The following is an extract from Artist in business

Copyright © Artist in business 2003

Is Sale or Return (SOR) A Sale ?

I feel it is important to clarify the difference between the two different kinds of deals you can get at a retail outlet.

A sale is when the retailer purchases your cards outright, this gives him the right to choose what designs he wishes to stock and how many of each he wants, it also means that he understands fully that he has purchased the cards from you and is fully intending to pay for the whole order after around thirty days.

This also means it is up to him if he will buy from you again, most retailers will buy again if a card range goes well, however it is up to you to chase him for a second order, don't wait by the phone!

The benefit to you when you are achieving outright sales from a retailer is that it means the retailer is very confident that your cards will sell in his shop, he is prepared to take a chance on your cards and prepared to commit to you by paying you for them.

This is known as a trade deal, he will be expecting a trade price from you, he will also expect you to advise him on what the Recommended Retail Price should be i.e. the trade cost is £1 .50 + vat therefore using the standard formula the R.R.P. value is £1.50 x 2 + 17.5% VAT = approx. £3.50, he will also expect you to have a carriage paid amount that you work with i.e. if he orders over £125.00 worth of your cards you can offer carriage free, if he orders under that amount it will cost £6.50, (this fact often persuades the retailer to order more to get the carriage free)

Normally a retailer will buy at least six of any one design, so if you have ten designs in your range and he orders a half dozen of each that's sixty cards. (orders are normally half dozen or dozen)

He will also expect delivery to be ASAP, and expect you to know what he requires from you, i.e. an invoice, a delivery note, a reminder letter after 30 days is up for him to pay you.

When I wrote the AIB information over two years ago, a direct sale was the only kind of deals that I did with retailers and still is on the whole apart from locally where I like to do a few SOR's with people I know well, to me this is a business deal between two businesses.

A sale is a purchase agreement between a seller and a buyer, and a supportive commitment between businesses.

A Sale or Return agreement is a completely different affair.

Firstly, there is absolutely no commitment to you or your cards when a buyer aggrees to SOR.

It costs the retailer nothing, he has no worries whether the cards sell or sit on the shelve until he decides to send them back to you, however he will still want to make money for giving you floor or rack space in his shop, which means it's important you to make it worth his while, he will expect to earn at least £1.00 per card he sells.

In reality of course he is doing very little for you at all, he has no real incentive in making any effort to sell your cards, he doesn't give a jot whether your cards are any good or not.

SOR deals are as easy to get as falling off a bike!

A true measure of success is when a retailer refuses your offer of SOR preferring to buy your cards because he knows they will sell them and make more profit!

SOR is not a measure of whether your cards designs are any good, yes it is a way in, and yes you will get some feedback about what sells and what doesn't, however be warned that what doesn't sell will end up in your rubbish bin and not his!

The realities of SOR

The retailer will expect you to take old stock away and replace it with new stock that he believes will sell.

Quite often SOR sales are disappointing and you may find going back after 2 months that only ten or twelve cards have sold, taking into consideration petrol and parking when delivering the cards, cost of spinner etc.

Is it really worth it? I leave it to you to work out how long it'll take to get into profit, you must keep in mind all of the hidden costs when dealing SOR.

I believe it is a good thing to try in the beginning, as it will achieve you a deal, you will also find out what designs are good and which ones are stinkers!

Once you have dipped your toe into SOR and are happy with your designs avoid it like the plague, it causes stagnation, cash flow problems plus masses of investment and time.

If you can get a few locally, where you have a good relationship with the retailer then that will probably work fine.

It is important to know that your cards do actually sell at the trade price you are asking, the only way you will find out is if you have made direct sales to local retailers, after a while you can visit the retailer and find out how your cards have sold, this takes courage, but being in business is all about having the courage of your convictions.

Doing an SOR deal takes no courage at all, it is a means to an end until you feel sure you are ready to start asking for those all important SALES.

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Copyright © Artist in business 2003