Gift Rep Sandy

Archive for the ‘Working with Vendors’ Category

As your work your business, you want to periodically evaluate which vendor lines are selling for you and which you need to drop.  Sometimes the products you thought were the best lines, just don’t work for your buyers and their customers.

When looking to change or drop any vendor lines, consider the following:

1.    Saturation of % of stores you sell this line to.  In other words, how many accounts did you opened with this line?  Is it 50% or 20% of your customers?  Obviously, if you are selling these products to half or more of your buyers, it is a winner.  If the percentage is low, you may want to look at some of the other options listed below.

2.    Low saturation but large re-order rate.  Maybe a line sells to small percentage of your customers, but has a consistent re-order rate.  I have kept lines I sold to only a few of my buyers, when I noticed the re-orders were consistent and growing.  Often these lines will produce larger and larger orders over time.

3.    Average order size.  It is common for gift stores to start with a small sampling of a line before ordering the full line.  If after that initial purchase, re-orders are good and consistent, I would consider this line to be a winner.

4.    Communications while working with vendor.  If you are having communications problems with your vendor, you may want to evaluate whether or not you want to keep this line.  I represented one vendor who did not keep me informed of new products or changes in policies, but because the line sold so well, I chose to ignore the problem while continuing to selling it.  But in another case, I dropped a line for the same reason because sales were low.

5.    Customer follow-up.  If your vendor has poor customer follow up:  does not ship orders on time or does not offer to accommodate your buyers, it might be best to drop this line – no matter how well it sells!  Poor customer follow up often reflect upon you and cost you more if you continue selling the products.

You know the old joke:  “How can you tell when a salesman is lying?  When his lips move!” Unfortunately, sales people have a bad reputation as smooth talkers with little integrity. Like it or not, you are faced with this misconceptions the moment you identify yourself as a sales person.  But you can reverse this image if you are committed to honest and upfront communications with your customers and potential customers.

One of the most asked question I encounter during sales presentations is:  Where else in town have you sold this product?  Buyers are concern about sales people who are more interested make sales rather than servicing their individual customer needs.  When you sell a unique product to every possible store in town, you do a great disservice to your customers and to your vendors.  Often, products showcased all over a town do not sell because they look commonplace rather than unique. Next time you visit a those stores, they may be unwilling to buy from you again.

While building your business, it is more important to look at the long term effects of your actions (or lack of action!).  If you want a good lasting relationship with a buyer who will continue to order products from you, good choices need to take priority over short term gain.  Telling a buyer what they want to hear rather than being honest is a very unprofessional way to run your business.  For instance, if they are interested in buying a product which you know from experience won’t sell well in their store, don’t sell it to them without explaining your concerns.  Or if they need a product within a certain time, and you know that the producer is not be able to fill the order in time, share that information before you agree to take the order.

Even if you have a written sales agreements, issues or disagreements can come up – even if it is addressed in the agreement.  Situations like these require some difficult decisions as it is not easy to find a win-win solution.

Some of the biggest problems I encountered with breaches in sales agreement revolve around territory and/or house account issues.  For instance, it is easy for a potential buyer to call a vendor direct (not realizing that you are the sales rep) and place an order.  The vendor processes the order forgetting to give you credit for the sale or to inform you about the new customer.  Like I said previously, vendors are busy people wanting to get products manufactured and shipped as soon as possible.  Most of the time, these instances are just oversights.  Personally, I chose to ignore these minor occurrences.  Most of the time, I ultimately found these store buyers and took the re-orders anyway.  Also, I felt my relationship with the vendor was more important than making an issue over a small commission.

When the situation becomes serious, there are a few courses of action.  First and best option always is to talk to the vendor about the problem.  Visit in person if possible.  There may be many different reasons for the situation and your vendors should have the chance to explain.

If the first option does not work, or if the vendor is not willing to pay you, you can file a complaint in small claims court in the county where the vendor is located.  You need written proof of your attempts to collect.  If you kept good records, it should be easy to prove the breach in the written agreement.  Or you can turn the vendor over to a collection agency.  Once again, you need actual written records including a demand for payment before a collection agency is willing to assist you with collections.

Lastly, you always have the option to terminate your services with a vendor who does not pay you.  I found this option was often my best choice because I did not have the time or the inclination to follow a legal course of action. At this point, the relationship was damaged and I no longer wished to represent their products anyway.

Whatever action you decide to take, these cases should be weight by questioning whether the money you receive is worth the effort or time you need to take to collect it.  In most of my cases, my time and peace of mind was more important to me than filing any legal actions.  But, of course, the ultimate choice to handling the issue is really up you!

There are several reasons why a commission is not paid on an order.  Listed are some of the most common reasons I encounteredL

• The order was cancelled by the buyer
• Products are on back-order, so the order has not been shipped
• Products were discontinued, so the order was not shipped
• There is a problem with payment on the last order, so the order is held waiting for a resolution
• The retailer has not pre-paid the vendor for the order
• The order was lost or misplaced after the vendor received it
• The order emailed was interpreted as a duplicate order, so commission payment was never issued
• The order was not flagged to the correct sales rep
• The commission check got lost in the mail

With the system described above, you can track the status of each order you take.  Of course, mistakes happen with everyone involved – after all we are all human!  I did find it interesting how many commission payments suddenly appear on a check after a “friendly reminder” was emailed a vendor.  For that reason, it’s worth the extra time to develop and keep a system to keep track of your commission payments.

