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wholesale dilemma


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I know we been talking about wholesale a lot but I am still wondering how to make it work for my tiny business. I don't have a store and my mainly sales are thru other stores, mostly bulk, wich is ok. I recently approach another town (Boulder ), I got a small account for bulk chocolates in a nice coffee house, very busy. Also since I had to get the license anyway, I went to a really upscale store, where they sell about everything from houseware to cooking books, imported cookware and ofcourse chocolates (Peppercorn). Now they are interested to carry the chocolates but asked me if I could lower the price a bit, I don't know if its because I am very small, that my costs are so high, or I am not calculating rigth, but lower the price to what they ask will put me almost on even with what I spend. Do I go ahead and get the gig to get my products out there and hopefully next year I will have more business so my prices will be lower etc?

Sorry for the long post and thank you for any advice.

Vanessa

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I can only answer from the retailers perspective. First, I always ask my wholesaler if they can get me a lower price. That may simply mean a lower price, but it also means do you have quantity price breaks, seasonal price breaks...what can you do to make this more attractive to me.

Any item that comes across my desk I double the wholesale (including shipping if it exists) and ask if I would pay that much. So for example, I had someone bring me locally raised, grass-fed beef yesterday. The wholesale was $4.95/lb. Obviously I can't sell that for $9.95/lb - maybe in a big city, but definitely not here. She agreed to take it down to $4.25 if I buy 50 pounds at a time, or if I gave her a 1 year purchase commitment. I think I can get $8.95 from the consumer...now we have a deal. This person also is going to commit to ## of in-store samplings at her expense and her own advertising listing us as the sole reseller. A very sweet deal for me.

More direct to your question - I had a chocolate maker approach me last year. She makes nice bon bons and truffles. A bit big for my liking, but I'm sure they could sell. She wanted $2.50 each. I know I can't sell them at that price point. Simply too expensive.

So I guess my advice is to view the retailer as someone with their own set of expertises and as a partner, and ask how can we make this work for both of us. I'm always surprised at how much people will pay for things that I wouldn't, but it takes a big to support from the provider/distributor to get me to try it. But any item, regardless of price, that sells quickly, is something I will restock.

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Do you know what discounts for larger quantites that your suppliers will give you? The place I buy chocolate from would not discount at all until I purchased way above what I buy now. I suppose there are some economies on time when making greater numbers but not so easy to quantify ahead.

I've noticed packaging can get much cheaper in bulk.

Could you select just some of your items that are cheaper to produce, in time if not ingredients, and give them a lower price on that basis.

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I totally understand the retailer point and it really helps to get your input. I brought my pc at work today so I could do some recalculation, I think what it hurts me the most is packaging. Like Lapin said maybe a greater order would give me a better price, unfortunatelly I don't think I can put that many boxes on the market, I mean the products aren't meant to be on the shelf for too long rigth? Maybe if I get more stores then I could make it.

Probably choosing a less expensive packaging would help as well, then is mostly the inside product and not the packaging I am trying to sell.

The idea of offering some in store sampling its good maybe I should consider something like that to make the sales go especially in this season, and create more demand for my product.

Thank you both so mach for your help with this topic, somehow the business part of all this chocolate making isn't the one I enjoy much!

Vanessa

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Unless you think higher business volume will dramatically reduce your costs, then I think you shouldn't undercut yourself. It's really hard to raise prices later.

And you're right that packaging is huge, both from an expense and time perspective. I can offer pretty competitive pricing if someone just wants individual pieces which they could package themselves (or even that I could provide inexpensive ballotin boxes for packaging). But good packaging that's able to sell the product drives the price up a lot - I could save a lot of money using non-window boxes, but I think people need to see my product.

Tammy's Tastings

Creating unique food and drink experiences

eGullet Foodblogs #1 and #2
Dinner for 40

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I'd really like to hear more on this topic, from both chocolate makers and retail buyers. I am soon going to be shipping chocolate pralines to the US wholesale. I'm trying to figure out a good price point, especially given the economy.

For a half pound box (21 pieces) I am looking at a price point anywhere from $8 to $15 ex works. This is a retail box ready to put on the shelf. For a buyer to get this price, I need a minimum order of about 200 pounds. Otherwise, airfreight rates are just too high to make it affordable. That's about 400 units.

I also have 12 piece and 6 piece boxes, which will price out a little higher per unit due to packaging costs being pretty steady, regardless of size.

I have done my homework analyzing other upper end chocolate makers, and the price per piece (including the fancy box) can go anywhere from $1.60 or so to $3.00. The median is about $1.90 per piece. I'm aiming midrange in that level, assuming a retailer could turn around and sell half pound box for $30-$35.

Jeffrey Stern

www.jeffreygstern.com

http://bit.ly/cKwUL4

http://destination-ecuador.net

cocoapodman at gmail dot com

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I can't speak for the confectionary trade at all as my partner and I are not professionals...heck, we aren't even competent...and we give all our stuff away.

