Can’t blame a buyer for asking for an exclusive. Whether you give it to them is a different story. Ask yourself the following questions to determine if this is the right opportunity for you.
- Is this the only option for landing the deal? Probably not. Explore other options first. When you offer an exclusive, you will need to manage the inventory of that sku(s) for only one retailer. This is not the most efficient use of your time/resources. And it’s a lost opportunity for selling that sku elsewhere.
- What objectives are you benefiting from by giving them this exclusivity? Maybe you move forward because the exclusive deal puts you in a better cash flow position, increases your top and/or bottom line margins, helps to reduce costs due to higher volumes, gives you brand or marketing exposure that you would not otherwise receive, and/or builds credibility by aligning yourself with this particular retailer. But, as I mentioned above, could you have negotiated a non-exclusive deal and still accomplish the above?
- How custom is this exclusive sku? Is it so custom that the packaging or the product itself makes it unsellable to your other retailers/customers? If the sell-through doesn’t meet the buyer’s expectations (and find out what those are ahead of time), will you be able to re-sell the inventory?
- What is the retailer’s commitment to you? Will this be a final sale or guaranteed sale (a guaranteed sale means YOU are responsible for it selling)? If the sales projections are not met, what is the buyer’s expectations of you (are you expected to contribute to mark downs and/or ship product back to you on your dime – not only for what they paid for it per unit but also a handling/shipping fee tacked on)? Find out ahead of time.
- Be clear on the terms. What is the time frame for this exclusivity? What channels? National/international?