Approaching vendors - what should I expect?

[AndyP]

Hi All - I have been working on starting a small roasting wholesale business for the past few months, and I'm currently waiting on my labels to be approved by the state. I expect my food production permits within a month so when I begin selling I will be legal, nicely labeled, have barcodes, and everything. My market to start includes gift shops, specialty food shops, and small grocery stores. I am curious about what the process is when approaching a vendor for my coffee. I'm not looking for sales tips, rather what will the vendor expect from me as a producer. As I understand, I will have to show a business license for the city, my Federal Tax ID number (I'm in South Carolina), and proof of my business liability insurance. Anything obvious that I'm missing? (im sure this varies by state and county).

After I get a vendor to agree to stock, say, 25 bags of coffee in their gift shop or whatever, what is standard procedure? Will I negotiate a markup on the coffee say 25-35%? or will they already have in mind what they expect for a markup? Will they expect me to send them an invoice after delivery? Will they expect to be billed monthly? Weekly? How quickly do privately owned vendors typically pay their bill?

I will do my own distribution. How often should I agree to delivery coffee? Will most small vendors order weekly, monthly, quarterly?

I'm sure my questions have lots of different answers but would love to get any input I can.

Thanks!

 

[peterjschmidt]

If you're doing delivery, then I'd suggest going every week or two at the most, to take old product off the shelf and replace it with new.

 

[boyleia1]

In my experience (limited to my first and currently only wholesale account) I simply asked them what they usually look for in a markup. This particular vendor said he wanted to markup my coffee 30%. but if necessary could do less.

Because my retail price was already set and I have been selling online at this price I did not want my vender to price my coffee higher or lower, so i simply set his wholesale price at 30% below retail and told him what he had to charge for retail. He seemed happy with that. I am trying to build relationships and get my product out there so I was willing to work with his desire for 30%.

I also have a 21 day selling window. So I told him if the coffee is not sold in 3 weeks he has to pull form shelf and eat the cost. He agreed to this. This means smaller and more frequent orders but i am okay with that.

I do have a question for the coffeeforum world and that is How do you price your coffee to a coffee shop. My method of pricing to a bean retailer was simple enough but i have no experience with shops and what they might expect to pay for their coffee. Thanks!

 

[AndyP]

Thank you for the info - Exactly what I was looking for. What kind of establishment was this? I suppose any grocery store is used to eating the cost of unsold / expired products?? Also - anyone willing to share what markup your vendor is looking for ? Is 30% pretty standard? Will larger vendors like wholefoods want a higher or lower markup?

 

[chast]

larger companies such as Wholefoods will charge you a slotting fee anywhere from 100.00 to 5K depending on which shelf level and how many you can put in. They call the shots. Grocery chains are not the same as small mom and pop shops. Consignment is popular here in my part of MA