Dear Design Doctor
I’ve been contacted by a web-based company overseas who wish to stock my products, but they have also asked if they can have exclusivity on a specific collection for the whole of the country (Australia).
Whilst I am very flattered, I am also very hesitant.
Can you give me any advice on what questions and information I should ask for in order to consider their proposition? They have spoken about growing my brand in Australia but obviously I don’t know how successful they are.
It’s in the back of my mind that I am attending my first big trade show this year and I know a lot of Australian buyers visit that show. So I don’t want to give everything away, and then something better comes along? Is that greedy?
The plus side is that they have had a lot of successful press (from what I can see on their website) and the have very good relationships with journalists/editors. They are tempting me by saying they have a contact at Australian Cosmopolitan magazine who is interested in using the collection for a feature.
Another thing to add is that they want to work on a drop shipping basis, which is another thing that doesn’t make it quite as attractive. I have noticed that another UK company sell their prints with them so I was thinking about asking them of their experience with them.
I would be grateful for any advice that you can give.
Firstly, I think you need to have more information to actually be able to make a decision. As you say, you don’t have that much to go on.
I recently wrote a blog post with the kind of questions you should be asking any online retailer, which will be helpful for you too to look at the kind of questions you will need to ask them to get a better idea about their success, and what they can offer you.
Concerning the ‘exclusivity’ there are different things you can negotiate on here:
- You mention that they are interested in particular items, so it would be good to know which ones in particular. Also (see below) you might want to focus on products that are easiest to transport to Australia. Create a list of products that they are particularly interested in, with their prices.
- I would ask them what marketing they would do for you in Australia, as it isn’t just about the sales, raising your profile can be very useful too. This could make a big difference in your decision.
- When it comes to exclusivity deals you can negotiate on getting larger bulk orders or minimum orders, or you can ask them to decrease their commission. It all depends on what you want to negotiate, and what works for both parties.
- I suggest that after negotiating a good deal for you both, that you sign an exclusive contract for a limited period such as 6 months or 12 months or so. Review the situation on both sides regularly.
- You also might decide to have an exclusivity for a specific group of products only. Indeed you can negotiate specific geographical areas that they have an exclusivity for, which might include for example South East Asia too, as it would be easier for them to ship to there than for you. Be aware what the rules would be (negotiation is up to you!) if you would have an order directly from Australia, as you normally would need to still pay them their commission, even if the sale is through your online shop. And indeed what would happen if they would get an order from Europe?
- You might want to wait till after the trade show to finalise your negotiations. Start already asking questions now, but delay maybe your decision till later. Having already one Australian client ‘in the bag’ can help with potential negotiations during the trade show, as you will know better what specific questions to ask potential retailers, and can also improve some of your negotiation power potentially with your current trade client. But really look at what you want to achieve and what you want to get out of it, and what the more difficult aspects of this deal potentially are (e.g. having a trade client with a brick & mortar shop where you sell and send 3 orders per year might be financially more attractive to both you and their customers).
The biggest question I have is how much it would cost to ship, and how much that would add to the cost the consumer would have to pay. You might need to focus especially on ‘lighter’ items in your collection.
Also, you need to check how your prices would compare against local creative suppliers when you convert to Australian dollars (including the costs of conversion, and potential fluctuations!).
Whatever happens do make sure that you get your exclusivity agreement in writing, signed by both parties. ‘