The Art of Brokering and Licensing and Turning Others Ideas, Products and Businesses Into Virtually Risk-Free Profits

Up until the 1970’s the largest manufacturers decided what retailers they would supply products to. Sam Walton and the other modern discount department store pioneers had to literally beg suppliers to allow their businesses to sell the supplier’s products. All that changed with the emergence and ultimate dominance of Walmart in 1970. Today, less than 2% of all vendors who solicit Walmart to carry their product succeed, and often their windfall is short-lived.

The mass merchants give each vendor a Scorecard, in which they are graded primarily by the shelf and time value of the product. They call it “GMROII” or “GMROI” (Gross Margin Return on Investment), which is based on their profit margin and turnover, resulting in their bottom line … profits. At the very least they demand a GRMROI of 1, namely a dollar return for every dollar of inventory. However, it is largely an inaccurate term, as in many instances before these mass merchants invest a penny, they have already sold the product. And many demand Guaranteed Sales, a fancy term for Consignment. If the product does not sell, they return it to their vendors, with the latter having to pay up to a 20% handling fee plus shipping costs.

In reality, these controlling retailers are simply brokering other people’s products, a version of OPM. Many brokers have no inventory and do not invest a dime in manufacturing any product. Some make tens of millions of dollars working out of an office in their home. Many do not even have much of a staff. Their advantage is that they know who will buy and have established distribution channels that their customers and clients simply are unaware of.

I21 vast network of distribution channel awareness can allow its clients to greatly profit by OPI (other person’s idea). Sears has for decades sold its Kenmore line of appliances, licensing out OPIs.

Another alternative way to sell someone else’s product is through Licensing. Black & Decker, now Stanley Black & Decker rarely if ever manufacturers the products that bear the family black and orange logo. They outsource virtually all of their products.

One of the perfume industry’s greatest names was that of Francois Cote, an Italian who modernized that multi-billion dollar industry by turning personal fragrances from a medicinal or deodorant into a fashion statement. Cote is considered the greatest perfumer (perfume maker) in history. Yet today, Cote is a marketing company. It makes no perfume. It licenses celebrity names, such as Jennifer Lopez and outsources the creation and manufacture of the perfumes, eau d’parfum, toilet waters, colognes and spritzes to one of the ten major Flavor and Fragrance companies like the largest American one International Flavors and Fragrances, and then markets the products through their distribution channels. I2I team are experts at licensing from and to companies. It’s wholly owned developing company, Pur Parfume de Grasse (Grasse, France being the historical capital of perfume making) is licensing OPIs and its own personal fragrances using licensing and distribution agreements.



 

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