There are plenty of benefits to having your products sold in catalogues. But, be wary! There are pitfalls as well in this sales/distribution channel.
Giving away the farm
Many catalogues 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 delivery costs. They want an “advertising allowance.” They ask for a volume discount, a catalogue allowance, and a photography fee. The requests for concessions go on and on. But beware of this game. If a catalogue truly likes your product, they will usually pick it up without requiring a tonne of concessions.
Being stung by mistakes
Review a catalogue’s rules and shipping requirements closely. Mislabeling your master cartons, shipping late, or failure to follow any of their seller 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 catalogues are successful with your item. And always have backup suppliers lined up — just in case.
Products that boomerang
Returns from catalogues 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 catalogues ask for an “exclusive.” This agreement guarantees that the catalogue 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 them
Let’s face it, the main reason you do business with a catalogue 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 catalogue 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 catalogue until you get paid. You can even ask for payment up front on new orders.