Keeping commission records or create a bookkeeping system to accumulate commissions due, is not a common practice among all sales reps.  Most reps I know submit orders and never track their commission payments even though keeping track of all commissions due is a good business practice.

There are several reasons why you should take the time to track your commissions.  First, you have a good idea at all times, what your receivables are.  Second, when you fill out your tax returns, you have a detailed listing of your gross income.  But most important, tracking your commission lists the records needed to ensure you get paid what you have earned.

Earning commissions, as a base for income, is not the same as receiving a paycheck.  Generally, a vendor pays commissions on an order AFTER receiving payment from the retailer.  For example, if you write an order for a retail store on May 1, you email the order to the vendor and he ships products to the store on May 8.  The retailer receives the order on May 10, and processes payment for the invoice on June 8.  In most cases the vendor does not write a commission check to you until after July 1.  60 days from the time of the order (and often times, 90 days) can pass before you see your commission payment.  If the retailer is slow to make payments, it could be longer than 90 days.  Details can be forgotten during that time, and if you are like me, you won’t remember unless you have kept accurate records.

If you use QuickBooks or some similar accounting program, your system for tracking commissions due is rather simply.  Once you take an order and email it to a vendor, record the order on a QuickBooks invoice or on an invoice form that you create in a word processing or spreadsheet program.

After receiving the commission statement and check, record the date of payment on the invoice.  Orders with no date or check number, obviously, are orders you did not received commission payment.  If you set up an invoice for each vendor for each month you write a sale, the system works fairly easy.

This system may seem like a long involved, but the time I, personally, spend on these records paid for itself in retrieved commissions.  Vendors mean well, but too often make mistakes, omissions, and do not flagged orders for commissions correctly.  Checks are often cut without a system to ensure you are actually getting paid for the orders you submitted.  Periodically, go through your Commission Invoices to check on orders you did not received commissions.  In my case, a quick email to the vendor often corrects the problem on the next commission check.

Good systems and communication between you and your vendors is critical when submitting orders.  Several different ways to submit orders are available including mail, fax, phone or email.  I used all the options, but found email is the fastest, easiest method, and can be done at any time of the day.  Mail is too slow and sometimes unreliable, faxes incur extra expense, and phoning in orders is inconvenient.

When submitting an order by email, you send all the information in one compact submission that can be printed out by the producer.  And you have a back-up copy on your computer should there be any questions later.  Using the same formatting for all order submissions makes your orders consistent and easy to find and understand.  Often a subject line listing your company name followed by the date flags the email for accounting purposes as well.

Also, with email transmissions, it is easy for a vendor to receive and confirm receipt of an email order.  Whenever I submit an emailed order, I add the following phrase to the top of the order:

“Order following.  Please confirm receipt of this message by hitting Reply and Send, or by responding with a message.”

After the email is ‘sent’, make a list of the orders sent that day in an Excel or word processing document.  The document needs to list the date the order was sent, the name of the vendor, the number of orders in the email and a blank column to note when the producer confirms the order.  If the vendor does not hit the reply and send button for your confirmation within 2 days, the vendor may not have received the email.  If the email gets lost somehow, there is a copy of the email in your sent file that can be re-emailed to the producer.  Nearly a full-proof method!

Not every vendor works out as a good line to represent.  Over the years, I discovered several “red flags” to consider when reviewing vendor’s lines you wish to continue selling.  If you see any of these problems, you need to serious evaluate whether you want to continue working with the vendor:

• Shipping costs of products not competitive. Shipping costs is a major issue with retailers as they frequently absorb the cost of shipping in their overhead costs.  If shipping becomes too high or non-competitive, they will look for another supplier.

• Problems between owner and employees – blames employees for poor follow through. If your vendor consistently blames someone else for their poor follow through, run!!  You will spend numerous hours dealing with a poorly run business or an incompetent owner.

• Packaging vs. market. If a product is not packaged for the gift industry, it may not sell.  Since presentation is often the determining factor in first time sales of a product, poor packaging or packaging for a different market keep the product on the shelf rather than selling out.

• Hiring you as sales rep, then wanting to take over accounts. I worked with vendors over the years who viewed their sales reps as an easy way to increase their customer base only to cut the rep out later and capitalize on their hard work.  If you have a vendor that takes over any of the accounts you set up, you are better off terminating your services.

• Single product niche and does not grow. Many small companies don’t spend the time necessary to review their product and grow their company.  If you work with a vendor who consistently does not add to their product line or grow their company beyond their original products, they are probably not serious enough for you to continue selling for them.

• High extrovert doing introverted craft. I discovered that many producers are interested in making their products, but have little interest in selling it.  If you are working with a small producer who is more interested in “helping” you sell their product than following through with fulfillment of your orders, there can be a brewing problem.

