Summer 2007
Why are minimum wholesale orders necessary?

Minimum wholesale orders. Vendors need them; retailers complain they are too restrictive. In a new forum, in association with the Gift and Home Trade Association, we talk to industry professionals to find out how retailers can turn their minimum orders into maximum profits.

Ed Butler of The Butler Group


Ed Butler of The Butler Group
800.241.9533

ButlerGroupGifts.com

With each product line, there is a minimum amount needed to create a selling display. I find that this is normally more than the manufacturer’s required minimum order. Sometimes the buyer is collecting products from various vendors to create a collection within a theme. Don’t fall into the temptation of buying items that are not bestsellers to force a fit. This usually results in disappointing sales and markdowns. Ask the sales rep for advice when placing the order. Good reps will be honest and suggest the bestsellers. Adding bestsellers will help meet the minimum order and reduce your overall risk.

Rosanne Brown of Venice Stationers


Rosanne Brown of Venice Stationers
Venice, FL
941.488.6113

I don’t have a problem with many vendors’ minimum orders. A $100 minimum is not that difficult to meet, but if you have to buy 24 of one item, that’s when it gets a little difficult to test a new product. As a retailer, you also want to be sure that not everyone on the block has the same product. The right minimum orders take care of that. Rely on your reps. They have great insight into what will work for you.

Maggie Blackert of Premier Buying Group


Maggie Blackert of Premier Buying Group
717.823.6718

PremierBG.org

Wholesalers receive their goods from factories that usually determine the quantities per “inner” box and per case, optimized for shipping. The quantity per “inner” is the “minimum wholesale order.” Selling inner boxes as they are received keeps merchandise clean and cost-effective.

Minimum wholesale orders hamper the small retailer’s creativity and undermine his insight. He must compromise diversity to balance his purchasing objectives while complying with the minimum ordering quantities of an increasing number of items.

Possibilities to avert minimum wholesale orders? Cash and carry shows enable retailers to buy one or two of an item that usually carries a higher minimum. The sales rep might special request a smaller quantity or manually/physically split a minimum wholesale order between his customers after it is shipped in the original “inner” or case pack. Not all wholesalers’ software allows splits, but certainly ask. Some wholesalers have on-premises retail operations that allow items to be pulled individually. Also, retailers should consider joining a buying group that works directly with wholesalers to solve retailers’ problems. As a group of thousands of independent buyers, they have a compelling voice.

David McCadden of OGR Accessories


David McCadden of OGR Accessories
800.503.6351

OGRAccessories.org

The difference in cost of processing a small order versus a large order is very small. Under a certain dollar amount, you just don’t make anything. It allows the retailer to create an impact section and draw attention to the product. Buy enough to properly show the line. If you constantly struggle to meet a vendor’s minimum order level, you should consider if you are really committed to the line.

Bill Vaughter of Anita & Associates


Bill Vaughter of Anita & Associates
615.385.4750

AnitaandAssociates.com

It makes no merchandising sense for a retailer to order a single item per sku, but most vendors commonly allow a couple items per design to be ordered. Moreover, it’s mutually beneficial for the vendor to encourage the retailer to order prepacked bestselling assortments, particularly on opening orders. This simplifies the sales process, eases order fulfillment and puts the very best product assortment onto the retailer’s shelves. While many retailers may be inclined to keep the lid on minimums by cherry-picking items within a given line, the rule here should be, “Do it right or don’t do it at all.” Vendors may wish to encourage orders for bestselling items by offering favorable terms and perhaps a discount for doing so.

Gail Markert of Markert Group Consulting


Gail Markert of Markert Group Consulting
615.292.7819

MarkertGroupConsulting.com

If a supplier receives a consistent message from customers and sales representation that their minimums are too high, the problem should be examined. Suppliers could also compare their minimums to competitors’ to see if they are in line. In order to set up each line for optimum success, you the merchant have to be driving the buying decisions. A retailer should first determine how much product is needed to make a proper statement in the line, and then match that up to the supplier’s minimum. If the minimum is way over what is needed, I’d explain my rationale in requesting a lower minimum, or pass. It’s all about determining the right amount to buy to make an impact at your store.

The Gift and Home Trade Association is the gift and home industry’s professional trade association, formed to help vendors, sales agencies, industry affiliates and retailers work together to improve the industry. It hosts an annual conference for vendors and sales agencies, and its eight-member Retailer Advisory Board supports independent gift and home retailers through regular seminars at industry trade shows. For more information about the GHTA, call 877.600,4872, email info@ghta.net, or visit GiftandHome.org.





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