32
JUMPSTART
PROCESS, STRUCTURE, COSTS AND
PAYMENTS
The entire process varies between
supermarkets but it generally
follows one of two patterns:
purchase vs. consignment.
Purchase
Stores may decide to purchase
products from you directly if they
feel that it is unique and that you
have exclusivity. Once a product is
presented to the stores (regardless
of which of the above channels are
chosen), it may go through a QA
exercise to determine if the labelling
and descriptions comply with the
relevant laws and ordinances. If
it is approved, then an account
is opened, terms are agreed and
delivery arrangements are made for
the product to be sent to the stores.
Payment is usually negotiated, but
can range from 30-60 days after the
date of the purchase order. Beware
of hidden costs such as listing fees
etc. which can amount to HK$1000
– HK$2000+ per product per store.
This is not often paid up-front but
instead taken out of the revenue
from the sales of your products.
Consignment
This is the preferred route for
newcomers and unknown products.
After the products have been
approved by the QA department,
the terms normally dictate that
the store takes a percentage of the
recommended retail price (about
20% - 40+%). Listing fees may or may
not be involved in the consignment
route but it may be disguised as
‘support’, or costs may be involved
in promoting the product in the
stores. The downside to this
route is that all liability for theft,
damaged, lost products (whether
by customers or the stores) remain
with the merchant.
Experts
JUMPSTART
EXPECTATIONS
So many stories abound Hong Kong
supermarkets (some true) but
managing expectations is key if you are
thinking of getting products into stores.
1. Don’t expect to make millions
overnight. The set up costs will
eat into your revenue and it
may be a while before you start
to reap pure profits. Expect
that and you’ll be pleasantly
surprised if the contrary
happens.
2. Look out for competitors.
They will do ANYTHING to
sabotage your efforts if you
are successful in getting
your product listed. Expect
to compete aggressively on
quality and price.
3. If your products don’t sell well,
they will throw you out in a
heart beat. I saw it happen to a
friend of mine and they simply
dumped his product stand in
the car park and asked him to
come and pick it up. He was
out of the country at the time.
Expect to constantly worry
about your sales figures.
4. Supermarkets will change
offering terms and conditions
without a moment’s notice as
stipulated in their contracts.
Expect to see the conditions
becoming more onerous and
prepare for it.
5. Listing in a supermarket will
open doors to wholesale
merchants and HORECA (Hotels,
Restaurants and Cafes). Expect
more business outside the
retail markets which is where
your business growth will most
likely come from.
Jim Coke
The son of a Jamaican farmer, Jim
read Social and Political Sciences
at Cambridge University, obtaining
both a Bachelor and Masters
degree. After Cambridge, he began
a career in banking,