In the last weeks I got some requests from clothes manufacturers and brands to help them finding wholesalers. Well, life is never that easy. I made a summary about my answer what might be good to anyone who is planning to start business in Hungary.
If you are running a factory or an already existing brand, the first what usually comes to your mind is to find a wholesaler or a dealer who will find market for your products. This is quite comfortable though everyone knows: there ain’t no such thing as a free lunch.
To understand the meaning of this, you have to know and learn the other side, the wholesaler’s side as well. We could get in the details about wholesalers, but now just let’s stay with the main thought: they are about saving their business interests. What are of course maximizing the profit and minimizing the risk and the costs.
The other side
Because of this in our case what do they say? There are three elemental cornerstones what will arise almost surely.
First of all, even if they are interested in your product, they do not buy a normal quantity for the first time. Mostly neither for the second time. They order just a trial quantity what is way far from a load of truck or a container.
After, to “make your life more difficult”, they pay with a delayed payment of 30-90 days. This is most of the time the biggest problem. For a small factory it is just not an option to pre-finance orders for months.
3. Marketing costs
Finally, a new product –even if it looks to have a high potential- needs marketing. This might mean a LOT of things in practice, but shortly, marketing has its own cost. So offering creative materials and ready-to-print files is closely not enough. Especially if you want them to put your product into hypermarkets, just like Tesco or Auchan where paying “shelf-money” is quite often. So many times they ask financial support as well in order to make the product successful. Especially if the market itself is not huge, just like in case of Hungary.
Based on my experience the above list looks to be constant, even if we talk about clothes, food or any FMCG products, or alcoholic drinks. If you ask me, the most surprising fact is the marketing cost. Even if it has sense, still: what the wholesaler gives you for all the above? For instance: contact.
And here comes the magic. If it is really “just” the contact –probably every affair will have its specialty, so probably there will be some more above the contacts, but let’s skip this from the big picture-, you can try to get them by yourself. It might look difficult, but we can assume that the wholesalers’ interest is to be able to get the rights of dealing with a new product. So probably they will welcome your approach and will tell you the conditions how they can work with you.
Also, you can try to ask for help from companies like Business Management Hungary. We have wide business relationships in many fields of business.
Finally, getting in touch straight with the retail partners might save you a lot of headache –and money of course.
Ok, so now we see that contact shouldn’t be a problem. So why else it worth to work with a wholesaler? If someone would like to expand to somewhere or start business in Hungary he has three ways:
– finding a dealer (or a partner office),
– starting a business and find a representative,
– starting the business locally by himself.
The first looks like to be the easiest: but as we saw above, it is closely not. The second is obvious. If we let define the representative a little bit proper the wholesaler is also a kind of representative. In a wider meaning a business management agency is what you need.
The third option is something what requests much more time and commitment. But still, probably this will work the best. You have to invest more, you have to “be there” personally also, and there are many other facts what might make you think that this is more than what you can achieve or accomplish.
But after all, it’s you who knows your own business. It’s you who knows your company and products. You know your industry. Who else could sell your products the most authentically if not you, personally you?
This post is going to be continued. In that I will show those steps what you will have to consider after deciding to start business in Hungary without a wholesaler.
Business Management Hungary