Hi Everyone! My name is Sarah and I recently started a company selling independent designer accessories from South America to the US through an ecommerce website. While I still see value in this business model, I think that wholesaling in the higher end market would be a good counterpart for the company. Basically we handpick cool products and put them together under one brand, and then market/sell them in the US (hopefully the UK and Australia too).
My question is:
How do I keep to my mission of promoting foreign designers while creating a viable business model?
Issues:
For example, I sell X brand name handbags to a big store but I don’t have an exclusive agreement with the handbag manufacturer so if a store is big enough they could go around me. I had been thinking about putting my label in the items (if the designers agreed) but I hesitate to ask because I didn’t create these products and I want to be transparent about the designers I’m representing. I do not know the accepted protocol in the industry on how to handle this. I have a big investment in promoting these products in the U.S. market and I don’t want to get under cut or have buyers go around me, all because I did not have a good strategy. Of course I also have related questions such as hopefully being able to establish and enforce fair contracts with my international vendors.
Kathleen suggested some options I have are:
- Join the forum
- Cooperatively licensing the products
- Private Labeling
- Becoming a distributor
I have already joined the forum but am wondering what lurking retailers on F-I might suggest. Kathleen suggested I could consider becoming a distributor, entering into a sales representation sort of arrangement with each brand, the caveats being territory and the length of the term of contract. Considering the cost of promoting these brands, she said she would advise me to push for exclusive U.S. territory for a period of five years. She also says that if those designers consulted with her, she’d tell them to push for a limited territory (east or west side of the country), and for a contract term of three years.
I would appreciate any advice or experiences you could offer.
You are in a unique position (and a good one, I think). You have to look at where your strengths lie before you start in on how to structure your business. What unique quality do you have that is valuable to the companies you do business with? Are you good at penetrating new markets? Do you have the ability to make sure the right people have their products? Do you have the ability to grow their accounts better than they can on their own? Diversification is the key to every business and I think you are on the right track, but the question is ‘what do you bring to the table?’. Once you can answer this (in one sentence), then you can move forward to bring your operations up to speed. Good luck!
If you are acting as either a distributor or a sales rep, you are making a significant investment in marketing and selling these brands. I would think you would definitely want a contract granting you exclusivity in your territory. From talking to a couple international distributors and SBA advisors, I have learned that this is pretty standard.
Yes, I agree. We are distributors/sales reps right now! This investment is huge. Currently many designers have agreed to exclusivity of selected designs in the US market for 3-5 yrs.
It is hard bc many of the designers are on different levels of international sales so it also is very dependent on that.
I will let you all know my final strategy when it is finalized in the next coming weeks.
saludos