TheGolfBiz.com Resource for the Golf Business World

Dan,

Your wholesale strategy will depend on what segment of the market you're within.  For hard goods, you could start with standard wholesale prices being 70% of the projected retail.  From that point forward, offer some volume or incentive programs that will drive a retailer or golf pro's margins into the 35-45% range.  For accessories or soft goods, you'll probably want to start at the 60% range of retail and have similar volume/incentive programs.

Take care,

Reid Gorman
What Performs Best, LLC
rgorman@wpb-llc.com
www.wpb-llc.com
(850) 867-9170 cell phone

Thanks Reid. What would be a common or standard price break quantity?

Since you're selling putters, you'll probably want to have have some incentive opportunities at the 6, 12 and 24 unit levels.  If you have any other questions feel free to e-mail or call.

Reid Gorman
What Performs Best, LLC
rgorman@wpb-llc.com
www.wpb-llc.com
(850) 867-9170 cell phone

Most golf retailers are operating on 20-30% margins, so work backwards from what your research shows will be a retail price for your product. Once you define a solid retail price point, assess how you can get the retailer to promote and actively merchandise your product. My guess will be that you will need to define where your product resides in the marketplace relative to competing products. Offering "sales spiffs" are very effective building product awareness of the retailer's staff. I am confident you probably have plenty of margin in a competitive wholesale price to be creative. 

Most golf retailers are not very good merchandisers, so you need to build in a merchandising model for your product that the retailer will be willing to execute. In my opinion, wholesale pricing is only a small element in the successful introduction of a new product.

If you have any other questions feel free to e-mail or call.

Victor Pesqueira
Duck Press
victorp@duckpress.com
www.duckpress.com
520-795-1700 x112

I'd beg to differ on the retail margin advice.  All of the big hard goods brands (Taylor Made, Callaway, etc.) are delivering significantly more than 20-30% margins for golf club sales, even at smaller volume Green Grass shops.  The bigger your brand and the more you drive traffic through marketing demand creation, the lower your retail margins can be.  However, if you're a startup and don't have millions to spend on marketing (which seems to fit your venture at this point), above average margins (40%+) will help you get in the door of a retailer or golf pro shop. 

I agree with Victor that spiffs can be effective, but the least impacted segment of golf clubs for spiffs is putters.  This is due to the putter area being primarily a "self service" section of any golf shop.  Sales Associates that work on spiffs aren't patrolling the putter corral, trust me.  You should approach your retail strategy by the product category that you're targeting...and Putter sales are very different than Driver and Iron sales.  Call a few retailers and I'm confident that they'll echo my advice. 

With the unique product that your are offering, a direct to consumer "launch" may warrant exploration.  If your commerce site is SEO optimized with key words related to your category (golf putters) and the likeness of the design (something related to NASCAR or Racing)...you'll be surprised how much business can be generated at full retail margins.  It can also be cost effective to tap into some of the high traffic golf forums for free PR and to drive consumers to your website.  GOlfWrx.com is probably the leader here.

Cheers,

Reid Gorman
What Performs Best, LLC
rgorman@wpb-llc.com
www.wpb-llc.com
(850) 867-9170 cell phone

Reid is absolutely right, the margins are typically greater that 20-30% at the onset, but most hard goods SKUs have a relatively short life cycle and end up being discounted after the marketing demand (newness factor) declines. I suppose I should have clarified that the average for many hard goods will be ultimately end up at the lower margin.

Fundamentally, a golf store is a destination point for most golf hard goods and the traditional soft goods. In either case if your product does not have much brand equity, you are going to have difficulty building product awareness at the store level without the help of the store's staff - how you do that is the challenge. I have found that some managers/buyers are responsive the extra margin, but many will not work harder for the extra margin. If you are dealing with a centralized buyer (at the larger chains), they will evaluate your product on traditional retailing metrics and your product can be adversely categorized if it doesn't demonstrate immediate results.

I think Reid's advise of building demand through ecommerce sales, and social media is excellent. I would also consider traditional PR efforts to see if you can get some editorial exposure.

Good Luck...

Victor Pesqueira
Duck Press
victorp@duckpress.com
www.duckpress.com
520-795-1700 x112

 Thanks guy's, great information! Exactly what I was looking for and then some. I do have another quick question, well maybe not so quick.

 What way is generall practice used in the golfing industry for paying independent reps? Give them wholesale pricing, or give them a percentage kickback on total sales per month, week?

 As soon as I become a pain in the butt with all these questions let me know. I'm new to this and am looking for all the info I can get.

Thanks again,

Dan 

Dan, most independent reps will want 10-20% commissions (10-15% is most common). Your challenge will be to get a rep to add the line without any quantifiable demand. I would focus compensation on collected receipts, paid monthly. 

Keep in mind that most independent reps carry several lines, so they will gravitate to the easiest line to sell; your product may not get the sales effort it needs.  You want to be very careful in selecting your first sales rep/group. If they do not do well with your line (especially if they don't make much effort), you may need to fire them and they will most likely say they "dropped the line" in their trade directories. This can adversely effect your ability to attract good reps in the future. Moreover, independent reps want exclusive territorial rights and you'll need to evaluate how much they do to build the territory for you. In many cases you'll build the territory and the rep will want credit for the sales. This is not a bad thing, if the "added-value" of the rep is exhibited in consistent sales efforts in the respective territory.

As Reid advised, you need to build some momentum to maximize your success - the least expensive way to do this is using the Internet. You'll have a better leverage on the reps with some market momentum.

In regards to reps, success breeds success, so you may be better off with reps who are currently carrying successful products.  Most reps aren't looking for something else to sell, but they will take a look at something they can really get excited about.  Having the enthusiasm and passion of a respected rep or rep firm can help with your introduction.  Unfortunately, getting them to that point is the challenge. 

At my company, we don't use reps, but we're thinking about it.  Most of our major distributors handle over a thousand sku's, so you can get lost in the mix.  The right reps can connect with the people you want.  It's worth considering.

Tom Donahoe

tdonahoe@gorillagold.com

www.gorillagold.com