[CH] retail racketeers
Margaret Lauterbach (melauter@earthlink.net)
Mon, 14 May 2001 10:42:12 -0600
I've heard the same story from inventors of useful products. How in bloody
hell do people get their inventions or products on the market? You have to
be rich to start with. My friend was charged $100 a month or something
like that for hanging space near the cash registers at KMart. And Sears
ordered a thousand electric heaters from him, saying up front they wouldn't
pay him for six months. Just think of the alternative products out there
that can't get a place on the shelves, but you'd like much better than what
they do have. This is the contorted view of competition that retailers and
wholesalers know and love. It ain't what they teach in schools.. But I
think they'll sing a different tune when online sales begin to hurt
them.Margaret L
Date: Sun, 13 May 2001 17:25:21 -0500
From: "wildpepper.com" <jim@wildpepper.com>
Subject: Re: [CH] $$$
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
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%.
- -Jim C
Mild to Wild