Comment 路 Tue, June 25, 2024 路 ND Owner
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Original post in this thread
NDSocialMedia 路 52 points
What they were answering
verifitting 路 1 points
I fear a site like iHerb will indeed eat costs. Moreso than amazon.
u/MisterYouAreSoDumb 路 ND Owner
That seems to be the case, because iHerb actually buys the product ahead of time, then sells it themselves. It's not like FBA. It's more like when Amazon sells a product directly. The below article gives an example.
https://mrcheckout.net/how-to-get-into-iherb/
Be prepared to profit.) Does your product offer enough of a profit margin for iHerb? Can you sell your product at a reasonable enough profit to cover the packaging, shipping, commissions, marketing and wholesale distribution? Check iHerb guidelines for other fees that you will have to build into the cost of your product in order for you to be able to turn enough of a profit to make the effort worth your while. If you work with a discount retailer, they will try to strip your profits down to zero in order to keep their prices as low as possible.
The typical breakdown of margins are: If a products costs $1 to produce, that product will retail for $4. That product that retails for $4 will wholesale for $2 to distributors and stores that purchase direct. Retailers like iHerb= may offer to pay $1.25 to the manufacturer if the product costs $1 to produce. That is the typical profit margin.
Those numbers are ridiculous! So if your product retails for $4, they expect you to only have each unit cost you $1, which is unrealistic. Then even if that was the case, they want to profit $2.75 per unit, while leaving only $0.25 per unit for the brand that develops, sources, tests, manufactures, markets, and takes the liability risk on the product?!?
Pitch your product to iHerb. Decide whether it will be you or a representative to present your product to iHerb. Your presentation depends heavily on your strengths as a businessperson as they will most likely ask financial questions and logistics questions.
It鈥檚 common for companies to hire an iHerb (broker) to pitch their product to iHerb, as it will be more likely that your product will make it to the next stage if the individual pitching your product has industry knowledge or a personal relationship with iHerb. The percentage of commission verses, however generally a broker will take around 5% to represent your product too iHerb.
So you need to give another 5% to a broker to even get your product onto iHerb?
Anticipate the need for increased volume.) Having iHerb agree to stock your product will most likely mean a significant increase in volume. You should be prepared to ramp up your production and informing your manufacturer of this opportunity.
Having production, logistics and distribution to sync is not only difficult, it requires a significant amount of time invested in customer relations. Also, iHerb may have stipulations in the contract that may penalize you for delays in shipping and production. Have an attorney explain all contracts to you if you don鈥檛 understand the terms.
So then if you have any delays in shipping or production, you can get fined by iHerb as well? Wow, that sounds like such a great deal for brands! Imagine if customers didn't have to go through all these middle men. Brands could actually have the margins to properly lab test their stuff, and hold to higher standards. Maybe even consumers could have better pricing, because you wouldn't have so many people in between the brands and them taking unreasonable margins themselves.