Wholesaling Issues - need advice

[pamielynn]

Hi all!

I haven't bee around in awhile, but I really need some help with an account. Please let me know what you would do:

I have a boutique account who is also a personal friend. She opened her shop about 1.5 years ago and I've been selling to her since she opened. She has stock of mine still in there since the day the place opened. I've spoken to her on several occasions about how some of the products have a shelf-life, especially due to the fact that her shop is very sunny and overly warm.

I was in the shop yesterday and took one of the old lip balms. It has gone over. It is soft and has a funny taste. I'm also seeing discolorations on some of the soaps - through the window of their boxes.

My conundrum is this: she has paid for these products which are now past their prime. Not consignment. I do not want customers paying for products with my name on them that are not up to snuff.

What can I do?

I am NOT resupplying her for free, because a part of the reason she doesn't sell through is that she is hardly ever OPEN. I've already had to cut her off of future orders until she sells more of the product she has. I don't want my reputation destroyed because someone buys worn out product.

If you've got any ideas, or have dealt with this before, please help me decide what to do.

Thanks!!

P~

 

[The Efficacious Gentleman]

The stuff that is already over needs to be put as reduction through her accounts - she bought stock and didn't sell it on time before it went over.

Some things to consider-

Have you a record of telling her that she needs to sell the products within a certain time and or how to sore them and so on?

Have you recorded that she should not sell products that you identify as being no longer fit for sale, again at cost to herself?

 

[pamielynn]

No. I was a butt-munch, helping her out, more than myself and we've been going on no contract. I knew it was wrong from the beginning, but it's the "she's a friend" thing.

She doesn't sell much in this shop and my soap is the most heavily rotated product through there. That's right - she has other stock that is over a year old, too. So, I need to come at this "as a friend", which complicates matters considerably. There may be nothing I can do, legally.

One thing I need to do, is to put this in my other contracts. Display and storage conditions are in there, but not expired products.

I just don't know what to do if I TELL her she's got to take my products out and she says no.

 

[The Efficacious Gentleman]

Oh dear - then I think your worst case is to buy it back at retail price. Next best is at wholesale. "Not too bad" would be that you bin the stock and you give her half of the wholesale price back, but what would be best is that she bins all the bad stock and takes the hit herself - that is the ideal situation and what would be contractually so if there was a contract.

Of course, she needs to take your friendship in to account too and consider what it does to your business to have this manky stock being at least displayed if not sold! That's not good for either of your businesses, actually

 

[dixiedragon]

Depending on how much product she has, it might be worth it to your reputation to replace it with new products that have "best used by" dates on them.

 

[pamielynn]

I'm going to sit her down on Friday and have a solid "business" talk with her.

Your comments have helped me a lot.

I'm a stubborn old mule and I do not feel that I should have to take this stuff back, at my cost. She's supposed to be open 3 nights a week, for 5 hours each night - it's part of a space-sharing initiative by our downtown. She pays no rent, utilities or insurance and she's lucky to be open 1x a week, for 3 hours. So, I'm just angry that she runs her business poorly and I have to pay for that.

I'm going to use some of the phrasing that the Gentleman used and basically tell her to sh*t or get off the pot, because she's apt to ruin MY reputation, along with her own.

Thank you for letting me work this out here, with you all.

 

[shunt2011]

I agree with the others on replacing them for your reputation since she's a friend. However, with wholesaling you really have no control as to what they do with your product once it leaves your hands. I have thought about this before. If you happen to wholesale outside of your city/state who's to say how long product will sit around unless they order regularly, then of course you would know. If it's a one time thing there's just no knowing.

 

[pamielynn]

You are right, of course, but this time I know.

And, with everything I do usually - I put out the expectation (as in a contract or rules of our farmers market) and hope that people follow it. This particular case, I didn't do that AND she's a friend - double jeopardy as it were.

I guess it's time for my business to start putting out the expectation that products have an expiration date. IDK. It's frustrating.

