Party Alternatives

Is it worthwhile for your direct sales business to participate in vendor events?

Vendor events are called many things – craft shows, expos, farmer’s markets, flea markets, festivals, bazaars or fairs.   Some are one day events and others can last as long as one week.   Some are as affordable to enter as $45 per booth while others can cost hundreds of dollars or more.

How do you determine if it is worthwhile to participate?

Do the math and make sure you calculate all expenses, including your time. Also consider the cost of goods sold.   A common question is “How much inventory should I bring?”   Bring as much as you can afford without going into debt over it.   Many experienced direct sellers would not do a vendor event without a large supply of cash and carry. People want it NOW; they don’t want to place orders; they won’t give money to a stranger in hopes that they’ll get the product in a few weeks; they don’t want to fill out any contact sheet – they just want to buy the goods and go. They’ll buy whatever you have – impulse purchases.

Some people set up a small display, without much on-hand inventory and choose to do events in hopes of future sales. That’s too much of a business gamble and far too much of an investment of non-income producing time in hopes of orders later.

Below are some factors to consider when calculating return on investments before deciding to do a vendor event or not.

Based on a 25% commission rate, if the booth fee is $50 you’d need to sell at least $200 just to break even on cost of goods sold – and that does not account for your valuable time, investment in business cards, samples, catalogs, and any display pieces (tables, table cloth, racks, cases, signage, etc.)

If you sold $500 at the show then you’d only profit $125 (assuming you’re at the 25% rate and did not invest any other monies) Figure between product preparations, pack up, travel, set up, time working the booth, tear down and return travel, you had 12 hours invested. That’s earning just a little over $10/hr, yet you still have to deduct taxes from that rate.

That said – if you had on-hand inventory and sold $500 product at the event, you’d make about the same amount of money you’d make at McDonalds.

Take the same above example, only this time figure what you would make if you sold $200 worth of inventory.   You’d be working for free and the event would have cost you money.   Now figure this example without the inventory or without the sales?   Pretty glum picture, isn’t it?

That is not to say that vendor events are never worthwhile.   Sometimes they can be very profitable and a great way to advertise to the masses.   It is just vital that you do the math first and actually calculate your incomes to expense ratio.