Company Stores & Fulfillment Programs Starting Guide for Vernon AE s

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1 Company Stores & Fulfillment Programs Starting Guide for Vernon AE s OVERVIEW: The terms program and store are hot topics right now. What s a program, what s a store? Are they the same thing or are they something different? In this brief overview we re going to answer those questions and go over the tools and platforms we offer. Are programs and stores the same thing? No. All stores are part of a program but not every program has a store. In very general terms, a program is simply a defined set of products presented to a defined audience. Within that broad definition there are several variables including product, audience, price, inventory, payment and marketing. A store is a tool to communicate the specifics of the program to the audience. Stores are web-based and are the most popular, but not the only way to market a program. Other options include printed catalogs, printed order forms and physical product displays. Webstores are by far the most popular because they are relatively inexpensive, easy to modify and easy for end buyers to use. They are convenient for the client, and offer reporting capabilities to help them make better decisions regarding inventory and purchases. Programs are attractive to the client because they strengthen the client-customer relationship. A successful program introduces some efficiency into the relationship and makes it easier for the client s audience to do business with them. Examples of program efficiencies include: Brand management and regulation of product and logo options. Programs can limit the product choices and logo options so the audience has access only to those approved by the sponsoring organization, creating brand consistency. Management control of budgets. Our more sophisticated programs offer management tools that can set and monitor budgets preventing customers from spending more than allowed. Providing a reward mechanism that offers incentives for sales performance, attendance, years of service or any other factor the client chooses. Efficient inventory management and order fulfillment. Consistent pricing based on total program purchasing power. Presentation of relevant products in an easy to access and use format. Reporting that empowers the client to make informed decisions about products and inventory and/or monitor the purchases of their affiliates.

2 CONSIDERATIONS: Product Products are the centerpiece of any program; define what products will be in your client s program. Vernon provides a program website where your client can select from thousands of products from approved suppliers. Work with your client to select products suited for their audience. New stores should start with a small selection of products (15-20 items or less) and then build product offerings as demand increases. Logo options Determine if there is a single logo option for each product or multiple logo options. Does the logo depend on the end-buyer? Although some programs may include multiple logo options, it is strongly recommended that programs start with only one logo option. Inventory/Drop-ship If the client wants to quickly ship 1 or 2 pieces of a product, then the decorated version of that item will need to inventoried. If end users (store audience) are willing to purchase a quantity of an item and wait for it, then product can be decorated as ordered (decorate on demand) and drop-shipped to the end user. Dropship means no inventory is required, but won t work if the end user only needs one of an item or they need quick turn-around on a regular basis. Payment methods Webstores have these payments options: credit card, PO, coupons, gift certificates, and budget management. Audience Who is the audience employees, distributors, dealers? How many of them are there? What percent of the total audience are expected to make a purchase? Administration How much control does the client want over the end-buyer s activity? What type of control do they need? Orders How many orders is the program expected to generate? How large will individual orders be? Orders under $50 will be assessed a $4.95 handling charge. Sales What s the annual sales expectation for this program? Is there an action plan if sales do not meet expectations? Marketing How will the client market the store to encourage commerce? What are they building into their marketing plan for the program and is it adequate? COMPANY STORE CRITERIA: A. Programs Vernon will consider: Financed by Vernon (Vernon owns inventory). An established client with Vernon, with whom we have an established credit rating and sales history of at least $100K. o If new client, must have a current program in place, with supporting documentation of program sales of $100K annually.

3 B to B (dealer or distributor) store o Marketing based programs that are intended to help market the company and provide brand consistency. Projected sales from the webstore must exceed $100K per year. Ideal inventory turn is 3x/year. Initial inventory commitment from the client, to start the store, is $30,000. o Programs are reviewed annually, and sales of $100K annually through the webstore will be required for the store to renew each year. One that involves special kitting in either one-time or periodic distribution of products, assembled at Vernon and shipped to one or more destinations. Programs that require a minimum quantity purchase, not one-piece minimum orders. (Orders under $50 require a $4.95 handling charge.) All requests for programs must be reviewed and approved by members of the Vernon executive team. B. Programs Vernon will not consider: Prepaid program (client owns inventory), if the store requires credit card purchases. A program for a client with whom we have no or little sales and/or credit history. A store with projected sales less than $100K per year. B to C (retail) stores, or B to E (employee) stores that do not have $100K in documented sales history. Stores that offer one-piece minimums and/or average order size is $50 or less. PROGRAM BASICS: The standard approach to a program is for The Vernon Company to purchase the merchandise on behalf of the client. The goods get paid for as end-users buy the merchandise. The program agreement holds the client liable for any unsold merchandise after 12 months. If everything has gone well, the program is renewed for another 12 months. Slow moving products are dropped, and some new items are added. In rare cases when the store has dramatically underperformed expectations, the contract is not renewed and the client is shipped and billed for the remaining merchandise. PROGRAM COSTS: 1. Marketing costs are charged up front. Webstore start-up cost is $1500, which includes hosting for the first year, plus a $25 per product one-time set up fee. Annual renewal fee is $1250 for hosting and licensing. 2. All inbound freight, storage, pick and pack fees are included in product costs. 3. Special fulfillment requests (handwritten thank-you notes, collateral, kitting projects) are billed according to our fulfillment services fees. 4. Costs should be billed to the client. If you choose not to bill the client, 50% of all program costs will be billed to the Vernon AE, deducted from your stab account monthly.

