Gift Rep Sandy

Posts Tagged ‘Sales Reps’

Some of the areas for potential problems and issues needs to be addressed as they occur in your day to day experience as, often, there is not a way to deal with the ‘unusual’ in an agreement or contract.  Having worked with both non-contracted vendors and contracted vendors, I can tell you, potential problems come up with both scenarios.

Non-Contracted Agreements can work with larger companies that have a set policy established when working with sales reps.  Some of the larger companies I have represented told me they have worked with dozens of sales reps in various different parts of the country without an agreement (and don’t intend to start using them!).  Most of these companies know exactly what they will or will not be able to do and can explain that to you at the beginning.  If you prove your value to them early in your business relationship (by generating good sales and customers for them), they, often, honor you by protecting your territory and customers.  They will see you as an asset to their business and will work to maintain this asset.

On the other hand, new or smaller companies often need the framework of an agreement – especially if they have not worked with sales reps in the past.  Because new or smaller companies have little experience with reps, they may not understand the value of an agreement.  Too many times, they enjoy the sales you bring them, but view you as competition rather than a sales partner.  If a buyer frequently contacts the vendor direct when placing their orders rather than contact you, their sales reps, your vendor may assume that you are not servicing the account.  If vendors see this regularly, they may just fill the order without paying your commission.  When you address this issue in the signed sales agreement, you have some protection, but not always.  Vendors, like buyers, are busy people and often will fill phone orders and forget to give you credit for the sale.  If this issue comes up, you need to weigh the relationship with my vendor verses the one or two sales or small customers. Mostly I decided the relationship was more important.   But honestly, I was never sure if this philosophy was the best approach.  You may want to decide ahead of time how you plan to handle a situation should this happen.

The way you handle a difficult situation can smooth a potential problem between you and your vendor.  I work with producers where I have an arrangement for the vendor to take an opening order for a new customer, but they turn the account over to me for future servicing and re-orders.  No commission is due until I secure a re-order from this store.  Working with an arrangement such as this shows the vendor you are working your best to take care of their customers.  Other options are to ‘train’ your buyers to always contact you for orders.  If your name and contact information is on ALL literature or catalogs you leave with your buyers, they are more likely to contact you rather than calling the vendor.  If this issue is addressed in an Agreement, it helps to clear up misunderstandings before they happen.

Terms of sales are as different as there are companies to represent!  Because each company uses specific but different terms, I found it helpful to devote an entire sheet to the various terms a vendor will extend to new and repeat customers.

Standard terms for the gift industry are Net 30 days – where the products are shipped with invoices due in 30 days.  Most companies require some additional information or requirements for first time orders to a store.  These many include some of the following:

• Prepayment on first order only
• Credit card required for first orders
• Trade Credit Application on file before extending terms
• COD required until credit is established
• Minimum order amount (dollar amounts or quantity amounts)

Within those categories, a vendor may have other requirements or terms, such as:

• Free shipping on orders over $XX
• Free shipping on prepaid orders
• Free display for orders over $XX
• XX% discount for orders over $XX
• 2%, Net XX days, or a XX% if you pay early
• Prepayment required for order over $XX
• Prepayment required for order under $XX
• $XX handling charge for orders under $XX

As you can see, the possibilities are endless.  If you use a detailed questionnaire with your sales agreement, most of these terms can be addressed and listed for future reference.

House accounts are store buyers the vendor has been working with directly within the territory you are servicing.  How you can deal with a producers’ house accounts depends on what your vendor and you decided together is in the best interest of your mutual customers.  Here are some of the options to consider:

• Servicing all of the vendor’s house accounts.  Should you and your vendor decide to use this approach, it is very helpful for the vendor to send a letter of announcement to their customers.
• Servicing only certain specified vendor’s customers.  A list of these customer should be provided by the vendor.
• Servicing none of the vendor’s house accounts.  In this scenario, having a list of these accounts listed in the agreement lets you know which stores these include.
• Servicing the house accounts at a reduced commission level.  This arrangement works as a compromise to the either/or options listed above.

I have worked with vendors using all four of the options listed.  Having a detailed list of which accounts are house accounts and how they need to be handled is essential to the agreement as it will provide the information you need when approaching your potential buyers.

The first system to implement in your new business is a standardized or template sales agreement form.  Here are some of the points you need to cover in your template form:

1.  Territory. List the cities, states or regions where you plan to sell.

2.  Type (s) of accounts you intend to service.

3.  Exclusive representation. List clearly if you request an exclusive agreement in your designated territory.  Exclusive representation bare any other sales rep hired by this vendor to sell in your territory.

