The quickest way to scale your product-based business is to sell wholesale. Rather than try to increase the number of customers you sell individual product to, you sell a large number of items to a handful of wholesale buyers. The best way to find new wholesale customers is through sales reps.
How sales reps work.
Sales reps present merchandise for the lines they represent. They work out of a showroom or they travel within the territory they cover. They will have exclusive sales rights in the territory that you agree to. If sales reps are not successful with your products they will not continue to sell them. The reps are paid strictly by commission so they tend to show the retailers lines that will sell well so they get re-orders.
Sales reps take orders and then forward orders to the manufacturer who then ships the order.
Sales reps require free samples and marketing materials to help them sell your products. The more tools the sale reps have the better they are able to sell your products. The retailers that buy from the sales reps need to be able to see, touch and feel the products before they purchase. You will need to make sure that you build the cost of the samples into your pricing.
The first year I hired sales reps I remember spending a lot of samples and catalogs for the sales reps. However, it was definitely worth it as my business tripled in size that year.
Sales reps are paid 15% commission for orders that are sold at the regular wholesale price.
The benefits of working with a sales rep.
Experienced sales reps mean less management time for you. The rep will handle customer service issues and product knowledge questions for you.
The sales reps know the area they serve better you will. The benefit of having local knowledge always helps understand the needs of retailers they work with.
How to find sales reps for your product-based business.
Trade shows- I found my sales reps by walking the trade shows and looking for showrooms that were a good fit for my products. One of the things to think about as you are looking for reps is to make sure that your products are a good fit with the other lines they carry. The reps like to be able to get multiple orders from each store as they are paid on commission. It makes it worth their time if they can show multiple lines on each sales call.
Referrals- Most manufacturers that have been in the industry for a while will have connections with various rep groups. I got a lot of referrals by just picking up the phone and asking vendors I met at shows what rep groups they enjoyed working with.
Online- There are a few websites where you can find connections on such as greatrep.com or saleshunter.com.
Trade Journal- Often times sales reps will advertise in the various trade journals. I did an article with a list of trade journals here.
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When I started a new line of candles years ago and was trying to find new sales reps. The first thing I did was walk trade shows.
The Las Vegas Gift Show is at the World Market Center in Las Vegas. I have learned over the years the gift industry is great place to start looking for reps first.
I start by walking the show and just looking around to see who the players are. I look for showrooms that either don't have what I want them to carry or they have a lot of what I want them carry, in this case candles.
I just walk in the showrooms that I like and ask "who makes decisions on the lines that you carry here?" Don't be afraid to ask, they want to pick up good lines just as bad as you want to sell your products.
Make sure that you have these five things before you start looking for sales reps.
1. A catalog or line sheet showing clear photos of the products with item numbers.
2. Business cards with contact email and phone number on them.
3. A website and email addresses with the name of your company, it looks more professional and they will take you much more serious.
4. Clear pricing on your products with the correct gross margins built in and an allowance of 15% commission for the sales reps.
5. Samples of your products.
As an example of what your pricing should be to make it work for both you and the sales reps as well as the retailers, use this formula.
Cost of Goods $1.00
Wholesale Cost $3.00
Retail Cost $6.00
I have always used this this formula over the last twenty years, if you use this formula you will always make money. I say one dollar COGS, one dollar overhead and one dollar profit. The only exception I make on this formula is if it is very large volume then I will wholesale for $2.00 and retail for $4.00 for every $1.00, however it has be large volume as in 1,000's of units.
Make sure you wear comfortable shoes when you set out on your trade show journey. At the end of the day nobody is going to remember what shoes you wore and your feet will thank you. My shoes at the Vegas Show....my fitbit says I walked six miles that day.