|
Giving away the farm.
Many catalogs will ask for a multitude of discounts
and concessions before they even place one order. You give them a set price
for your product. But they insist on a lower price. They expect you to pay
freight. They want an "advertising allowance." They ask for a
volume discount, a catalog allowance, and a photography fee. The requests
for concessions go on and on. But beware of this game. If a catalog truly
likes your product, they will usually pick it up without requiring a ton of
concessions.
(article continued below ...)
Being stung by
mistakes.
Review a catalog's rules and shipping requirements closely. Mislabeling
your master cartons, shipping late, or failure to follow any of their vendor
requirements could cost you. Penalties are typically enforced through
deductions off invoices. A few deductions here, a few there, and you can
kiss your profit goodbye.
Falling behind
with orders.
The only thing worst than having a product no one wants to buy, is having
one that so many people want you can't keep up with the deluge of orders. If
you've never had insomnia, this scenario is guaranteed to cause it. When
thinking about your production needs, think as optimistically as possible.
Make sure you're capable of handling production if the catalogs are
successful with your item. And always have backup suppliers lined up -- just
in case.
Products that
boomerang.
Returns from catalogs are an inevitable part of the equation when
figuring out your profit. If you have a good, well-built product that
delivers on its promises, you have little to worry about. However, high
returns are often the first warning sign that there are problems with your
product. It breaks easily when shipped, customers think it's overpriced, or
assembly instructions are confusing. Any number of issues can be red-flagged
by high returns.
Placing your
eggs in one basket.
Many catalogs ask for an "exclusive." This agreement guarantees
that the catalog will be the only one carrying your product for the length
of the exclusive. Generally this is not a good deal for your company.
Naturally an exclusive with one company locks you out of the rest of the
market. If you do grant an exclusive, keep it as short as possible. Six
months is plenty of time for an exclusive.
Doing business
with deadbeats.
Let's face it, the main reason you do business with a catalog is so they
will pay you for your product. How frustrating it is then when they don't
live up to their end of the deal. And it happens. Like all businesses that
are strapped for cash, when a catalog is experiencing lean times, they will
delay payment to their vendors. So keep a close eye on when an invoice is
due, and don't let them slide too far past. Any invoice more than a month
past due could indicate trouble. Your best recourse is to hold up shipments
to that catalog until you get paid. You can even ask for payment up front on
new orders.
About the Author:
-- Jim Tilberry is President of Tilberry Direct Marketing. His
business specializes in helping inventors and small companies sell their
consumer products through mail order catalogs. www.catalogrep.com
tilberrydm@aol.com / 800-413-0679
October 28, 2003
| 
