Wholesaling Grocery, Confectionery & Beverages

Sally Floyd

I have been in contact with a wholesaler in Northern Ireland to supply me stock so I can sell to stores in the West of Ireland. They have agreed to deliver direct to my customers, but I will pay the carraige. The cost of delivery will be approx 30 per pallet. What sort of mark-up do I apply to ensure I cover costs and make a profit? Do I insist on COD with my customers, considering the goods should turnover pretty quickly.

DubTony

That's a pretty competitive business you're entering. While there are quite a few guys buying up north and selling in the Republic, most of them do the delivering themselves. 30 quid a pallet (is that pounds or euro?) seems kind of steep to me.

Your prices won't be determined by any margin you might feel is acceptable. Unfortunately, the local wholesalers will determine that. You'll probably need to go in cheaper than them just to get the business. And consider that as you develop more business from each customer, their deliveries will cost you more.

I think you need to go back to your wholesaler and negotiate a per delivery price. If they drop off to 2 customers or 10, they'll still make a profit on the goods they sell. But if they drop the whole truckload to 1 customer, their costs are less than delivering to 10, but the number of pallets will be the same.

I don't think you can operate in this way in that market. A per pallet price just doesn't work. I had a wholesaler drive 60 miles to me once a month and I never paid a penny for delivery. His prices were better than anything I could find locally and he made his profit on the price he bought the goods for in N.Ireland.

Anyway, find out the prices of the goods you propose to sell from local wholesalers, and then look at the retail price in the shops of your customers. Your margin is in there, although be careful about telling retailers what price they should sell at. They don't like that ... At All.

antoinolachtnai

(It is also, generally speaking, illegal to dictate prices to a retailer.)

You are dealing with relatively small grocers, I'd imagine. They can't really store up pallets. They need to take in fairly small quantities, and I wouldn't think they can necessarily plan orders very far ahead. But it's not my game.

If you really want to do this and the prices are really keen, I'd sell the stuff at cost and then charge a margin on the delivery charge.

The big problem is how you hold on to these customers for recurring payment. There is very little to stop the wholesaler bypassing you if they have the customer addresses.

Re COD, if you do it that way, you will have to accept a lower price.