep travels from one sales territory to cover another territory, they often ‘cream’ the region by servicing the large accounts and neglecting the smaller remaining profitable customers.

Wholesalers/Distributors to Rep Conflicts occur when a wholesaler or distributor (or just distributor) is selling your vendor products in the same territory as you.  Even though, in the gift industry, a sales rep is normally a better sales force option for a producer, distributors are a matter of choice when there is no or little sales representation in a territory or region.  As noted from the definition listed above, distributors buy, inventory products and often deliver (or hires a rack jobber to deliver) within a predetermined sales route.  In this case, a gift store is forced to buy whatever stock the distributor currently has, but receives the purchased product on the spot.

While selling gift products, you have contact with many different marketing channels which will bring many different variables to your business.  Producers sell directly to stores or consumers, through you, the sales rep, through distributors and wholesales, or through gift shows and gift marts.   Before describing the different types of potential conflicts, let’s look at the different players involved in wholesale marketing:

•    Brokers: Similar to manufacturers’ representatives, but work almost exclusively in higher volume food markets such as grocery and food service. Commission rates of 2 – 5% which is generally much lower than for “reps”, due to larger volumes.

•    Distributors: An intermediary between producers and retailers, with large warehousing capacity and a sales and delivery force servicing stores in their area or region. Different from reps, in that they purchase directly in quantity, and take both ownership and possession of the products, for delivery. Distributors sell (often with the use of reps or brokers) and collect payments directly from the stores. Distributors are the dominant method of food distribution in grocery and food service.  Standard discount rate:  25-50% of wholesale price.

•    Manufacturers Representatives: Independent sales representatives, or “reps” who call on retailers in many categories to sell your products, and items from many other companies, on a commission basis, paid monthly. The producer ships, invoices, and collects from the retailers, who are the mutual customers of both the manufacturer and the importer. A dominant force in the gift, and aspects of the specialty gourmet industry.  Standard commission rate: 10-20%.

•    Producers, Vendors or Manufacturers: Names for manufacturers who choose to produce a product for a target market or markets.

•    Rack Jobbers:  A wholesale middleman supplying certain classes of merchandise handled by distributors such as snack foods, postcards, etc. The rack jobber commonly inventories display racks in retail stores, periodically checks the stock, and replenishes inventories. Also called a service merchandiser.

•    Retailers: Companies that – usually from a physical structure, but increasingly over the internet – sell products directly to end consumers and collect sales tax (where applicable) on the transactions. Some direct sales companies and other such organizations also fit in this category. Note the confusion of terms, since retailers buy at wholesale and sell at retail, which what makes them “retailers”.

•    Wholesalers: Similar to a distributor, EXCEPT they generally do not have a sales force or offer on-site delivery, instead shipping to retailers by common carrier from central warehouses.  Standard discount rate:  25-50% of wholesale price.

Many larger producers work through many different marketing channels that can conflict with your sales or sales territories.  For example, a specialty food producer may hire a sales rep to sell their products to a gift store and also hire a distributor to sell to other retail venues such as specialty grocery stores.  Or a producer may decide to sell direct to retail stores and consumers in certain areas and hire one or more sales reps to expand their markets elsewhere.