Met up with a possible new client yesterday, a married couple in business, and was amazed at the problems they’ve experienced.
They distribute a very good, very unique specialty product that they and their customers absolutely love. The aggravation to date has been lack of support from their supplier. It isn’t your typical corporate greed, they are dealing with an individual who seems paranoid about anyone making money from his product.
The supplier sells the product through his country-based retail shop, his web site and through a small network of distributors who sell on commission through the party plan method (like Tupperware).
The couple negotiated a different deal with him, where they would purchase the product wholesale and sell through their own channels. They were convinced that a shop front in the city was a good idea and organised a lease.
The shop has really proven to be their undoing. Fearful the couple would make more money in their city shop than he makes out in the country, the supplier raised his wholesale price. Six months on they are getting very little walk in trade at the shop, they are doing more business at weekend markets and home-based parties.
It’s a nightmare situation, they have little or no margin on the product because they are competing with the suppliers retail prices. They are locked into an expensive city shop lease which is eating into their capital. The wife runs the shop single-handed as the husband works full-time (with my husband as matter of fact) and they can’t afford to pay an assistant. She is spending less and less time at the shop because they get more business out of the shop than in it.
To make matters worse they handed money over to someone to build a web site for the business, and it wasn’t finished. The guy just skipped. They then paid someone else to finish it for them, but it was poorly done and is still not what they want.
That’s how I first got involved about a month ago. H bought some product at work from the husband, and they got to talking about the web site. The husband asked me to do a tidy up of the site – fixing some terrible coding and spelling errors, in exchange for more of the product.
The couple recently had a break, and a hard think about what they are going to do with the business.
They have decided to get out of the shop, although they still have to pay the rent there until another tenant takes over. It is likely they will dump the current web site and I will probably be building them a new one with the focus on booking the parties, re-order of product and extending their sub-distributor network.
They have good ideas about marketing the product and are still committed to work hard with it. The parties are where the business is, and the good news is they’ve successfully negotiated better pricing from their supplier.