I'm thinking here along the lines of produce and bread. If I sold either, the seller would either have to sell it or count it as a loss, once either went bad or past the expiration date - why should our products be all that much different?

 

[DeeAnna]

I'd guess your friend's business is slowly declining (or maybe not-so-slowly!) for lack of motivation and experience. Most small businesses don't survive more than a year or two due to the steep learning curve and the never-ending cash drain. The lessons it sounds like she's faced with at the moment are keeping product moving out the door, stocking merchandise in her store so it stays fresh and interesting, keeping the cash flow flowing, and building a reputation of being a good place to shop. I don't envy her -- it sounds like she's really struggling. Maybe your talk will help her be more realistic about these challenges.

 

[KristaY]

I really like the idea of putting an expiration date on all the products. Then it will clearly state to her, the customer and to you, when it the item is best. She's really hurting her reputation as a retailer by selling items that should no longer be sold, and hurting you since your label is on the product. Once this is resolved and if you keep supplying her with stock maybe you could encourage her to run a special several months before the "use by" date on the packages. Maybe put all the items into a certain area or in a large basket that says "x number of items for x amount of money". Like a buy 2, get one free sale. People like seeing the word "sale" on anything so it might help the inventory move faster. But she also has to keep her doors open for business....

 

[pamielynn]

I'd guess your friend's business is slowly declining (or maybe not-so-slowly!) for lack of motivation and experience. Most small businesses don't survive more than a year or two due to the steep learning curve and the never-ending cash drain. The lessons it sounds like she's faced with at the moment are keeping product moving out the door, stocking merchandise in her store so it stays fresh and interesting, keeping the cash flow flowing, and building a reputation of being a good place to shop. I don't envy her -- it sounds like she's really struggling. Maybe your talk will help her be more realistic about these challenges.

The real story is that she went to a convention on "restoring downtowns" and one new thing was this "space sharing" initiative, which is putting a business in another business' storefront after hours. She brought this idea to another friend of ours who is an eye doctor. The doctor's office allowed her to setup her boutique in a partitioned area of their waiting room (it is very cute and and small, but a full-on store of it's own).
She does not pay rent, or lights, internet, A/C, heat, insurance.. nothing. And because she does not - she really does not have to worry about that portion of overhead - which is normally a very large portion of the overhead.
She is not motivated to work.
When she opened, she begged (not being dramatic here) me to sell her some stock, because I do well with my soap in this city. In fact, I pretty much only see people buying soap in there, not much of the other stuff, including her own crafts.
Because she's not motivated - the products sit there forever. She has these "mason jar" coffee pots that have been there, also, since December 2014 of which she has sold three. She never does sales, or discounts or anything to push stuff out the door.
As was mentioned earlier, I would normally not know this, if she were not my friend and didn't have her store 4 miles from my house. The problem is that I DO know.

It is just frustrating as hell, and another prime example of why you still need a contract when doing business with friends... my gut was screaming at me not to do it, but sometimes I can be wimpy.

Phew - that's enough of my personal problems, though, haha. I think I know what I'm going to do, now. And hopefully that will make it all come out right.

KristaY - I agree with you 100%!

 

[TBandCW]

In some retail markets (my hubby sold bread, cookies, etc to supermarket chains) the agreement was called guaranteed sales. In other words, guaranteed to sell it or will buy it back. That's what I would do, lesson learned and move on. Consider it the cost of keeping your company's reputation in good standing.

 

[pamielynn]

In some retail markets (my hubby sold bread, cookies, etc to supermarket chains) the agreement was called guaranteed sales. In other words, guaranteed to sell it or will buy it back. That's what I would do, lesson learned and move on. Consider it the cost of keeping your company's reputation in good standing.

That's what I did - bought it back at her cost and explained to her (again) why my lip balms aren't the same as Chapstik and why the soap needs to be stored differently. She seemed to listen this time. I feel like I was chastising her - but I'm hoping she understands, now.

We also had a talk about how she could do a little better as a buyer - for all the stuff in her shop.