However, my husband and I are professional artisans and our experience has always been that the larger cities will strike a much harder bargain with the supplier than the smaller or more remote ones. We have never had a 'fight' with the smaller galleries, but, oh, the larger and more important galleries can be unpleasant sometimes to deal with in their drive to wring every cent out of their business. Should add, that the largest gallery we deal with is also one of the nicest, so it is not across the board.

Just expect a possible harder bargain to be made by a larger retailer. :unsure:

Darienne

 

learn, learn, learn...

 

Life in the Meadows and Rivers

Cheers & Chocolates

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Unless you think higher business volume will dramatically reduce your costs, then I think you shouldn't undercut yourself. It's really hard to raise prices later.

I couldn't agree more. Don't sign up for something that will hurt you down the line -- or that won't have you seeing a profit now.

More sales = good, but if you're killing yourself to fill more orders but you're not making anything from it, there's no point.

As a retailer in a good-size city (650,000) I can't double the price of most of the products I sell, but I always feel that it's my issue. If something is offered to me at a certain price, I have to decide if I can make it work in my store. Sometimes that means doubling the price, sometimes only marking it up 30% and sometimes choosing not to stock it.

And as for packaging -- you could spend less on your packaging to make more money. But you have to consider that if your packaging doesn't look as 'high-end', some of the 'high-end' retailers may no longer want to carry it. (Though you may be able to find some really neat, inexpensive packaging.)

Good luck!

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Its a dilemma already :raz: ,I am going thru my brain to think how to make this work, but you guys are right, if I have to kill myself to fill orders and dont make anything out of it, isnt worth it.

I am due in 3 weeks and for some reason now i feel the urge to make this business work really well, but I guess the timing is little bit off :laugh::wacko: .I think I am going to make sure I focus next year on my personal advancment ( in the chocolate confectionery field) and I think I am going to try to do as many shows as I can and enjoy, some things just require time and I sould not rush it, if I am not redy.

Thank you again so much for all the great advices :wub:

Vanessa

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gfron mentioned seasonal price breaks, so I was thinking maybe you could give them an introductory price. Make it very clear that it will only be for the first order, and subsequent orders will be at your usual price.

They might be wary because they don't know if they'll be able to move your product. Once they see there is a demand for it, they may be willing to pay more.

Another option is to see if they're willing to sell it on consignment.

But yes, if you're due in 3 weeks, I don't know if you'll have much time to really go all out if they want more. Best to stick with one big event at a time! :smile:

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I'm a little late getting into this discussion. As I know we've discussed before there is really no economy of scale making artisan chocolates. 10 times as many chocolates takes about 10 times as long to make and pack when you are doing things mostly by hand. So while most retailers are accustomed to discounts for larger quantities, it just doesn't seem to work with this product.

Much as you want to see your stuff in high end stores - I'd be waiting until the price is right. And as someone said before, you don't want to make your product look any less inviting by using less elegant packaging.

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I agree with Kerry. I work hard, use top quality everything, and my packaging is expensive. That is because this is the line I chose to follow-suits me and my ways. Perhaps it is slower and takes more time, but I figure my chocolates will get to the right places eventually-no sidetracking. But this is a goal I chose for my business.

What is your goal?

To sell to whomever so long as you make some sort of a profit? Or to the right places where a certain level of profit is attainable?

A friend of mine sells to everyone, and in some places she makes it even-almost no profit. In others she compensates a bit more. Her idea is that it is advertising for her when she doesn't profit, and this advertising is for free!! Perhaps she is right, but you have to do what feels right for you.

Another friend is very stubborn and says "no!" way too often. She insists on very high pricing and her items are quite small compared to most! She is thinking of closing her business as there isn't much going on. I am trying to talk her into trying other methods.

So it is very hard and it is a personal issue of what feels right to you and why.

Keep us updated. Are you due- to have a baby? If so, how wonderful!! And then I wish you an easy delivery and much joy.

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Kerry is definitely rigth! There is no way to be an artisan and be able to discount your products. The more we make the more time and money we spend, plus with the prices going up on chocolate and everything else this may not be the right route.

I don't want my products anywhere, this store I mentioned is very very nice and popular, with the rigth type of customers. I guess taking my time and figure out better where I want to go wouldn't hurt, I just wanted few nice stores to carry my products so my name gets out there, because without a store is a little bit hard, I haven't get much business lately

and Iam trying to figure out where and how I should move next. I am little bit frustrated, my web site is a disaster, and I don't have much control on it rigth now, I am going to redo it soon with the help of my sister and hopefully will get more traffic.

Well sorry I guess I am venting, but you guys are so patients!!!

Thank you so much!!!!

Vanessa

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You say they asked you to lower your prices a bit - is there still room for negotiation? Could you suggest they pay your price, but that you'll also make them some interesting barks for a better price. Barks are so quick and easy, fast to package - you could sell that closer to cost to them - gets your high end product in the store.

