We did a drop-ship private label program with Georgia Pacific`s building product division selling into Lowes. One requirement was that we were required to "take out" the competitor`s inventory. For every new store, they would provide us units on hand of all sku`s and we would ship them the initial order. Then they would ship us the competitor`s stuff which we would credit. So the initial order was free. It was suppose to cap at $200 per store. Seldom did. So, needless to say we had a huge investment in initial inventories, (and competitor inventory) but after re-orders hit this became a great account for us. Both GP and Lowes were nice to deal with. The GP sales reps covered the stores for us.
We then sold competitor inventory to accounts that were loyal to the competitor and we knew we would never get at $.50 on the dollar. The account liked it for the price and the competitor hated us because their account was now over-stocked and not ordering.
Does anyone have experience with private label agreements? I am about to enter into two non-exclusive license agreements and a private label agreement, if anyone would like to share advice or past experiences with either, I would love to hear about it.
I am just looking for things that I may not have covered, before entering into these agreements. Thanks in advance.
President - 3R Products, Inc.