CPG 101: Strategies to Get Your Consumer Products to Market by Towner David

Author:Towner, David [Towner, David]
Language: eng
Format: epub
Publisher: ООО «ЛитРес», www.litres.ru
Published: 2013-01-28T16:00:00+00:00

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Purchase Order (P.O.)

A purchase order (P.O.) is a written sales contract between buyer and seller, detailing the exact merchandise or services to be rendered from a single vendor. It will specify payment terms, delivery dates, item identification, quantities, shipping terms, and all other obligations and conditions. Purchase orders are generally preprinted, numbered documents, generated by the retailer’s financial management system, that show that purchase details have been recorded and that payment will be made.

Remember, it’s imperative that you get a printed copy of a purchase order. A purchase order is a legal binding contract. A verbal commitment from a retail buyer is not a binding contract.

Point of Purchase (POP)

The point of purchase (POP) is the location where a product is displayed or a consumer makes a buying decision. The term “POP” is most commonly used when discussing POP displays, which are simply “in-store” displays.

Potential Costs in Retail Channels

Earlier, I referred to retail as the most expensive channel in which to do business. I have already mentioned a few expenses that you will incur prior to even getting your product on shelves. Prior to issuing a purchase order, a retailer will have you fill out and/or provide paperwork that can include a certificate of insurance, logistics paperwork, compliance agreements, and a vendor agreement. The vendor agreement will outline all the relative costs of doing business with the retailer and expectations of both parties.

No two retailers operate the same way, but the following are some direct and indirect expenses that may be required in this channel.

Slotting

Slotting is essentially a fee assessed for the privilege of having your product placed on a retailer’s shelves. This fee can apply to both retail shelf facings and warehouse slots. A retailer may charge from $100 to $500 per store; a warehouse may charge a percentage, usually between 5 and 10 percent, of the gross purchase price of the product you are selling.

New Item Introduction Allowance

A new item introduction allowance is a retailer’s charge for placing an item in stores; the fee helps the retailer with the cost of setting up the item in their system. Such fees typically run 10 to 15 percent off the first invoice.

Guaranteed Sale

As the name indicates, a guaranteed sale is an arrangement in which a vendor agrees to deliver a specified quantity of merchandise to a retailer with the “guarantee” that it will all sell over a specified time period. If it does not sell, the vendor agrees to accept back all non-selling product (from both the retail outlet and warehouse) at the vendor’s expense. The vendor receives payment only for the quantity that sold.

Free Goods

Many retailers prefer that you provide free products instead of fees or discounts. The free product can range from as little as a few pieces to a full case, depending on the category. Durable items usually turn slower, so the retailer will require a lesser quantity. However, faster-selling categories, such as grocery and frozen items, typically have a full-case requirement.

Payment Terms

Extended days/percentage. To ensure they do

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