4.  Commission amount and payments. Agreed upon commission percentages are listed as another line item with instructions as to when and how they are to be paid.  Also, you, as a sales rep, need to keep track of all your commissions due from each company your represent.  You would be surprised how many commissions and payments come up “missing” and reappear after you inquire!

5.  Terms of sale. You need a section clearly stating the terms that you sell to the buyer.  Leaving this part of the agreement as an open form is helpful as every vendor has different terms of sale.

6.  Samples. Most vendors supply sample to you at no charge, but this item needs to be addressed in the agreement.

7.  Product literature. You need to be informed if the vendor has catalogs or product literature you can leave with potential buyers.  These, too, should be supplied at no charge to you and your buyers, but it is good to address this in the agreement.

8.  Incurred expenses. Independent sales reps usually pay their own expenses for gas, lodging, meals, etc.  But other expenses may be shared or paid by the vendor such as trade show expenses or special advertising, etc.

9.  Default or dissolution. Be sure to include a section listing what happens when you no longer rep for a vendor.

10.  Changes to the agreement. Make sure to note that the agreement may be altered ONLY by written notification by either party.  This stipulation will avoid any confusion over verbal comments or agreements.

11.  Signatures and date. Designate a spot at the bottom of the agreement for both you and your vendor to sign and date the agreement

“Theme” niche markets are very popular, and a good way to position yourself in the industry. Often this represents your area of product emphasis, rather than exclusivity. Gift stores are looking for that unique line that no other store carries.  While meeting this preference is difficult to accommodate across a large area, the idea is more feasible if you work in niche markets.  Examples of niche market specializations could be cowboy-themed products, or perhaps themes such as chocolate, huckleberry, “in-state”, gold jewelry, or woodcrafts.

If you do offer a specialization, make sure you communicate that fact, to take advantage from a reputation standpoint. Often, the narrower your niche, the more potential success you will experience – especially if you find a popular consumer market that is not addressed sufficiently in the marketplace.  Trying to be everything to everybody ensures that you will appeal at a high level to almost no one, although that is the more traditional model for reps. Remember that if you take the wide spectrum approach, each mini-niche you offer among your lines, is competing against a rep that might be SPECIALIZING in that niche area.

As you spend time with your lines and your customers, you will find under-represented specialty markets.  These are great opportunities to change and refine what product lines you are selling.  Not all the answers or directions come at once when you start, so allow yourself the option of changing with your themes, as you become more knowledgeable about the opportunities in your territory, and as markets change.

For now, let’s take a look at most of the significant gift product categories of products you might choose to offer (and you very probably will end up with several). This list is by no means exhaustive, but represents a large sampling of the opportunities available:

•    “General” gifts
•    Souvenirs
•    Gourmet foods
•    Confections
•    Home décor
•    Jewelry
•    Personal care (soap, massage oils, lip balms)
•    Books and/or CDs
•    Housewares
•    Toys/children’s products
•    Cards and stationary
•    Candles
•    Apparel
•    Regionally-made products
•    “Country” theme
•    Hand-crafted or artisan pieces
•    Herbal or natural products
•    Custom or private label
•    Special event (births, deaths, birthdays)
•    Holiday merchandise (Valentine’s Day, Halloween, Christmas)
•    Desk accessories

Nearly all reps try to get as many different types of product lines as they can, and offer a full menu of options for each gift store. Nothing wrong with that! Some reps choose to focus on a single specialization, such as candles, gourmet foods, greeting cards, or in-state products.

Specialization in a single category is sometimes advantageous because neighboring stores in the gift industry, particularly in towns under 50,000 population, do not like to carry the same lines. As soon as you sell one candle line to one store, competing stores in that community will prefer to avoid that line, since part of their competitive advantage is to offer their customers something different. If you only represent one line of candles, you are done selling candles in that town once you make your first sale, and must make your money in other categories. If you specialize in candles, perhaps offering 15 lines, you have a line for every shop in town. PLUS, you become known as the “candle” lady, or “hot sauce guy” or “specialty food rep,” which offers some advantages for word of mouth marketing.

A Manufacturer’s Representative, also called manufacturer’s agent, manufacturer’s rep, sales representative, or sales rep – or more commonly, just “rep” – is a self-employed salesperson who contracts direct selling and marketing services to one or more related, but normally non-competitive, companies in a particular industry.

The job of a rep is basically to “represent” the manufacturer’s, distributor’s, or importer’s line of products to prospective buyers, who could be retailers, wholesalers, distributors, or service businesses, depending upon the industry and/or product line. As part of that service, they call on and present the client’s products in a positive light (as a way to solve the buyer’s needs), answer questions, offer materials and information, and ask for orders and re-orders in person, or by phone, fax, or email. Increasingly, web sites are a way to service wholesale buyers.

