Question

Topic: Strategy

Opportunity Knocks ....perhaps.

Posted by NovaHammer on 12/5/2009 at 11:51 AM ET 500 Points
Chance to represent a hardware line but wondering if I should. Here in North America.

What is the best bet for success?

Agent..
Country distrubutor/rep....
Lead Creator ....

some other involvement?

Ask any more questions I'll answer what I can.



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RESPONSES

  • Posted by CarolBlaha on 12/5/2009 at 12:01 PM Accepted
    First, I'd toodle some samples into some buyers and get their reaction. Make sure you know price points and if they have min order requirements.

    Being a distributor usually means buying inventory. This may be required if your supplier is offshore and has no inventory in the US. Otherwise, clients will have to order in container loads. That is a hard sell.

    A lead generator has little value. Good reps know where the leads are.

    An agent, or manufacturer rep is my fave. I cannot say enough good things about that as choice-- it has certainly made me more $$ than I deserve. There is no inventory or investment-- a clean sweet biz. You set a geographic region and I wouldn't touch one without exclusivity.

    I know of some reps who act as national sales managers. They recruit other reps and are paid a % of all sales generated.

    I am working with one co where I am their rep-- in addition I do their tech support (which I am paid a monthly retainer) and we are in discussion of me being a specialist in one (new for them) niche across the country. There is another rep who is their national account specialist. So in addition to having a geographic territory, we have areas we can go beyond.
  • Posted by CarolBlaha on 12/5/2009 at 12:02 PM Member
    One more thing-- reps can set up distributors within their territory. So you can have both agents and distributors. Let them handle the inventory.
  • Posted by Gary Bloomer on 12/5/2009 at 3:35 PM Accepted
    Dear Kevin,

    I agree that before getting into this you need to get samples into the hands of store buyers to see if the hardware on offer is appealing to American buyers.

    Before you take on the dealership it might be worth looking into whether or not you have to (or will want to) deal with inventory, stock management, and reordering. Or, whether it's easier to simply act as a store front and as you take orders, those orders are then automatically e-mailed to the factory and then drop shipped to the customer directly from the manufacturer, but
    with your white label or private label invoicing, addressing, and packaging.

    This could save a TON of work AND, relieve you of any inventory headaches, storage problems (and costs), back order issues, and all the hassles of dealing with customs.

    People order through you and pay you, you pass the order
    on, the manufacturer ships directly to the client, you pay the manufacturer, and all returns, refunds, and customer service issues are handled by your (outsourced) customer service department.

    I hope this helps.

    Gary Bloomer
    Wilmington, DE, USA
  • Posted by michael on 12/5/2009 at 11:04 PM Accepted
    Yes, get some samples.

    You want to know
    If your territory is protected.
    If the company plans to a approach big box stores on their own or if that's your job.
    If they will direct ship to buyers.
    If you have to handle ANY money issues.
    If you will be paid in US dollars by a US bank.

    If there is no money outlay on your part and you have a good agreement...go for it.

    Oh...tell them you want to visit the factory. If they're serious they'll get you there.
    Michael
  • Posted by NovaHammer on 12/5/2009 at 11:28 PM Author
    Great Help all. So fast too.

    Any advantage in doing Shopping Chanel stuff or is that low volume for tools? What % would they need?

    Brokers ... from US to Can. (free trade does exist but in degrees I'm sure) if I end up doing hands on with construction tools......suggestions?

    Thanks.
  • Posted by CarolBlaha on 12/6/2009 at 7:54 AM Member
    Tools... ok, hardware is a broad term-- I was thinking decorative hardware.

    Brokers sell by "lots". Not lots of volume. If you got a guy willing to give you national-- you are going to have to produce to keep it.

    In this field the channel is more likely distributors vs brokers. Or rep agencies that handle similar lines. With only info provided it's hard to determine if this is a line that should go from manufacturer to dealer, or manufacturer to distributor to dealer.

    In rereading your original post-- this is what I'd do (assuming after you've taken samples to buyers and got a good reaction).

    I'd take it as exclusive national rep (agent). Then I'd start looking for other independent reps -- contracting for them to handle their smaller exclusive territory. If this should go thru distribution, you can have larger rep territories-- or keep as same.

    You are paid an override on all sales nationally. The reps are paid on performance for their sales alone. Distributors buy and resell. All funds are handled by the manufacturer. Make sure these guys are solid financially. Make sure they are willing to give terms to the dealer. I've worked for many offshore companies-- all pay from US bank and US funds. The manufacturer does all invoicing to either distributors or dealer. They handle all collections. (Like I said this is a sweet biz)

    Nothing I have said or will say is out of the ordinary, but SOP.

    Good reps are cautious about adding new lines- and you are going to have to sell them like any customer. Wooing distributors is not easy either. Convincing a big box to add another sku -- this isn't an easy job but it's great $$.

    If you are handling this nationally, it's really too big for you to deal with smaller channels. You will be spending time targeting the national accounts and working with the territory reps (which is like herding cats). You will be working with them one on one-- in their territories, making calls with their customers-- ones you and they target.

    You will have to strategically decide-- which national accounts? Ace, Depot, Lowes-- or exclusively the smaller guys? Build a biz model like Snap On Tools going after the end user?

    Here are two good links to understand the market. Manaonline.org, is the creme of the crop manufacturer rep org. I've been on the smaller sites- they are full of clutter and things that I don't think can be sold. There is a great article on the home page about creating a rep sales force.

    Home Channel News, https://www.homechannelnews.com is the industry trade ezine. I repped a high end line of custom doors sold exclusively throught the Depot-- you'd never figure Depot selling $10K custom front doors- but they did and it was darn easy money. I mined this for industry info and to look for complementary lines.

    With both these links you'll learn about the industry and distribution thru reps.

    I've got a lot of experience in this and can speak volumes. There are a lot of ways to go with this. But if you have a real product with some sizzle, it could be huge for you.



  • Posted by NovaHammer on 12/7/2009 at 11:17 AM Author
    Carol - Many thanks once again!

    Great direction. Helpful onsite info plus personal info.
    Sounds too good to be ... ya know.

    Michael - It appears I may be out of my depth here with only marketing/life experience... Your thoughts please.. if they don't offer conditions you suggest is it worth continuing negotiating/training them or is that an indication they are going down eventually?

  • Posted by CarolBlaha on 12/7/2009 at 11:42 AM Accepted
    I have repped many co's (one a bill in sales) and have invested time negotiating and training them. You can almost feel their cycle. Stingy with samples one day, filling your garage the next.


    Michael for sure has his own comments. But I'd have contracts excluding specific accounts. It's not the right policy with big boxes as you have to be in them regularly doing the PK's (product knowledge training). I had one do this, begin to fail and found a piece of the pie for us. Sales are still handled by one manager, who only does the large stores.

    As far as $-- I wouldn't take a foreign cheque. In today's world they can figure this out. Having said that-- US cheques can bounce too. I had one from a pretty large co-- still in biz, just has earned the rap of jerking around their reps.

    Some foreign co's cannot ship direct to the dealer/end user. The best way to ship overseas is container load. In that case, you either bring on a distributor with warehouse capability, or maintain one yourself. If you are doing it, negotiate them subsidising it.

    I have repped lines without exclusivity and regretted every one. I have had exclusive contracts with a few exceptions (an account or niche market) and that, spelled up front is perfectly fine.


  • Posted by michael on 12/8/2009 at 12:48 PM Member
    Absolutely it's worth pursuing. These are just the things you want to know because they are real issues that will affect your income.

    Once you have those answers, you'll have a better picture of the opportunity.


    Michael
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