View Full Version : What about simple consignment?
01-03-2008, 06:41 PM
Hi everyone, just got done with the book, and I have what I think is a great idea. Please give me some feedback and poke holes in my theory for me if you have a chance. Am I just being lazy in finding the muse by using established companies?
My plan is to simply contact small businesses in my area i.e. boutiques, frame shops, hardware stores, basically any business that is only doing local business.
I could simply get orders for them, they buy the product wholesale and we drop-ship the product and split the overall profit. I could spend the money for the site and the advertising and just use their wholesale buying power and established product. I could repeat this process with as many businesses and products as I wanted. Each business may also have several products that would allow for very specific search words....
That's not really consigment...consignment is more of the eBay Store idea...people drop off products at your location for you to sell and you take a percentage.
What you are proposing is working as an independent sales rep.
"We" drop-ship the product? You mean they do.
As a small business person with a niche market online retail operation, I could see some value of this for someone wanting to hustle the local market for me (I don't have a storefront). It sounds like you're wanting to do the opposite....give local brick-and-mortar stores a "web presence" that they may not have.
Part of an issue you might run into will be with the manufacturers, who more often than not forbid retailers from acting as "wholesalers" to other people/companies wanting to sell the products.
This has to do with control on how the product is represented, marketed, etc. Because you have no direct connection to the manufacturer, the manufacturer has no control over you (not directly), and I am not certain that a local retailer will be willing to risk their wholesale relationship on the idea.
What you'll need to do is sell the following:
1. That you're acting as an independent, outside sales person for the retailer and will abide by any policies they put into place so as not to endanger their manufacturer's relationship
2. That your idea will cost them more to implement themselves (i.e. run a website and sell their stuff there) than it will cost them to pay you a commission
3. That you wiil not sell, or attempt to sell or rep, competing products with ANYTHING else they might sell. For example, Retail Store X makes great Golf Clubs, but you want to use Retail Store Y for Golf Bags since you can make more money from them. Why would X agree to let you represent their clubs and not their bags?
Most outside sales reps work for companies known as "manufacturer's representatives", who usually have rights to a particular territory. What you're doing might also step on those toes, too, further endangering the retailer's relationship with the manufacturer.
I am not saying this cannot be done, but there's a lot to consider. Since you're looking to do web-sales, you might look at manufacturers who allow drop-shipping for smaller online retailers. Depending on the industry, there are a lot out there, you'll likely make more money and there are fewer hassles though you'll have the same issues/headaches as you would trying to sell these local companies' goods.
It's an interesting Idea. I think that for most small retailers it is way to complicated and time consuming to run a website and keep on making a profit in the store and the webshop. In order to keep things simple, Can you become a virtual personal shopper?
But what may become an issue is that shops that survive the internet will have a feel to them that makes them atractive to customers and can not be reproduced trough internet. That main reason for shopping online is price (low price for common goods because of bulk buying) or availability (highly specialized goods with good margins) It may be difficult to find goods in local stores (website free) that can be sold well over the internet
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