General Retail Business Issues/Markups on Products

Advertisement


Question
Dear Jeff:

I'd appreciate your answer to the following:

I've been in contact with a company in the Philippines who'd like me to distribute their products in Canada.  From what I can determine the product is now being brought in from the U.S. and retails between $2.00-$3.00 Canadian.  In making my calculations, can I assume that the retailer would mark up 100% on the wholesale price or is this too high?  Generally, what percentage should I as the middle man get?  I would be trying to find clients for the manufacturer overseas. I wouldn't be handling the import/export of the product itself.

Best Regards,
Howard

Answer
Howard,
The answer to your question isn't black & white. What you can expect the retailer to mark it up is based mainly on where the competition is at and what the product is at and the type of product, where it is in the life-cycle, etc. that in turn will help you to determine how much you can charge and make on the product.

A commodity item may allow a retailer multiple sourcing opportunities and therefore pricing will be very important. A more exclusive product will enable you to have greater opportunity to control pricing.

Another question to consider is the status of your distribution agreement. Does it give you exclusive rights in Canada? Can the U.S. distributor sell into Canada, etc.?

Jeff

General Retail Business Issues

All Answers


Answers by Expert:


Ask Experts

Volunteer


Jeff Bender

Expertise

If you have questions regarding the methods and metrics practiced by department stores and mass merchants when it comes to how they manage categories and product, I can help.

Experience

I have been a buyer for over 11 years, including within the Target corporation. My expereince has included all apsects of the profit and liability for my areas, analysis, planning, marketing, costing, markdowns, negotiations with vendors, and more.

Education/Credentials
BS, Unversity of Wisconsin, Madison

©2016 About.com. All rights reserved.