Business Plan help! Inventory pricing woes.

June 27, 2012 8:54 AM

I'm working on a business plan to open a specialty food store. Everything was going great until trying to price out the start up inventory.

The problem is that the few distributors that I am planning to work with won't let me know the prices until I actually have a storefront. So, how can I accurately figure out my start up costs without this vital information?

I know that I can look up the retail prices for most of my products, but I have no idea how to determine how much their mark up is. Even when I contact the manufacturers, they direct me to the distributors.

Any help, advice, or tips would be appreciated! Thanks!!!

posted by ilikefood to work & money (6 answers total)

Perhaps you could get in touch with a similar store in a far away market and ask for their help. You won't be a competitor, so they might be willing to help you get on your feet.
posted by ocherdraco at 9:09 AM on June 27, 2012

It sounds like they're trying to make sure that you're actually going to buy something before they're willing to disclose their wholesale prices. This makes a certain amount of sense, as those sorts of things tend to be jealously-guarded trade secrets.

I'd suggest getting in touch with the local business community to see if someone can give you rough numbers that are firm enough to let you get some idea about startup costs. These things are never worked out down to the penny anyway, and you're going to need a healthy amount of room in your budget for just that reason. Try to connect with your local SCORE chapter.

Barring that, you may just need to eyeball it.
posted by valkyryn at 9:09 AM on June 27, 2012 [1 favorite]

That's kind of key, and it's kind of worrying that you're stumped on this. It's sort of a "If you have to ask, then you are probably not ready to open the store" deal-breaker.

I suppose you can contact other business owners of stores similar to the one that you're contemplating and see if they'll give you the information. (I'd recommend some place a few states over from where you are, so that you won't be a competitor.)

Also, why are the distributors being tight-lipped about this? Are you asking about specific amounts of inventory? Do you know how much of what you'll want to order initially?

You might want to consider working in a similar store somewhere, doing some of the inventory stocking, etc to get a feel for what all is involved.
posted by Ruthless Bunny at 9:17 AM on June 27, 2012

If you're just trying to price the initial inventory, can you ask the distributors for a single price for everything together rather than broken out items? That will give you an idea of the costs while preserving their secrecy for any individual item wholesale price.

It may take a bit of convincing, but assuming you're talking about a large enough basket of goods the distributors won't be giving much away by telling you this information.
posted by true at 9:27 AM on June 27, 2012

You should be able to get your reseller's license without a physical location. That's usually all that's needed for vendors to give you wholesale prices.

For our specialty food store that we opened in March of this year, we spent $40 - 50K on inventory for the 1800 sqft space.

You can reverse engineer from retail prices using the following margins (not mark-up)

Perishable food: 20-30%
Shelf-stable: 35-40%
Beer & Wine: 30-40%
Gifts: 50%

I'm happy to answer questions if you want to PM me.

Good luck,
chuck
posted by humboldt32 at 9:58 AM on June 27, 2012

Thanks so much for the tips.

humboldt32 - Thank you so much! I'll be sending you a PM later this week or early next week.
posted by ilikefood at 1:16 PM on June 27, 2012