Direct sales or dealer network
Discussion
I am in the process of setting up a second company, all being well we will be launching in Mid-Late August.
Our product is custom made and will be a new brand within its sector, although its initially two main products we have plans to expand within 12 months and bring new products to the range, as well as merchandise and some clothing such as jerseys, t-shirts etc.
I am currently the director of one company in the same sector so know it well and can really see this product taking off, there is others on the market but ours are custom made and have many features the others don't plus better pricing and warranty.
Anyway its based solely online and we planned to sell direct to the customers, our audience is literally world wide so we thought this maybe the best solution as we can keep the price down and offer cheap postage.
It costs us approx £350 to manufacture the product, we planned to sell it at £899. With the intention of walking away with £500 profit once the card fees and other fees deducted.
However after thinking about it we are now considering looking for dealers after a few months, although we would only look to make about £200 profit instead of £500 we might be able to get quite a few dealers on board and if we do a minimum order of 20 sets we could look at making around £4000 per dealer on an initial order. This could add up if we have 25 - 50 dealers world wide.
My question is has anyone on here done the same? If so did you find your profits overall increased?
Also regarding pricing, what would be enough margin for a dealer, we would aim to sell them to dealers at £550-600, they can then re-sell for £899 however we feel the product could sell for £1000 without any bother, we aimed for £899 to keep it the right side of £900 (just
)
Thanks in advance, any advice is appreciated.
Our product is custom made and will be a new brand within its sector, although its initially two main products we have plans to expand within 12 months and bring new products to the range, as well as merchandise and some clothing such as jerseys, t-shirts etc.
I am currently the director of one company in the same sector so know it well and can really see this product taking off, there is others on the market but ours are custom made and have many features the others don't plus better pricing and warranty.
Anyway its based solely online and we planned to sell direct to the customers, our audience is literally world wide so we thought this maybe the best solution as we can keep the price down and offer cheap postage.
It costs us approx £350 to manufacture the product, we planned to sell it at £899. With the intention of walking away with £500 profit once the card fees and other fees deducted.
However after thinking about it we are now considering looking for dealers after a few months, although we would only look to make about £200 profit instead of £500 we might be able to get quite a few dealers on board and if we do a minimum order of 20 sets we could look at making around £4000 per dealer on an initial order. This could add up if we have 25 - 50 dealers world wide.
My question is has anyone on here done the same? If so did you find your profits overall increased?
Also regarding pricing, what would be enough margin for a dealer, we would aim to sell them to dealers at £550-600, they can then re-sell for £899 however we feel the product could sell for £1000 without any bother, we aimed for £899 to keep it the right side of £900 (just
)Thanks in advance, any advice is appreciated.
The products will be sold to the general public, there not a trade only type product.
Based within the cycling industry, reasons I can see a dealer network been better is the customer can see, feel and try the products at numerous dealers world wide. The shop also has the chance to up sell this product on the higher spec bikes.
I do like the idea of selling through my other company also, I want to keep them separate on paper as they are both in the same sector but not really similar.
I might try the internet only sales for a few months, then look at advertising for dealers once our product has been reviewed in magazines etc and has a bit of a name.
My second company could become the 'first' dealer and hopefully get the ball rolling.
Based within the cycling industry, reasons I can see a dealer network been better is the customer can see, feel and try the products at numerous dealers world wide. The shop also has the chance to up sell this product on the higher spec bikes.
I do like the idea of selling through my other company also, I want to keep them separate on paper as they are both in the same sector but not really similar.
I might try the internet only sales for a few months, then look at advertising for dealers once our product has been reviewed in magazines etc and has a bit of a name.
My second company could become the 'first' dealer and hopefully get the ball rolling.
If i was going through a dealer network I wouldn't sell direct, it would be one or the other.
I might supply my other company with stock but that would be treated the same as any other, same price, warranty etc.
20 items would be viable in my opinion, that would be an order of approx £10-11k which is fair considering the product however i could have a bit of leeway if i smaller supplier wanted to become a dealer.
I might supply my other company with stock but that would be treated the same as any other, same price, warranty etc.
20 items would be viable in my opinion, that would be an order of approx £10-11k which is fair considering the product however i could have a bit of leeway if i smaller supplier wanted to become a dealer.
The type of bike shop we will be selling to are the higher end ones who will regularly have thousands of pounds sat in components alone.
A price of a bike alone can be in excess of £5000 quite easily.
We can offer this initially, if there concern is putting 11k down then we will work with them.. Its all a bit of a learning curve at the moment.
A price of a bike alone can be in excess of £5000 quite easily.
We can offer this initially, if there concern is putting 11k down then we will work with them.. Its all a bit of a learning curve at the moment.
Hmmm, it does seem to be mixed reviews at the moment. I really wanted to go one way or the other.
