Interested in doing business with large retail chain stores? Here’s the skinny on how it works.
Taking the Order
Once you’ve been approached or have presented your work to a chain store buyer, you may end up writing an order. Sometimes this order will be a one-off. For example, if the buyer loves your handmade ceramic baskets and they would make an excellent addition to Easter displays the chain is planning, you might get this once chance to make a big sale and nothing further.
Or, you could end up with ongoing orders from the chain, depending on sell-through of your line in their stores. It’s helpful to know the situation going in, so that you can plan.
Be honest with the buyer about your production capabilities. Don’t overpromise, and put yourself in the position of scrambling like mad to fill a huge order that just doesn’t make sense for your business. You can always suggest that the order be created for one regional area instead of nationally, or request to stagger shipments to stores in order to allow you to produce the quantity desired.
The Purchase Order
When buyers for national chains place an order with you, they will create a Purchase Order, with details and with a reference number. This P.O. number is crucial – if you don’t have a Purchase Order, you don’t have an order. A buyer who tells you they will get a P.O. number for you must produce this before you should consider starting production.
Use the P.O. number for your order on all correspondence or email with the buyer or anyone from the chain that you need to contact. Have it handy if you are on the phone too, because everything revolves around the number, which is trackable. Write your P.O. number several times on the outside of packages you ship, and put it on the packing list inside. This is used by receiving departments to check in the merchandise, and it will be used to pay your invoice, too.
Most of the vendors that chain stores deal with are commercial manufacturers, or importers. The more you can learn about the procedures common in dealing with chains, the better your experience will be, since you will be expected to comply with their policies. You should also receive information from the buyer after the order is place on their requirements and procedures, as well as contact numbers.
Major retailers hold a lot of sway with vendors who want to do business with them, and as the 800 pound gorilla, they often get their way. For creative entrepreneurs with small businesses, it can sometimes be a little scary getting started, but it needn’t be. Selling successfully to chain stores can transform your business and take you to the next level.
Chains don’t always demand discounts on their orders, but often do request price breaks due to volume. Know this going in. If you are willing to negotiate a better price for a large order, be aware of your bottom line and have profit built into your price so that you are making money, and enough of it to undertake production.
You may put a chain store on a Net 30 basis (which they will probably require) but in today’s world it’s not uncommon that these retailers take longer to pay. Be prepared for this.
It is also very common for chains to return items to vendors (this is across the board, it’s not just you!) If an item is damaged or broken in the store, or is returned by a customer, you might end up with a return you have to credit out.
Any questions about terms should be directed toward the buyer, or someone in their department if they are unavailable.