Melandas Sofa Any Good?

[B2B 0]

All retailers will have to mark up 100% whether they have a factory or not to cover operating expenses such as warehousing delivery, rentals and salaries.

Having a factory is not necessary a good thing, a retailer without a factory can simply buy from a cheaper supplier when costs go up at a certain location.

Companies with factories will have to live with higher costs, for example Cellini has a factory in Malaysia, they cannot buy from China or Vietnam where costs are much lower.

In fact, fashion retailers mark up 200%-300%, that's how retail works.

My opinion is to buy what you can afford and not worry about getting the cheapest price because not matter what price you pay there will always be someone who can get a better price.

The only thing about buying from retailer is there is 2 X 100% market up. One from the factory cost price and another from the retailer's cost price.

By the way, Cellini has two large panel factories in Indonesia, one in Cikarang and one in Cikempak. Indonesia cost is comparable if not lower than China. Lorenzo and HTL, Eurosa, Star has factories in China, Koda in Vietnam.. and they are all direct manufacturers. Besides doing retail, they export to US, Europe and the middle east. I am aware of their prices because I am in the export business.

However, there are alot of fly-by-night retailers. They have longer lead times as they do not have the cashflow to hold inventories. Many times thay have difficulty trying to consolidate a 40 foot container, especially when they only have 2-3 outlets in S'pore. Many smaller retailers have also defaulted on their rental payments in the last few months. I am sure you have heard of many stories of customers not getting their goods on time, no replacement of defective goods or deposits gone when such retailers turn insolvent.

I have dealt with many retailer wannabes in the past, some local , some overseas... all you need is to be able to cover your rental payments. With the deposit and full payment you collected from your customer, you will use that to pay your suppliers. If you are small fry- you don't have bank trade facilities or credit terms from the supplier. In order to maximise profits, you gotta fill up a 40 footer container. For some small retailers, it can take 1-2 months to do that.

When there are customisation or large variety of orders(imagine 40 different types of sofas, tables etc in one order) , only small time supplier/sub contractor can do such orders. The bigger and more reputable companies in China will not entertain such orders as they prefer bulk orders of one type of product. The problem is the quality and workmanship of small time suppliers are terrible. I have advised my clients to stay away from them.

Most of the local manufacturers I have mentioned have been around for more than 2 or 3 decades. They have backing from banks, spring singapore, IE Singapore and SFIC. They were even cited in the PM's 2009 national day rally for participating in the Milan Fair.