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What's new in various product categories; monthly update.

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A Warning to U.S. Scrapbook Vendors

Investigate before signing an exclusive distributorship with an overseas company.

By Margaret Benson (November 1, 2004)

(Note: Margaret owns Artbase, a retail store in Hornchurch, Essex. She writes about the practice of U.S. manufacturers unwittingly naming an overseas company as the sole distributor for a particular country.)

Here are some of our thoughts on the exclusive distribution agreements that several scrapbooking retailers over here are concerned about:

We are hearing rumblings from established UK-based scrapbooking retailers expressing concern about the appointment of distributors and, in particular, exclusive distribution agreements, which are affecting their ability to order direct from U.S. manufacturers with whom they often had existing accounts. Some of these agreements are being made with retailer competitors or with companies with un-established credentials, and it is these agreements that are causing the most concern. They feel that U.S. companies, when considering appointing UK distributors, should consider the following:

1. Remember existing retail customers in the UK have to be treated fairly; please consult with them before reaching agreements.

2. Existing UK retailers should still be able to continue trading direct at the same terms as before, bearing in mind that it is these customers that have established the market in the UK in the first place.

3. Any agreement with UK distributors can be a sole distributorship but NOT exclusive, thereby keeping trading with existing UK retailers.

4. If a UK appointed distributor does a good job and can offer goods at an equivalent (or better) landed cost than the UK retailer already achieves, then orders will naturally drift their way.

5. It is important that U.S. suppliers protect themselves when dealing with any customer. The proposed UK company must, therefore, be a reputable, financially sound, experienced distributor who, preferably, has a proven and established track record of other successful distribution agreements.

6. Many UK retailers prefer to deal with reputable distributors who do not sell direct to consumers. This means that appointing a retailer as distributor is bound to limit the number of other retailers who would deal with them. Furthermore, it is possible that UK retailers would not have the necessary experience, financial backing, or the warehouse space to grow successfully as a distributor.

7. Any increase in price to UK retailers as a result of appointing UK distributors is very unwelcome. Many UK consumers buy direct from the US online and the landed cost to them is often well below the existing UK retailer selling price. Often the reason for this is that many sales seem to bypass import taxes and duties such as 17.5% VAT (the UK equivalent of sales tax); added to this, some U.S.-based stores shipping the goods illegally mark down the value of the goods or indicate ‘gift’ on the export documentation.

To summarize, the U.S. suppliers should be careful to consider all the points mentioned above and think twice about greeting anyone with open arms who says they can act as a UK distributor. Your existing customers are precious; do not jeopardize any good relationship.

(Note: Artbase has a website at www.artbasehornchurch.com. To read previous Category Reports, click on the titles in the right-hand column.)

xxx

 

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