Forums: Discussions for entrepreneurs and small business.

Hi!

I don`t know if this is the right place for this question, but I was wondering; I want to import a killer beauty product for a facial, I know this product for seven years now, because I use it myself and I kept on ordering it from overseas, but what I thought was: I want to distribute it to a drugstore chain (in the Netherlands, where I live), how to handle this best? The drugtore chain has 250 stores throughout the country. What I know about this product is that it is high quality. I can`t find any detailed info on this on the web. Can anybody help me? What will the people from the drugstore chain be critical about?

Thanks,

Patti

Hi Patti :-)
First question I have is how come the drugstore chain isn`t importing the product themselves? They`d likely get a volume discount, or wholesale prices, right? And if you do base a business around a single product like this, what`s to stop your chain (the client) from blowing you off and going direct to your source?

Thanks Craig for your reply.

The reason the drugstore chain isn`t importing the product themselves is because they don`t know it. It is produced in Singapore. Why would they buy from me and not the source?; First of all, I would be the sole distributor for this country, second; it is possible for me to put the product under my own label (which I am considering), so it would be very difficould, if not impossible to track down the source. And even if they did, I would be still the sole distributor for this country, which I was planning to put in a contract. I didn`t mention this in my previous post, but I have thought about this. You see, the Singapore people speak English, but they don`t speak Dutch and don`t know the habits of this country which would make it very difficult for them to approach the drugstore chain themselves, the other way around the drugstores have never heard of this product or the Singapore company that produces it. About the wholesale prices, I can get volume discounts and wholesale prices, my idea was to put a little percentage ontop of the price, which (minus some other costs) would be my profit. I have calculated and made sure that that price is still low enough for them to make high profits off it.

But my question is still; what will the people of the drugstore chain be critical about?

Thanks,

Patti

Patti,
That`s an excellent analysis and it`s clear you`re not just foolin` around with this idea. The reason for the questions is that when you start speaking with bankers, capital investors, and the main company in Singapore, they`re going to want to know real answers to real questions. Too often, entrepreneurs have an idea, but nothing to back it up.

It sounds to me (not being an expert in the field) as if you`d be best off having an initial consultation with an attorney about how to structure this business. It could be done as an import/export operation, in which case licensing would be a big issue.

On the other hand, the way you describe it, you could be the sole distributor. But will the manufacturer a) allow 1 person to have an entire country as their territory, and b) offer some sort of guarantee regarding maintaing that sole distributorship for a length of time.

The point is to lock in your control over the product. If you approach the drugstore chain too early, they could steal the idea and set up their own contract with Singapore. But then there`s the issue of demonstrating a strong demand to Singapore before they`ll allow you a distributorship.

The key issue on the drugstore side will be potential sales volume, and reliable shipping and delivery. They`re going to want to know who will do the advertising (you or them), and what potential profit they would make on the product.

So you`ll have to have your wholesale price--including all fees and costs to get the product into your own warehouse. Then figure out your markup to the drugstore. Remember that they then, will also put in another markup so they can make money.

They`re going to have to work out how much shelf space to give this product, and again, what`s the packaging and advertising. They also will need to know your order numbers and so forth---how many units will the be required to purchase in what time period.

You gave me some real pointers here; mainly about the logistics, which I now have to figure out myself.

Thanks,

Patti