Throughout my time selling goods, we have made some mistakes and avoided others by talking to different brands. If you’re in the retail or e-commerce business, here are the top land mines to look out for — and how to handle them:
Chargebacks From Customers and Retail Stores
From customers: A chargeback occurs when a customer disputes a charge on his or her own credit card bill, usually after their card has been used fraudulently or if they never received the merchandise they paid for.
Chargebacks can be a huge headache for business owners and can lead to fees and lost inventory. Thankfully, you can minimize them if you take these preemptive steps:
- Always accurately describe your goods so customers know exactly what they’re paying for. Unrealistic expectations can make for unhappy customers.
- Use a delivery service that has a tracking service so claims of an undelivered product can be definitively confirmed or discounted.
- Clearly lay out your return policy to minimize potential misunderstandings.
- Make contact information such as your phone number or email address easy for customers to find. This makes it much more likely that they’ll go through you, rather than a credit card company, to resolve their disputes.
From retail stores: Occasionally, if you do not package your products correctly or based on the agreement you signed with a retail stores or distributor, you may receive a chargeback. It’s important to read any agreement you sign very carefully and make sure you are crystal clear with any requirements you need to follow.
Below is an example of a chargeback detail related to freight. Freight chargebacks are issued for two reasons.
- Freight Agreement: “We have a Freight Agreement on file for your vendor number or the PO specifies that the vendor will pay some or all of the freight charges.”
- Purchase Order or Routing Guide violation: “To discuss your chargeback, please contact the distribution center to which merchandise was shipped.”
What can you do if you’re faced with an unforeseen shipping delay or your product sells out and isn’t available to a customer who just ordered it? If you over-promised on your timeline and aren’t able to deliver your goods, you could end up damaging your relationship with a customer or a store.
That’s why it is so important to remember: under-promise and over-deliver.
Under-promising timelines does not mean you should set the bar low for your brand. Rather, it is a smart way of managing expectations and efficiently delivering on promises. Set realistic deadlines and take into account potential obstacles or setbacks that could prevent your customers’ expectations from being met (under-promise). Your customer will then be thrilled if they receive their package early, get great customer service, or receive an exciting extra like free stickers or your innovative packaging (over-deliver).
Delayed Payment From Other Stores
Sometimes, it is just as difficult to get paid by a store as it is to get an order.
When I was selling goods with Matthew Burnett, we grew to over 30 stores in less than a year. In working with other sales representatives, it became increasingly difficult to manage all of the outstanding invoices – especially from the stores that refused to pay or delayed payment. This can be the case even when you are working large retailers.
Here are some lessons I learned about how to make sure you get paid:
- Establish terms. When you’re starting out, it’s easy to overlook the very important step of establishing payment terms. However, a well-written contract that confirms when and how you would like to be paid can save your brand a lot of hardship.
- Don’t hesitate to bill the store. Send your invoice ASAP! Also, make sure your invoice includes all the information the store needs to reach you with any billing questions. Specify the point of contact for accounts payable.
- Be persistent. Despite your best efforts, stores still might not pay you for your goods. If this happens, it is critical to be persistent in collecting your payment. Send emails and call your contact directly until they make good on their payment.
Spreading Inventory Too Thin
If you are just starting out, it might be a good idea to test the market with consignment, but having too many stores can be time consuming and end in a huge loss if you are tying to increase inventory in the wrong places.
A good way to avoid spreading your time and inventory too thin is to visit the consignment shops beforehand. Check out which other brands the store is carrying. Does your product seem like a good fit with the rest of the merchandise in their shop? Are the customers who frequent the boutique your target customers? Do you feel the store’s rate of consignment is fair?
If so, great – get selling! If not, maybe you should reconsider doing consignment with this store. It is much more cost-effective in terms of time and money to find a handful of shops that are a great fit, rather than putting your product in too many stores at once.