This is a topic broached a few times over the years but never actually answered fully in one place.
I very often get emails from customers asking about why we dont use many retailers. I also get emails from retailers asking to stock us, but we quite often decline.
I thought i would list some of the thinking around this topic here and also invite you guys to give your opinions/perceptions. As usual i will answer as honestly as i can.
PLUS SIDE TO USING RETAILERS
1: You obviously shift more stock long term.
2: Each time a retailer cross-links and sells a HF product to someone who hast come across us before it generates a potential future sale if that customer is happy.
3: We benefit indirectly from their advertising.
NEGATIVE SIDE TO USING RETAILERS
1: The dreaded bottom line. The deal we offer retailers is 40% off RRP. We think this is pretty generous as, for example, they get to buy a £3.00 figure in for £1.80 and sell it for £3.00 making £1.20 profit on it.
2: We reimburse retailers their shipping costs in free figures so if shipping their order comes to £12.00 we give them a minimum of £12 RRP worth of stock free.
However we get retailers ( alot of them) telling us that they want 50% , 60% or even 70% off RRP before they will stock us. We then have to deal sometimes with some quite agressive retailers who arent happy that we have said"no" to this. Yes we know they have running costs too, but they dont have the manufacturing costs that we do ... remember they get supplied with a finished product all packed nicely and ready to sell.
This is how we explain it to them.
"If we sell you a £3.00 figure for £1.80 you make a potential £1.20 profit on that figure. Technically we get £1.80. But is that profit?....course not!!"
For that £1.80 per figure that we get we have to pay
1: moulding/casting costs, metalprices have risen again as have rubber prices so the price we pay per figure is going up again. If you assume that 1 casting bought in costs 80p that just leaves £1 'profit'.
however this £1 'profit ' has to pay the following.....
2: sculpting costs (even Kev has to get paid occassionally you know, love doesnt pay the mortgage!).
3: staff wages at all stages from mould allocation through to shipping to caster, sorting the figures, quality control, packing the production castings, labelling the production castings,
4: Stock storage
5: postage costs to and from the caster for green, masters & production castings.
6: finance charges for processing the transaction
Cumulatively also the little profit we then make goes toward the running costs of the unit...rental, power, utilities, equipment, paper, bags,...basically everything needed in a day to day form.
If we drop our bottom line we cant afford to run, we will be to all intents and purposes just giving our stock away....doing all of the work so someone else can profit.
Is that fair?....i dont think so and i have 4 kids that don't think so either!
I can hear some of you saying "arent the potential gains from one of the larger retailers stocking your products at a lower rate going to help long-term?"
You would think so, wouldnt you. However, on the order form we invite customers to let us know how they have heard of us. The majority of comments arent retailer based but through word of mouth and forums.
We do supply 2 larger retailers (no names mentioned .. one UK and one US) at a lower rate of 50% discount. I have worked out (time and motion study) that if one of them places an order for £1000 RRP worth of stock (they pay £500), once all of the charges. labour etc are covered in processing that order we actually physically make on average approximately 18p per figure (small figures with lower retail price like Katie, Sarah, Little bits we make a loss and larger pieces like the multi-part adventurers we make a bit more profit...it balances itself out. However if their £1000 RRP worth of stock is mainly low value items we make a loss for that complete order). So on average thats 6% of the RRP in 'profit' which then goes towards running costs above. So we are giving the stock away. They get 50% per figure to play with for their running costs and we get 6%. This is called a 'loss leader' and apparrently lots of major retailers do this. Long term we hope that the gains of supplying them ...some of their customers coming over to us direct, benefit from their advertising etc will even this out a bit more in our favour.
So next time someone wants to badger us about selling at a lower than current discount, please point them to this topic first! We do have a right to make a profit, we arent just here to supply the industry with funky toys for the hell of it!
