New growth - Working with Sales Reps

If you’ve tried going out and contacting stores on your own, I’m sure you’ve experienced how long it can take to land accounts and the large amount of work it takes to maintain them. A lot of people go to trade shows in order to hit a large group of potential buyers at once, which can work, but in a previous article, I’ve also outlined why doing the hard work yourself can save you money due to the trade shows being so expensive and hard to recoup those funds.

I should say that my experience so far working with outside sales reps(people who travel like old door to door salesmen) came about randomly and fell in my lap a bit. I’d been going after stores on my own and since my line focuses on literature, I was approaching large indie bookstores with my cold calls. I’d landed Powell’s in the Portland area with that method and developed a good relationship over about a year’s time. One day I got a call from a sales rep saying he’d gotten my info from the buyer at Powell’s and wanted to talk to me about representing Miles to go. My first question was if he had a retainer and he said no and mentioned it’s a percentage of each sale that his company gets. If you aren’t familiar with what a retainer is, it’s when you pay someone X amount of money upfront and they work their way through that. Once it’s depleted, you start again. Lawyers do this often and it can be a really hard thing to swing as a small business.

At the time, my wholesale sheet had about 18 shirts offered in total. We spoke for an hour or so and he expressed that he sold to the gift sections of bookstores only. The exact spot I wanted miles to go to be and that he’d been doing it for over 20 years. Of course I got on google and looked him up as we spoke and mulled over all of it and called him back the next day to say, let’s do it!

Some things to consider before working with a rep:
• Can I afford the potential new growth in wholesale? As you may know, wholesale rates are 50% of retail, so the margins are already smaller and then on top of that, their company wanted 15% of any sales they made. At $12.50 per tee, that makes my take home $10.63 on a sold tee.

• Tying into the above point, can I afford to reprint items quickly to fulfill orders with such small margins?

• Is this rep going to represent my brand properly and do they have access to the stores I want to be in?

• What do I need to produce for their team? The reps will need samples, printed line sheets(see previous article about what one is) and you will need to commit to stocking the specific items you offer for that season.

• Payment terms can be discussed with whatever works best. I send commission reports and payments monthly, but some people do quarterly. At the end of a month, I calculate all paid orders in an excel file, figure out their 15%, send a check out and email the report.

Some things stores will not only request, but expect:
• They may offer a credit card on first orders, but the majority will want to be on net 30 terms. Be prepared for a lot of stores to be late on payments as well.

• Stores want free shipping to their location. I set a min order to get free shipping and I charge ½ shipping cost on orders under that amount to try and make sure they hit the quantity I want them to be at.

• Many want an immediate shipment, although some stores will order for a ship date a month or so in advance(not as common). That means you need to have stock on hand to ship and if you need to reprint, you should be able to get it out the door within a week or so.

Once we got things rolling, samples sent to the team and they were able to get out and start selling, everything started moving pretty quickly. Within the first month, their team added 15 new stores to the measly 3 I’d had at the time. Within the first year of working together, I went from 3 stores to over 100 and it’s been pretty crazy keeping up with everything, but a challenge I was ready to take on. Through the suggestions of my main sales rep, also named Greg, I produced tote bags, greeting cards and journals that have all done very well. I’d made tote bags to sell online in the past, but no one bought them, so I was weary. Barely anyone still buys them online, but I sold a few thousand this year to stores, so his suggestions paid off.

The first rep I started working with had a team of 3 people and they covered a specific territory(NW region of the US). As they saw sales of my items going well, they introduced me to a team of reps on the East Coast, Canada and the SE of the states. Because each sales team has a certain territory, having reps in another area is not competition for them. Through working with the first team, I also was introduced to one of the largest distributors in the country and have begun working with them as well. That company works off of a warehouse scenario and net 90 payment which has been an interesting challenge. What happens is that they requested a specific starting inventory of a set group of items, I produced them and sent them to their 4 warehouses. When a store orders, they ship my items along with whatever else the store ordered from their catalog. From point of sale, it’s 90 days until I get paid! Their initial stocking order was about $15k worth of product and not a scenario I’d suggest to anyone starting out in wholesale. We selected a group of my best sellers, so that if I had to get the product back, it would be items I knew would sell through.

None of this would have happened had I not first done my own legwork and landed a great account on my own. It got my product in front of more people and in my case, the right person who saw that we could make good money together. Each area that I have a store location will have a slight spike in online orders as well. A store will only order a certain percentage of what I offer online, so a customer who buys in a store may look online and pick up more tees that they can’t buy locally. My total revenue doubled last year from adding on reps, but like anything else, the more you make, the more you spend, so there were a lot of potential freak out moments as the waxing and waning of my bank account was happening. At this point, things have settled down a bit thankfully and have found more balance, creating less freak out moments. Sales keep coming in and although I may have to track down a store for a late payment, the work of going out and calling a ton of stores has been lifted off of my shoulders.

There’s no way I could have expanded as quickly as I did and to the exact market I needed so quickly without the sales reps. I know my niche is pretty specific and I lucked out by finding reps within the industry I needed, but it’s a sign that there are people out there who may do the same thing that could help your brand. I’m thankful that that first rep understood I was new to this and he was done to ease me into it. He’d asked me what I could handle monthly initially, because he didn’t want to overload me with too much to a point that I couldn’t produce it and we grew from that as I could handle more. From having only 18 tees offered, I now offer 40+ tees wholesale, 20 totes, 12 greeting cards and packs and 12 hardcover journals. If you want to find reps, do your research and look for someone who works in the exact market you want to be in and ease into it. As great as it would be to have a team bring in $30k in a month, you need to be able to produce all of it and creating a good relationship with your reps and stores is very important. It’s better to under promise and overperform than it is to claim you can handle more than you really can. Having a sales team behind you can help you get to places that would be too hard to do on your own. If like me, you are a one person company, there’s only so much you can do by yourself and having a team supporting you can be a great relief and a fast track to expansion.