Product Marketing

Catalog sales as a retail channel for your business

written by Tim Berry of Palo Alto Software http://www.paloalto.com

3 Comments

There are plenty of benefits to having your products sold in catalogs. But, be wary! There are pitfalls as well in this sales/distribution channel.

Giving away the farm
Many catalogs will ask for a multitude of discounts and concessions before they even place one order. You give them a set price for your product. But they insist on a lower price. They expect you to pay freight. They want an “advertising allowance.” They ask for a volume discount, a catalog allowance, and a photography fee. The requests for concessions go on and on. But beware of this game. If a catalog truly likes your product, they will usually pick it up without requiring a ton of concessions.

Being stung by mistakes
Review a catalog’s rules and shipping requirements closely. Mislabeling your master cartons, shipping late, or failure to follow any of their vendor requirements could cost you. Penalties are typically enforced through deductions off invoices. A few deductions here, a few there, and you can kiss your profit goodbye.

Falling behind with orders
The only thing worst than having a product no one wants to buy, is having one that so many people want you can’t keep up with the deluge of orders. If you’ve never had insomnia, this scenario is guaranteed to cause it. When thinking about your production needs, think as optimistically as possible. Make sure you’re capable of handling production if the catalogs are successful with your item. And always have backup suppliers lined up — just in case.

Products that boomerang
Returns from catalogs are an inevitable part of the equation when figuring out your profit. If you have a good, well-built product that delivers on its promises, you have little to worry about. However, high returns are often the first warning sign that there are problems with your product. It breaks easily when shipped, customers think it’s overpriced, or assembly instructions are confusing. Any number of issues can be red-flagged by high returns.

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Placing your eggs in one basket
Many catalogs ask for an “exclusive.” This agreement guarantees that the catalog will be the only one carrying your product for the length of the exclusive. Generally this is not a good deal for your company. Naturally an exclusive with one company locks you out of the rest of the market. If you do grant an exclusive, keep it as short as possible. Six months is plenty of time for an exclusive.

Doing business with deadbeats
Let’s face it, the main reason you do business with a catalog is so they will pay you for your product. How frustrating it is then when they don’t live up to their end of the deal. And it happens. Like all businesses that are strapped for cash, when a catalog is experiencing lean times, they will delay payment to their vendors. So keep a close eye on when an invoice is due, and don’t let them slide too far past. Any invoice more than a month past due could indicate trouble. Your best recourse is to hold up shipments to that catalog until you get paid. You can even ask for payment up front on new orders.

Originally published on Bplans.com.

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Tim Berry

about the author

Tim Berry

Founder and President of Palo Alto Software and a renowned planning expert. He is listed in the index of "Fire in the Valley", by Swaine and Freiberger, the history of the personal computer industry. Tim contributes regularly to the bplans blog, the Huffingtonpost.com as well as his own blog, Planning, Startups, Stories. His full biography is available at www.timberry.com. Follow Tim onGoogle +

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3 Comments

Geri Natural Skin December 24, 2011 at 9:53 pm

Great article. This will help me out a lot as I continue to research the best avenues for my business.

Anderson March 4, 2013 at 3:52 am

I wish to show some appreciation to you just for bailing me out of this type of problem. Just after scouting through the the web and coming across advice which were not helpful, I figured my entire life was done. Being alive devoid of the answers to the issues you have resolved through your article content is a crucial case, as well as the ones which could have negatively affected my entire career if I hadn't noticed your web page. Your primary competence and kindness in controlling every part was priceless. I'm not sure what I would have done if I had not come upon such a point like this. I can at this time relish my future. Thanks a lot very much for your expert and effective guide. I will not be reluctant to propose your site to anyone who ought to have tips about this situation.

Femmetools April 1, 2013 at 6:49 pm

very helpful article...can you provide any links or recommended sites for what companies can you a product into a catalog?

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