How To Connect With A Fashion Buyer, Tip 5
TIP 5: KNOW THE LINGO
Average turns per year, gross markup at retail versus landed gross, seasonal returns, advertising dollars and sales promotions, interest on inventory purchased, and markdowns are just some of the lingo you need to get familiar with. A good tutorial on doing business with mass retailers is the following article on how to do business with Wal-Mart. www.howtosellyourproducttowalmart.com. This is a good article, which covers all the information you will need on getting your product in front of Wal-Mart merchandiser. Much of what you’ll learn in this article is applicable to all retailers.
With Wal-Mart or other large retailers, if you get to the point of negotiations that cover terms, Do Not agree to any of these: (a) Guaranteed sales (b) Net 90-120 days (c) Get paid when your product scans through. Guaranteed Sales, means that you have agreed to take back a percentage of whatever does not sell. For example, if you sell 500,000 on an 85% sell through plan, and only 80% of the 500,000 actually sell then you are contractually bound to take back the 20% balance. Which mean you now have 100,000 garments that you have to pay for the shipping, from all of the distribution centers, back to your warehouse. You can believe those nice well ironed garments will not come back in the same condition you shipped them in.
Net 90-120 days or “net never” as we call it means you get to be Wal-Mart’s bank for as long as they decide to pay you. Bottom line is you need deep pockets in order to wait this amount of time because we can guarantee the factory you have lined up in China is not going to ship one piece until they get paid.
Scan through means you don’t get paid until your product actually sells. So, if you have agreed to these terms you are taking a huge risk. This means that if you ship 500,000 trousers, you will get paid only when the pant sells. There is a time limit set to sell all 500,000 units. We already know what happens to the ones that don’t sell in time.