Your line’s being carried in stores, and all those late nights sketching and trips to factories have paid off. But it’s important to remember that even when you’ve made it to retail, you need to be prepared for potential hurdles.
This is what happens when a custom disputes a charge on their credit card bill, and it’ll typically happen if their card has been fraudulently, or if they made a purchase and didn’t receive it. For business owners, this is a twofold problem: lost fees, and lost inventory. However, chargebacks don’t have to be a problem if you know how to prevent them.
- • For online purchases, make sure your items are described as accurately as possible, so customers have the right expectations.
- • For delivery, ensure you have an active tracking service. This way, you can verify claims of non-delivery.
- • Your contact details should be easy to find online. This way, your customer can deal with you directly rather than filing a dispute with their credit card company.
- • For bricks-and-mortar stores, make sure products are packaged correctly or you may incur a freight chargeback. This could be because of a freight agreement on file for your vendor number, or because the purchase order notes that the vendor will pay the majority (or possibly all) of the freight charges.
- • Alternatively, there’s the chance of a purchase order or routing guide violation. In this case, you’ll need to contact the distribution center that your items were sent to prior to being shipped to the customer.
It’s been said before, and we’ll say it again: under-promise and over deliver. This is particularly true of timelines, which despite your best intentions can only be out of your control. Perhaps there’s been a shipping delay, or maybe a product has sold out just as a customer’s placed an order. Under-promising isn’t about aiming low, but setting realistic expectations and achievable deadlines that consider the likelihood of roadblocks. Similarly, if you’re able to deliver a package early and provide great customer service, you can over-deliver – and that’s always a gold star.
We hope this doesn’t happen, but there’s a chance that outstanding invoices will become the bane of your existence. As you start supplying more and more stores, managing unpaid invoices becomes more time-consuming and can strain relationships with retailers. At times, this happens with larger retailers as well. How to avoid this? Here are some ground rules.
- • Set out payment terms. A clear contract that lays out exactly when and how you should be paid is essential, and can ward off trouble down the track.
- • Start the billing process post-haste – don’t worry about sending out invoices as soon as possible.
- • Include contact details for accounts payable, should the store have any questions around the amount, timing, terms or anything else that comes up.
- • Be persistent. If a store is being unresponsive, keep chasing up with calls and emails until they finally pull through.
Try to limit the amount of stores you have doing consignment, as it can be a significant loss if your inventory ends up stuck in the wrong places. Be selective: see what other brands the store carries, and if your product feels like a natural fit with the other stock. Other things to note are the customer base (is it the same as your ideal customer?) and to investigate if their consignment rate is fair. If all of these answers are to your liking, by all means start selling. However, if not, it’s much more worthwhile to says thanks but no thanks and find the stores that are the right fit.
This post is inspired by an earlier Maker’s Row article.
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