• Too much ego around product. I talked with producers who wanted to sell their products, but had a problem with any feedback concerning their items.  Beware of producers who are not willing to adjust to their target market.

• Constantly changing the sales agreement. If a producer changes the sales agreement every time a new situation comes up, beware.  Situations like these can cause frustrations for you that can eventually affect your sales efforts.

• Does not take you serious. Face it, you work hard for each and every order you write.  If you have a vendor that does not take your efforts seriously, you are better off not repping for them.

• Has no experience with reps and does not want to learn. Working with new producers is a very rewarding experience, but if you have vendors who will not work as a team, their attitude eventually causes problems for you and their sales.

Start-up companies are fun and challenging to work with.  Their enthusiasm for their products is contagious, even though their experience is limited.  Because they are not as familiar with their market or with sales reps as some of the established companies you may work with, they need special help and attention for you to be successful selling their products.  Based on my experience, I have listed of some of the items you need to consider when representing a start-up of smaller-sized company.

• How much do you say about their products? New producers often exhibit an ego around their products, and may resent suggestions or comments to help their sales.  On the other hand, it seems unfair to take on their line if you know there are certain small changes necessary for them to be successful.  You may need to perform a ‘balancing act’ when first talking with a new producer to see how much information you can share with them without sounding offensive.

• Discussions on logistics of products in your market. New producers may not understand the volume and niche placement you may or may not be able to create for their products in the gift market.  One potential obstacle in dealing with new producers is helping them to understand why they can’t be everything to every market.  If they want to place their products in conflicting markets, such as grocery and gift stores, they have unrealistic expectations.

• Packaging and labeling issues. Since packaging and labeling differ from market to market, you need to work with your new producer on effective gift market packaging.  Most new products are purchased because the packaging, which sometimes can be more costly than the product, is eye catching and appealing to the consumer.

• Wholesale/retail price structure (making money & keeping 50/50 margin). Appropriate price structure is very critical to successful for a new producer.  The average consumer is unaware standard retail operational costs and thus, unaware that gift stores keystone or double the price of an item to generate enough gross income to cover their overhead costs.

• Realistic shipping or payment terms. Standard terms in the gift industry is Net 30, meaning payment is due 30 days from the date of the invoice.  New producers may be unaware of this, or may not have the cash flow to wait 30 days to receive payment on their orders.  Reviewing these terms with your new producer, may be helpful, in order to avoid false expectations.

• New product category. New product categories are a challenge to both the new producer and the sales rep.  Is the product unique enough to interest the store buyer, or is it so unique that it will not sell?  Often a question none of the players involved can answer!  When working with producers dabbling in new product categories, I cautioned them to proceed slowly to see what sales the market would bear.

If you are sensitive to the needs and situations your new producer will face, you can find ways to help them make their products successful.  Your role, at least in the beginning, is to educate new producers on your role as their sales rep, the standard practices on labeling and product packaging, the standard terms, buyer expectations when selling their products and the trends and expectations of your market.

Keeping commission records or create a bookkeeping system to accumulate commissions due, is not a common practice among all sales reps.  There are several reasons why you should take the time to track your commissions.  First, you have a good idea at all times, what your receivables are.  In other words, you know how much income you can expect to receive in a giving time.  Second, when you fill out your tax returns, you have a detailed listing of your gross income.  But most important, tracking your commission lists the records needed to ensure you get paid what you have earned.

Earning commissions, as a base for income, is not the same as receiving a paycheck.  Generally, a vendor pays commissions on an order AFTER receiving payment from the retailer.  60 days from the time of the order (and often times, 90 days) can pass before you see your commission payment. Details can be forgotten during that time, and if you are like me, you won’t remember unless you have kept accurate records.

Vendors mean well, but too often make mistakes, omissions, and do not flagged orders for commissions correctly.  Checks are often cut without a system to ensure you are actually getting paid for the orders you submitted.  I have many examples of receiving bigger commission checks because I worked a system to keep track of commissions owed.

Vendors, or companies whose products you represent, are as important to your business as customers and need special considerations in your day to day operations.

Most vendors are manufacturers who are very busy with the daily routine of producing, packing and shipping their products.  Their main focus is on production and quality control rather than sales – which is why they hired you!  Unless they employ in-house sales people or contract other sales reps, they may not fully understand the daily issues you encounter while selling their products to gift stores.

Keeping vendors and their staff up to date on any issues or questions concerning their products is part of your role.  Since your vendors do not visit personally with your joint customers, they do not know all the particular concerns or problems customers can have unless you keep them in the communication loop. Sometimes, the reason you cannot sell a line to a particular store is due to poor pricing, incorrect packaging for your market, or bad customer service from the manufacturer.  You, in most cases, are the information link between the producer and their customers, the store buyers.  Passing along this pertinent information is invaluable and profitable to vendors as it gives them insight into changes and improvements to make products marketable.

Fostering a friendly working relationship with your vendor’s sales manager, office staff or employees is also in your best interest.  The clerical staff in a manufacturer’s office is very helpful when issues come up between with you or your customers.  A good relationship with the staff can help you smooth concerns without needing to contact the busy owner or manager.