Arts Business Institute
Exclusivity with shops
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I'm gearing up to build my button/magnet business to sell wholesale to indie stores that I feel would be a good fit for my product.
I remember a friend of mine who has a children's clothing store once told me that she made sure she didn't carry the same brand of clothing that a nearby shop carried.
Is there some contract someone like me signs with local stores that demand exclusivity within a certain mile radius? Or do I create a list of stores that represent my work on my new upcoming website so store owners can find out for themselves-I would make this list only available to store owners seeking to rep my line. I want to build a positive relationship with indie shop owners I'm pitching to.
Lastly, in order to offer wholesale to customers do I ask for a re-sale tax id up front?
If this topic's been covered these two topics would you mind sending me a link to the answers? Thanks much!
Posted at 8:57 am Jul 22, 2012 EDT
About wholesale, yes, you have to have thier resale lic number. Up front is how big suppliers do it. They won't sell wholesale without it. However, there is the concept of good faith, and as a small business owner, you can go on a case by case basis. But in the end, you still need to verify that they are licensed resellers. This keeps your tax stuff straight, what sales you have where you need to collect sales tax and those sales where you don't.
If it was to come back to you in some audit, you would need to proove that a sale of say $500 was wholesale (to who and what their resale # is) and no sales tax was collected.
Posted at 2:30 pm Jul 22, 2012 EDT
I've only done consignment contracts and there is a usually a statement about exclusiveness within a certain mile radius or within a city, or even a portion of a city so I am sure there could be a line in a wholesale contract stating the same. Make sure they understand that you sell online and could have customers buying from you within that area tho.
Posted at 1:48 pm Jul 23, 2012 EDT
I would never offer exclusivity to a store by bringing the subject up yourself. Let them ask for it. You might want to avoid selling to the store next door, but exclusivity is something that stores earn by carrying your product and reordering.
Stores who barely place an opening order don't have a lot of standing in my book. When they agree to carry a good amount of your work, and they are regularly reordering, you might talk about exclusivity with them - if they bring it up.
My production studio shipped to over a thousand stores during the 20 years we were open. I never gave anybody an exclusive.
Then, I was a sales rep for 7 years selling all kinds of gift, paper and art items into stores, and I never offered an exclusive unless it was required as part of their agreeing to take a line. They would have to place a substantial order as well.
Think about it - would you give a 20-mile exclusive to a store near your home that bought $200 worth of product from you? Then if you wanted to approach other stores, you would have to drive 20 miles to solicit them? Don't give your power away. I'm hardcore on this issue. :)
Posted at 3:27 pm Jul 23, 2012 EDT
If a shop wants exclusivity, you can also negotiate the level of exclusivity. For instance, I once sold in two separate shops that were only a few blocks apart. Neither had a problem with this as long as the inventory in each shop was different. I could understand that completely. So, each of the two shops handled a different line, and there was no overlap. By knowing both stores well, I could tailor the inventory to their separate customer bases. I did quite well in both.
If you have more than one line of items, you can get around some levels of exclusivity that way as well.
Never be afraid to try and negotiate. It is *your* business, after all.
Posted at 4:53 pm Jul 23, 2012 EDT
Thanks for that input, Giani!!
It reminds me that I posted an article on this very subject last October on the Arts Business Institute called "How to Live with Retail Exclusivity Policies"
Posted at 6:09 pm Jul 23, 2012 EDT