4 TIME FRAME & EXPECTATIONS: A program that involves a webstore and fulfillment takes approximately 90 days to set up. Webstores will go live 60 days after the program agreement/contract is signed and returned by the customer. Other factors, such as the speed with which you and the client choose products and submit product details, will determine the go-live date. It is strongly recommended that you set expectations appropriately by stating webstore launch will occur 60 days after signed agreement is returned to Vernon. You play a key role in being realistic with the time frame expectation. ACTION STEPS: If your client s program needs meet the program requirements outlined above follow these steps: 1. Talk with the Vernon program team before committing to the client that Vernon can accept their program. Set up a conference call with Vicki Palm and Sharla Elscott to discuss program parameters and viability. 2. Complete the Fulfillment Program Pre-Qualification Questionnaire on AccountPRO after discussing the details with your client. You may choose to work through the questions with your client. You ll find this form under the Program Marketing icon on the left side of the AccountPRO home page. 3. The program questionnaire will be reviewed by the Vernon corporate office executive team. You will receive notification from Vicki Palm and/or Sharla Elscott if the program is approved to proceed. Please do not proceed with the client until you have received notification from the corporate office. You can expect a decision from the executive team and notification within three (3) days. 4. If approved, complete the Webstore Initial Design Details form (also under the Program Marketing area in AccountPRO). Vernon will provide you with example webstores to help your client determine the look that best meets their needs. a. Costs for webstore design, creation and hosting/licensing should be billed to the client. If you choose not to bill the client, 50% of all program costs will be billed to the Vernon AE, deducted from your stab account monthly. 5. Work with the client to source products for their webstore from our program product website. 6. Provide Vernon with approved spec samples or virtuals, so we have approved designs prior to placing orders for inventory. 7. An Excel spreadsheet will be shared with you for documenting product details. This spreadsheet will assist the design team when developing your store.

5 VERNON WEBSTORE TOOLS: Depending on the client s needs, we offer different software platforms to create client webstores. Each platform one has it strengths and weaknesses. Here s a brief overview of each platform that Vernon is currently supporting: Brightsites/Brightstores - this is the most sophisticated software package we offer. Brightsites is a good choice for an inventory program or a program that will have a lot of client interaction. There s a full suite of management tools that allows the client to do everything from individual order approval to setting individual user s budgets to monitoring the program through the back-end administration area. This platform also offers dozens of client reports that can be accessed 24/7. Product features, and the ability to search for products within the site are available. We ve integrated a sales tax calculation tool and secure credit card payment service with the Brightsites platform. ASI Company Stores - since product information is pulled from a database, it s quick and easy to activate a large number of products on these stores. A single click logo tool drops a single logo onto every product in the store, giving buyers an idea of what the product will look like in final form. With an attractive design, custom header and plenty of product categories, you can market to a specific set of buyers with a format that matches their brand or their market niche. Drop-ship orders only with this platform, and the orders must be entered into AccountPro for proper commission payment and processing. This store has a maximum of 1,000 products. Vernon Online Order Forms - offer a solution for small program clients or Brightsites clients who wish to supplement their larger company store with a special event solution. Online forms are ideal when product options are limited and orders can be combined and drop shipped to one location. (e.g., employee events or tradeshow supplies). The order form allows clients to display product images, details and pricing for up to 25 products/skus. The Vernon AE is notified as orders are received online, and then enters them into AccountPro. Forms are created on a quarterly basis, and with few product change-outs during the year.

6 BRIGHTSTORES/SITES ASI COMPANY STORES VERNON ONLINE ORDER FORM Best Uses Inventory programs E-commerce Large company stores supporting sales and marketing departments Programs that need client management tools Idea stores High product count programs (up to 1,000 products) Associations, market niches, clubs, company stores Static offering with no inventory Small company stores Special events Vernon Support Contract development (if required) Webstore creation and maintenance Processing and fulfilling inventory orders Webstore creation and maintenance Online order form creation and maintenance Send orders to Vernon AE AE Responsibility Product selection Placing orders for virtuals or spec samples to be referenced for fulfillment to place orders for inventory Program marketing Product selection, from ASI database Process orders Program marketing Product selection Process orders Program marketing Fees Fees can be covered in full or in part by the AE or invoiced to the client $1500 initial start-up, plus one-time $25 per product configuration charge; $1250 hosting fee each additional year One site, per AE, no charge. Additional stores, per AE, $300/year $150 per order form, per year Inventory / Drop-ship Inventory Drop-ship only; minimums must be met. Drop ship single pieces of decorated apparel from selected suppliers, larger minimums on hard goods Select Products All store products are custom configurations. Approved products only; consult with us to select products for your client s webstore Products may be added from preferred and select suppliers Products may be added from preferred and select suppliers. Payment Methods Secure credit card, PO, budget, gift certificate Credit card or On Account. AE enters order via Account Pro and references payment or trips invoice None required with order. AE enters order via Account Pro and manages payment options Login Required Optional for store access, required for order Optional for store access, required for order Not required Suppliers Vernon Approved Vernon Approved Vernon Approved

7 BRIGHT STORES/SITES ASI COMPANY STORES VERNON ONLINE ORDER FORM Sales tax Yes, calculated by ship-to zip Yes, calculated by ship-to zip Yes, calculated via AcctPRO Freight Charges Estimated from freight tables Estimated from freight tables Invoiced Multiple Logos Yes One logo is shown on all products. Logo and artwork upload tool is available for each order submitted. One logo is shown on all products Buyer Order History Yes Yes No Client Generated Reports Yes, complete report package - sales, inventory, buyer activity Limited No Gift Certificates Yes Yes No Design Options Template based, numerous customization options including colors, text, logos, etc. Template based, numerous customization options including colors, text, logos, etc. Limited customization options. Template based, includes logo on form Custom Design Yes, quotes available upon request Yes, quotes available upon request No FOR MORE INFORMATION: Contact Vicki Palm, Director of Marketing, vickip@vernoncompany.com, ext. 8145, or Sharla Elscott, Director of Sales, sharlae@vernoncompany.com, ext 8242, to go over the considerations for your program.