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There are some sites that give you the ability to build your own site-as I did. Basic knowledge of computers, like we all have, is all you need. I can refer you to the one I used to check it out. They have onlune help by a chat box, and the first month while you build is free. It worked for me. I can relate to your issues of having no storefront! Did you join a business group?

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There are some sites that give you the ability to build your own site-as I did. Basic knowledge of computers, like we all have, is all you need. I can refer you to the one I used to check it out. They have onlune help by a chat box, and the first month while you build is free. It worked for me. I can relate to your issues of having no storefront! Did you join a business group?

Thank you! Sure I will check it out for sure. I havent join a business group, I entered in the Colorado proud program and I guess I havent used as I should have ( like talking to other business owner etc.) I should join the chamber of commerce next year, it was little expensive so I passed.

Vanessa

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I suppose ultimately you have to decide why you are in the chocolate business. Ultimately you have to assign a value to why you are making chocolates and stick with it. Essentially, lowering your price as a means of getting into a certain store is a form of advertising. Even though your product itself is probably the best form of advertising out there, you are still devaluing your product by offering it at a lower cost than it is worth. Getting your name out there in the form of increased sales is one way to increase profitability. Decreasing your costs (overhead, packaging, etc.) is another way. There certainly is a sweet spot with how much you need to produce with your overhead to make a profit. Many of those business groups are expensive I agree, but maybe there's one out there that may help with the networking that is often necessary to make it in your industry.

Stephanie Crocker

Sugar Bakery + Cafe

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Another idea. My business group tries hard to support each other and so we have started theme evenings once a month. Last month someone had an "artists" evening in her home. The various artists in the group brought their arts, I, my chocolates and we made up invitations and everyone invited at least 10 people. We had a good outcome. I sold quite a lot of chocolate and others also did well. Not to mention the long term benefits of returning customers and word of mouth effects. All in all it was very pleasant and profitable.

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Another idea. My business group tries hard to support each other and so we have started theme evenings once a month. Last month someone had an "artists" evening in her home. The various artists in the group brought their arts, I, my chocolates and we made up invitations and everyone invited at least 10 people. We had a good outcome. I sold quite a lot of chocolate and others also did well.  Not to mention the long term benefits of returning customers and word of mouth effects. All in all it was very pleasant and profitable.

Seems a pretty good idea and organization, not sure I have the same type around here, but I will check into it. I should probably look better into the Colorado Proud program wich is very good but maybe has more benefits than what I though.

Vanessa

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Another issue you might want to take a look at, which I just came across. When looking at packaging, make sure the box is free of chemicals. My box manufacturer told me some companies use paper board from china and when they were tested had fertilizer residue in the paper. I know I try very hard not to put any preservatives or chemicals in my chocolates, and of course don't want any chemicals in the box itself. I'm sure others feel the same.

Luis

Edited by sote23 (log)
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Since this topic has veered a bit from pricing, let me add that the Small Business Development Centers (SBDC) are very helpful and free (typically associated with universities, but not always). They can help you with all sorts of aspects to the business.

The other thing to consider is beyond food stores. Your work is beautiful enough that I could easily see it in spas, jewelry stores, or art galleries. How fun would it be during the holidays to do a sampling at an art gallery! You could also theme some chocolates to go with their current exhibits. I'm doing this with pastries in a few weeks for a holiday opening at one of our premier galleries. If people are in a gallery, then they are certainly your customers who will pay full price. And if you have a mailing list already, that's something you would be offering the site - you will market your tasting to your customers to bring a new set of people into their business ... win-win!

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Well selling and buying for a while and looking at it from a business side... It looks to me like your not going to stop what your doing anytime soon. As i learned long ago, there are certain things you can buy in bulk that obviously wont go bad, or go bad any time soon if kept well. For example if you are making truffles.

You can buy the chocolate in bulk, maybe 10x what your actually going to make per batch, which you should get at the lower price. And buy the other ingredients that are more perishable at the time of production. That is one way to cut costs.

Another to maybe streamline the production, try to think of the most efficient way to create said items. Cutting time, manpower, supplies used.

Also cut down on waste, scraping that last tiny bit of chocolate off of the bowl at the end could save you a nickle here a dime there, but would eventually add up. That extra inch thrown away in packaging... try to make it so you can use everything as efficiently as possible.

Last of price out everything you can, so you can keep track of expenses. Lets say you can lower your price for the person buying your products, and your costs are still the same. If it works out in a profit no matter how small of a gain, try to lock them into an agreement to buy X amount of product over X amount of time. Therefore you will know at least if your making 10 bucks per batch, you will at least know how many batches you will make and how much you would make at the end...

And ask them to maybe add a card or a website to promote your product in their store, ask if they know any other stores that would be interested in your product.

More you sell, more you can buy, more you can make...

i hope i didnt ramble to much, and i hope this helps at all...

**********************************************

I may be in the gutter, but I am still staring at the stars.

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