Retail World

Determining what type of product is thought to be difficult, yes, granted it is the main part of the equation, but we came to realise that compared to the process of trying to convince the market to purchase the item was just as challenging.  This is targeting the individual people in the particular market spectrum.  Now try and get this product to be of interest to major retailers.  This in itself is a really challenging task.  We received some great advise regarding this aspect, however the concept that stuck in our minds was that no one cares who we are. No one is interested in us regardless of the product, unless they can make money off of it or off of us.  Its not as easy as simply asking the retailer to purchase the stock from you.  They don't carewho you are at all, they will only consider the item if they are able to sell it, therefore ontop of creating a product that solve a problem, you also need to create the awareness of the product, and the need for it so that the demand will meet the supply potential.

Provided that you now actually get the product into the market, at every point along the way, there is someone with their hand out wanting their share.  Be it the distribution centers wanting a percentage or the store itself wanting a fee for the retail space over and above the profit that they themselves make on selling the item.  There is then SARS that want their share as well.  Taking our very product for example.  If we want to sell the product to a retailer at a value of R20, by the time that we make a profit, instead of the 200% profit, we only walk away with 50%.

A simpler example is as follows:

Sell item to retailer for R20
Vat - 14%
Distribution Center Rates (approx) - 15%-20%
Store Rebate (approx) - 15%
Merchandisers (approx) - 10%-20%

Once all of this has been paid,  the profits that remain are very slim compared to the original expectations.  Any product that made, needs to me produces as cheap as possible in order to try and achieve any form of measurable profit.  Real life retail is a tough, tough world to try and be part of.