Sales channels to reach your customers
Selling through retailers, wholesalers and other distributors
Selling through an intermediary may be a more cost-effective way of reaching your end-customers than selling to them directly.
If you are targeting business customers who prefer to deal with large suppliers, selling directly to them may not be a realistic option. Instead, you might aim to supply wholesalers who have existing relationships with those businesses.
If individual consumers buy low value quantities of your products, the best option might be to target retailers that sell similar products. Or you might choose to focus your efforts on a relatively small number of wholesalers who can in turn supply your products to many retailers.
Other distribution channels may also reach your end-customers. For example, technology suppliers often sell to resellers who can configure and install the technology to suit end-users’ particular needs.
Managing your distributors
You need distributors who will value your product. If they sell competing products, what will make them push yours?
onion paste Rural marketing ideas
Think about how you set your prices. Distributors will be more enthusiastic if they can make a large profit – but setting too low a price will eat into your own margins.
Effective advertising and promotions can be vital. As well as marketing to the distributor, you can promote your products directly to end-customers. Distributors will be keener to stock and sell products that their customers are asking for.
The key terms of the supply relationship should be covered in a written contract. Key issues might include:
onion paste Rural marketing ideas
how much stock the distributor will hold
what the distributor will do to promote your products
how quickly you can resupply and minimum order levels
whether the distributor has exclusive rights to your product (for example, in a particular territory)
what happens if either you or the distributor want to end the relationship
Business ideas, Marketing and sales , promotions and advertising ideas , articles
Contract Logistics Cost Model
Contract Logistics Cost Model
Warehousing Costing methods vary with the business models. While some warehouses using common shared facilities may be worked up based on transaction costs, dedicated and stand alone facilities would be on a different costing model.
In this section, we shall go through the cost elements of a warehouse project briefly.
Warehouse Cost elements are primarily divided into Fixed Costs, Variable Costs and Overheads.
Cost of Land & Building
This cost element is included if the land and building are provided by the 3PL and not the buyer.
Incase the land and building is acquired by the 3PL, the cost of land and building may be amortized over the life of the building or as per industry standards (average 10-12 years) and proportionate monthly costs can be added. One needs to ensure that the costs are realistic and nearer to market rates for rentals.
Incase the land and building is rented by the 3PL, the cost of monthly rental along with the cost of funds for security deposit may be added to the costs.
All costs would be worked out for the term of contract period with annual escalations considered annually.
Infrastructure Cost
Cost of acquisition of all infrastructure including racks, MHE, Charging equipment, dock levelers and any other equipment including office equipment are itemized and amortized over the contract period or over the shelf life of the equipment as the case may be, to arrive at monthly cost of infrastructure.
IT Infrastructure
IT infrastructure consists of the cost of Hardware & Cost of Software. Hardware covers all servers, desktops, printers, laptops, RF Equipment and any other IT related hardware.
Software application costs include cost of WMS based on one-time fee or individual number of user license, cost of other soft wares including mailing system and any operations related soft wares.
IT Costs are amortized over two or three years depending upon statutory audit guidelines.
Manpower
Detailed manpower costing will include the cost of Management Staff, Operating staff, in-house operatives and outsourced operatives like labor, MHE Drivers, etc. Outsourced security staff costs are also added under this item heading.
In case of in-house staff, detailed calculations based on cost to the company is worked out including staff benefit, insurance, bonus, training costs, uniform, etc. along with proposed incremental cost over the number of years as per contract period.
Outsourced staff costs are also tabulated for the contract period including annual escalations.
Utilities & Consumables
Utilities are not fixed costs. They are monthly variable costs. The items in this category are the costs towards office and communication expenses including telephones, the internet, etc., stationary and consumables both for office and shop floor items like tapes, packing materials, etc., cost of electricity, water, fuel, etc.
Administrative expenses
Costs of office support, cost of insurance and third party liabilities and travel costs, etc. including any other statutory costs, deposits are covered here.
Overheads
Cost of management time is estimated and included here. Alternatively, a percentage of corporate or regional office cost overhead is loaded.
Cost of money or interest cost on working capital for three months can be included.
Profit / Management Fee
Management fee can be added as a percentage of total cost or a fixed amount.
? PREVIOUS ARTICLE NEXT ARTICLE ?
Share the knowledge!
Similar Articles Under – Supply Chain Management
Warehouse Efficiency & Inventory Health
Contract Logistics & Warehousing
Contract Logistics Pricing Methods
Logistics Solution Design Document
Inventory Migration
VIEW ALL ARTICLES
Authorship/Referencing – About the Author(s)
The article is Written By Prachi Juneja and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.
