When you decide to take the solemn vows of marriage with someone, you not only wed that person but also, for better or worse, you wed the rest of the family. When choosing a product, you should take a long, hard look at the company that represents it because only an accommodating, symbiotic relationship will support a successful venture. This often is overlooked in product selection. See Choosing the Right Vendor for ideas about what to seek when selecting your vendor.
There are numerous benefits to having a local consultant. Use one to learn about the services available from a supplier, as well as how it will be of support in the future. Your sales consultant will educate your spa’s team, inform you about new product launches, and offer assistance at your open houses and events. Your business is your consultant’s business. Some vendors allow sales consultants to prospect new clients, open accounts and share product information. Usually, a different person is assigned to perform training sessions and conduct events. Ask the supplier about its protocols regarding sales consultants.
Most vendors propose incentive packages with initial opening orders. Some have a minimum requirement. Following are descriptions of common opening orders and reorders. Review these options to determine the best route to take for your business.
Optional opening packages. Having the option of an opening package enables you to decide the amount you would like to spend. Opening packages typically offer a discount, or free marketing and products, and they may be the best choice in order to receive free merchandise if you are prepared to order the amount specified.
Required minimum opening packages. Required opening packages are arranged in order to ensure that your spa carries the appropriate products. Minimum orders are a set dollar amount needed to purchase products. Opening-order minimums can range from $2,000–5,000 and can determine what products are needed to set up the account. Some suppliers require spas to carry their full line and represent it in a certain manner.
Minimum reorder requirements. Various vendors establish a set dollar amount of continuous reorders on a monthly or quarterly basis. Reorder minimums can begin at as low as $200. This is to ensure that you will sustain and properly recommend the product lines.
Some suppliers only sell products that come in predetermined quantities, meaning that you would have to purchase six, eight or 12 of the item. This typically is based on how many products come in a box—often known as “cases.”
In certain situations, if you do not order within a specific amount of time, your account will be terminated. In this case, you would have to establish a new account, meet all the start-up requirements and place another opening order.
Trade-outs, also referred to as “buy-back programs,” provide a win-win situation for both parties. They allow the spa owner to return current inventory to the supplier for a credit toward a new product order. So if you have $500 of ABC brand and you want to work with XYZ brand, XYZ brand will buy back your existing ABC inventory and put it toward your opening order of XYZ brand.
This works when a spa has an elevated amount of product inventory that it doesn’t want to carry anymore. It solves the problem instantly without losing time, requiring discounts or deceiving clients into purchasing a product that no longer is going to be available.
If there is only a small amount of inventory, then it may be wise to sell through it and place an opening package order on a different brand. In either case, be upfront with your clients that the ABC brand soon will be discontinued from your spa, and that there will be a new and improved line coming soon.
Trade-outs provide a great opportunity, but should be used with caution. If you are completely confident that you no longer want to carry the ABC brand, then go for it. However, if there is any hesitation, then a trade-out program is not the best road to take. There always is the option of bringing in a new line and continuing to carry the existing one.
It is crucial for spa owners to ask the right questions and to perform a thorough evaluation of a vendor before signing on the dotted line. In Part II, the various support and return policies offered by vendors, as well as vendor logistics, will be discussed to help you choose the right partner for this make-or-break business relationship.