Sales reps sometimes just represent one company, where they might be paid a base plus commission. More often, however, independent reps serve multiple companies who share an interest in marketing to a category of buyers that the rep calls upon regularly. Reps are usually given a specific (and often exclusive) territory, so customers are not confused by multiple competing sales representatives, and to honor the hard work done by a good rep.

Sales reps exist that target virtually every size of gift retailer from small mom-and-pop stores to large “big box” retailers, including chains. All these reps want to show and sell the newest, most attractive or innovative products on the market (plus, of course, profitable standbys).  When hiring a rep, you save buyers significant time and expense by showing several lines during your visits, and always, they want to know “what is new”! (You WILL hear this question a lot!)

On the other side of the equation, sales reps probably qualify as the lowest cost option for manufacturers interesting in expanding sales regionally or nationally. Independent reps operate as a contract sales person, or in the case of rep “groups”, as a contract sales force, working on a strictly commission basis, minimizing overhead for a producer. Whereas an in-house sales force could cost a potential manufacturer $75,000 to $100,000 per person, with travel expenses – regardless of sales volume – an independent rep only gets a check when they produce sales for the manufacturer.  Since reps can be found in virtually every geographic area in the US, opportunities for a low cost national roll-out are endless, for those manufacturers who choose to grow in this fashion.

Sales reps purpose is to introduce, educate and take orders for product lines and receive a commission as compensation, rather than making your money on the price differential between buying and selling prices.

(For more information on opportunities and information on this industry, visit the Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2006-07 Edition, “Sales Representatives, Wholesale and Manufacturing”, on the Internet)

Malcolm and I are very busy with holiday sales this month!  We have lots of web orders along with running a holiday kiosk in Moscow, Idaho near where we live.

But early in 2010, I will be starting a new series of blog posts on how to become a sales representative to the gift industry.

If you are interested in pursuing a career in this field, or if you are a current sales rep looking for some fresh ideas, make sure to subscribe to get the latest updates next year!

For now, I would like to wish you a very happy holiday season!

GiftRepSandy

After spending a week in southern Idaho and a week in northern Idaho, I am done with my fall sales trips.

Most of my customers/gift shops are buying very conservatively this fall — but most are still buying.  I have also noticed that the store in north Idaho (Riggins to Sandpoint) seem to be fairing the economic downturn better then their friends to the south (McCall to Boise to Twin Falls).  With all the foreclosure problems in Boise valley, it is no surprise that the gift shops are struggling too.

On a side note, while  I was in Boise, I was able to attend the Boise TweetUp meeting at the Berryhill Restaurant in downtown Boise.  While at the meeting, I was able to meet some of the folks I have as ‘friends’ on Facebook.  Very interesting group of people.  John Berryhill gave each of us a small gift card for the restaurant and I had a really interesting salad with lettuce and fruit!

While in Coeur d Alene, I was able to visit with my friend Kris at the Greenbriar Inn.  Me and Kris have been friends for several years, and I have sold her Wildbeary huckleberry products off and on for most of those years.  The Greenbriar Inn has undergone lots of changes since I first met Kris — and their restaurant and inn is totally different every time I visit her.

Over the next weeks, I will continue to process wholesale and retail holiday orders.  Will be a busy time for us, but hopefully, not too busy to ‘visit’ with you as well!

If you hadn’t noticed, the days are starting to get shorter, the nights are cooler, the kids are heading back to school … change is in the air!  Late summer is the time of year that my sale rep business starts transitioning from tourist season to holiday season.  Even though we have some of the hottest days of the year in August, I need to start thinking about Christmas, holiday products to offer my customers, and new products from my list of vendors (lines I represent)

With all these changes, comes new pages and updates to my website:  www.idahogiftswholesale.com.  I will be spend large chunks of time over the next weeks to gathering information, taking pictures, and offering new products to my retail buyers for October/November buying.

On the home front:  I need to take my laptop back to my friends at Cactus Computers in Moscow.  The crazy machine is running slow and crashing programs even after I doubled the RAM capacity a few weeks ago.  We bought a Toshiba laptop in March of last year — a change from our usual Dell purchases – because we were told that Toshiba made the best laptops.  Well, you could not prove that by my experiences with this one!!  Hopefully, my friends can fix the problem and I can go about my business.

We are still spending everyday at the downtown office to access the internet.  It looks like we will not be able to replace our high-speed internet at home.  Malcolm has set up a dial-up service, but I have not yet tried it.  I suppose I will want to go to sleep waiting for it to load up, but at least we will have service at home again.

So enjoy these last days of summer.  I get back with an update on the fall changes as they unfold.