What I am now thinking is base it online only for the time being, I can then have the products sent out, tested/reviewed, get some feedback from customers etc then look at a dealer plan in around 6 - 12 months once we have a bit of back ground. We could then phase it out to just a dealer only product over a year or so after getting a few on board.
I do think seeing them in person would be better, the shop is more likely to up sell them plus from experience in the industry you get a lot of people wanting the newest/best kit and buy on a whim, its very common to be honest.
Releasing this time of year doesn't bother me, we are targeting the adult market who are seriously in to biking, although you get a peak in summer its due to the fair weather riders. The people who will be looking at my product will be year round hardcore riders.
NorthDave - No backers as of yet but I am throwing a quite a bit of money into this and phase 2 - 3 might need some backing, its something I will likely be considering to give this a real boost.
AB - How does your plan work then, do you provide stock to the shop or do you supply on demand, so if they bag you a sale they take 10% of the sale price and you send the product out to them?
PM me if you would prefer not to discuss on here.
Thanks again everyone, feedback like this is invaluable and great food for thought
What I am now thinking is base it online only for the time being, I can then have the products sent out, tested/reviewed, get some feedback from customers etc then look at a dealer plan in around 6 - 12 months once we have a bit of back ground. We could then phase it out to just a dealer only product over a year or so after getting a few on board.
I do think seeing them in person would be better, the shop is more likely to up sell them plus from experience in the industry you get a lot of people wanting the newest/best kit and buy on a whim, its very common to be honest.
Releasing this time of year doesn't bother me, we are targeting the adult market who are seriously in to biking, although you get a peak in summer its due to the fair weather riders. The people who will be looking at my product will be year round hardcore riders.
NorthDave - No backers as of yet but I am throwing a quite a bit of money into this and phase 2 - 3 might need some backing, its something I will likely be considering to give this a real boost.
AB - How does your plan work then, do you provide stock to the shop or do you supply on demand, so if they bag you a sale they take 10% of the sale price and you send the product out to them?
PM me if you would prefer not to discuss on here.
Thanks again everyone, feedback like this is invaluable and great food for thought
There will be too variations, one we will price at £899 and the other £950. Both giving he same profit. I dont want to be at £1000 and then tipping over to £1050. I would like to keep it this side of £1000 as it will be a bit of a selling point.
Andy-xr, thanks for the feedback on that. We will carry out a survey once we get the website up and running and have some traffic on there, it will be interesting to see people's views focused on this product rather than a general 'online vs shop' scenario.
In the cycling industry there is always shops looking for the new brand/product so they can be the one to claim 'first dealer' rights on it, without these new products most bike shops are the same.
I am hoping once we get more known we can approach some of the individual cycle shops and show our product and chances are we will be contacted before also.
We will see how it plays out but it looks initially we will keep it online, 6/8/10 months down the line we can re-plan and aim to get some shops on board.
Any more input is appreciated
Andy-xr, thanks for the feedback on that. We will carry out a survey once we get the website up and running and have some traffic on there, it will be interesting to see people's views focused on this product rather than a general 'online vs shop' scenario.
In the cycling industry there is always shops looking for the new brand/product so they can be the one to claim 'first dealer' rights on it, without these new products most bike shops are the same.
I am hoping once we get more known we can approach some of the individual cycle shops and show our product and chances are we will be contacted before also.
We will see how it plays out but it looks initially we will keep it online, 6/8/10 months down the line we can re-plan and aim to get some shops on board.
Any more input is appreciated
Thanks DSLiverpool.
I have a friend who is great with marketing, normally I dont get friends/family involved as I have heard to many horror stories and I am fairly stubborn in my ways but he has gave me a basic plan to stick to. Proper marketing is something I need to look in to, at what cost I have no idea as of yet (are we talking couple of thousand or tens of thousand initially!?), my plan is to get the product out there in some mags for testing/reviews initially, its basically free advertising to start. We can then branch out in to paid advertisements shortly after and also look at getting a couple of sponsored riders on board.
I know this is extremely basic which is why if funds allow I would like to get some proper marketing done. If all goes to plan over the next 2 - 3 years we will be requiring some funding whether it be a business loan or backer but marketing will be one of the key aspects.
I have a friend who is great with marketing, normally I dont get friends/family involved as I have heard to many horror stories and I am fairly stubborn in my ways but he has gave me a basic plan to stick to. Proper marketing is something I need to look in to, at what cost I have no idea as of yet (are we talking couple of thousand or tens of thousand initially!?), my plan is to get the product out there in some mags for testing/reviews initially, its basically free advertising to start. We can then branch out in to paid advertisements shortly after and also look at getting a couple of sponsored riders on board.
I know this is extremely basic which is why if funds allow I would like to get some proper marketing done. If all goes to plan over the next 2 - 3 years we will be requiring some funding whether it be a business loan or backer but marketing will be one of the key aspects.
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