Forum Moderators: buckworks
I'm interested to hear what or how other people do it.
If you plan on extending credit, make sure you research the customer and check their trade references.
We do not offer terms, do not accept returns or exchanges, and have reasonably high minimums in place.
Are your widgets generic widgets or custom widgets?
... imo especially when you start out, do not offer any credit
unless you want to spend significant time trying to collect your debts!
... or returns for wholesale customers (it is normal for a wholesale buyer to expect seconds and damaged goods amoungst the order - eg you should specify that orders are 95% perfect or whatever, meaning that the buyer should expect 5% of the goods to be imperfect in some way, you would need to accept returns for damage beyond this, but ensure that the percentage you quote will cover you)
Not really. Maybe once or twice as an exception, but not as typical behavior. Bigger companies will accept returns with a restocking fee, give you store credit in return for those items, or give you a similar replacement. Some places will credit you the current selling price as opposed to what you paid for it then.
Typically, I don't buy in bulk unless I am very confident I can move the product over time with a profit. You get better pricing buying in quantity, but you also have to assume the risk of the product not sell or depreciating over time.
1) 90 day returns. We built a cushion into the pricing to cover for this. Since most of our customers are small businesses, we do not want to over burden them with inventory. We were small once and understand. A new guy may buy wrong until they understant their customer buying habits.
2) Low quantities and broken cases. Again small sized customers why risk overloading them.
3) Shipping issues. Part of the deal with our customers is for them to file all damage claims. We package well and figure at the pricing we sell them at this level of service(i.e. filing claims) can not be offered. If an item is lost we will reship and file the claim.
4) Warranty/Defective issues: As with the above, at the price they pay they need to deal with the defectives and have the manufacture help them directly.
Hope this helps more
no i don't, goods damaged in transit is different and should be covered by insurance (or not) but in any case returnable.
i mean if you are manufacturing goods there is a degree of error,
... for instance at one time we were selling inflatible widgets, sometimes the valves were faulty (as a product of the manufacturing process) we guaranteed that 95% of all the widgets supplied would be fine.
(in actual fact less than 1% were faulty but we covered ourselves by saying 5% margin of error)
or say you are selling hand crafted dolls, some are not finished as perfectly as others because they are hand done by different people ... thats the way of it.
the reason for this is that returns of single items are expensive to manage, obviously if a whole batch was faulty it was returnable, but if just one out of a case was then we wouldn't take it back.
... the price reflects this!
obviously it depends on the product, if you are selling diamond rings then you would probably need a 100% perfect rate.
People ordering small quantities as low profit margin. Needing to fill larger orders that impact your ability to sell to higher profit margin retail customers.
Do not give wholesale the sweetheart customer service you may give retail.
so Cerny....the businesses buying wholesale don't object to the inability to return the items? Also, are there any requirements or paperwork you need to see in order to sell wholesale? Do they have to show you tax ID forms and the like?
Not accepting returns is the norm in my industry (apparel). Some larger retailers can negotiate return rights with some vendors, but its not worth the hassle to us. Other industries work differently though. In bookselling, for example, manufacturing accepting returns is the norm.
Besides that, part of the reason for the discount is because they are shouldering some of the risk. When I sell my goods retail, I take the risk that it won't sell and I'll have to discount it. When someone else sells my goods, they need to take that risk.
We're pretty loose with respect to paperwork. In-state vendors must show us a valid resale certificate. We usually ask out of state resellers for theirs, but since we're not responsible for collecting sales taxes outside of our state, its not a big deal if we don't get it. (To us, anyway, I'm not a lawyer.)
As for returns, my items are often sold personalized, and in that case it's on my order form that "we're sorry, but no returns on personalized items". If it was a quality issue, though, or I goofed on the order, I would happily accept the return (only happened once, knock on wood).
And the personalization allows me to ask for the money upfront before I fill the order. Works real well.
Banks extend credit. You are not a bank.
Thats not how your wholesale customers view you!
1. I have a propritary product
2. I don't do credit - I will do COD on special cases only. I will do 10 day credit limit with a credit card to back it up only.
3. In dealing with distributors and wholesalers etc I'm stuck by my guns on the pricing and the quanity requirements. I am all for seeing that they need to make a profit as well but I have to make money first.
-Melissa
2. I don't do credit - I will do COD on special cases only. I will do 10 day credit limit with a credit card to back it up only.
All small companies are uesd to dealing with credit cards and COD. If a small company can't manage their cash flow well enough to pay up front, anyone who has granted credit is going to always be at the back of the payables line.
A good rule of thumb is that if they company doesn't require three people to complete a purchase decision (i.e. requestor, authorizor, payor) then they shouldn't be bothering you for credit terms. When a company is large enough to require purchase orders to get anything done, you may be forced to grant credit just to get through their internal processes.
In all my projections, the one major thing that could kill our growth was waiting for the money. In my experience, the credit card finds hit the bank in three days, UPS COD takes 21 days, and 30 day accounts take 45-60 days.
As for retail - we love retail customers! Why wouldn't we? same work selling, more money to us! But of course the wholesale customers can make it up in volume. Just don't let them use your money. I have found it reasonably easy to talk wholesale accounts into paying with credit card by talking about air miles, or the protection they get from buying with one.
And we have found that even big customers respond to our demand for instant payment - like the US Government (with VISA) and large auto dealerships with checks issued the same or next day after the sale.
As for returns, our wholesale clients can return anything the like -- as long as they buy 2 for every one item that they return.
We used to have a problem with credit and non payment most of the time. The web has changed that significantly. Most of our non payers were small customers with orders in the 100-1k range. btw one thing we have done is not limit our minimum order. it has allowed us to get into the "drop ship" market. the order comes to us through a reputable source...we drop ship to the customer. Great middle ground between b2c and b2b. our margins generally come out much better due to "standard" shipping and handling charges that are higher than bulk orders (go by semi).
We always request a copy of either a tax exemption or a copy of their state tax id docs. If MT, DE, or OR you just have to get a copy of their business license (those states don't charge sales tax? not sure if that is the correct list).
just my 2 cents. hope it helps.
