Re: [CH] $$$
wildpepper.com (jim@wildpepper.com)
Sun, 13 May 2001 17:25:21 -0500
Hooray for you Peter!
Sorry to jump on this one late, but I've been out of town for the
weekend. A post on that later....
Another thing that happens is that the larger retailers demand something
they call a 'slotting fee' (we would call it 'extortion') for those
prime shelf locations. When, as a small producer, I approach them about
placing my stuff in their stores, they typically ask 'how much do you
believe in your prodcut?' That's their lead-in for demanding money up
front for shelf space. That's only the start....
Another racket that causes me to charge way more than I would like to is
that most large retailers also work it like a giant consignment sale.
For instance, they order a pallet of sauce from me. I pay to produce it
& ship it to their warehouse. Do they pay for it yet? Not on your
life! They don't even claim ownership of it yet for if their 'top gun
fork truck jockey' sticks the forks throuh the pallet, I'm commanded to
remove the damaged product and replace it- at MY expense!!
Yet another ploy used by retailers and distributors is to (in addition
to everything else) assess an 'advertising fee' or 'promotion fee'. It
goes like this: we're going to proudly feature your sauce in our
upcoming newspaper insert since Cinco de Mayo is approaching. Oh, BTW,
if you want us to feature yours, instead of brand X, you need to pay us
to cover the cost of the advertising AND since it is on sale, you need
to lower your price to us.
It goes on and on.....
As Peggy also mentioned, economy of scale comes into play as well. I'm
using about a pallet of glass a month. While that might sound like a
lot to you and me, it is nothing but trouble for my glass people to be
bothered with such a trifling order (to hear them tell it). More than
once, my order has been 'bumped' off the delivery schedule because
someone bigger added to their order. I'm told 'tough luck- order more &
you can do it to someone else on day'. Due to aggressive consolidation
in all aspects of the industry, I don't have a lot of options. I know
that the first (okay- second) reaction is to tell them to go 'pound
sand', but they are the only game in town. You just sigh and deal with
it as best you can. THAT is where the REAL sainthood challenge comes in
'cause the FIRST reaction is to go take hostages! ;-)
You also have to remember that I don't see as much as HALF of that $7
you are charged either! Most all retailers calculate they need a 50% to
70% mark up to cover their costs (utilites, rent, labor, samples, taxes,
etc). Distributors most often request a 20% mark up and wholesalers at
least 10%.
Shipping is yet another racket! The postal service just quadrupled my
shipping rates from the first of the year. Packages that used to cost a
couple of bucks to send, now cost several! That one REALLY hurt as
neither of us sees benefit from that cost.
Sorry for the length of the post, but thought I'd get some venting and
education of my own done ;-)
-Jim C
Mild to Wild