We're often asked by new and prospective merchants why we charge a commission on sales when we're also charging rent. In our quest to be as transparent as possible, we'd like to break down what commission revenue goes towards and how important it is to keep the books balanced in the world of multi-merchant retailing.
The Commission Breakdown
When we sit down to develop our budget, we look at it as two different revenue buckets: commission on sales and merchant rents. Merchant rents will be taken up by fixed operating costs such as our rent for the building, maintenance and upkeep, utilities and general overhead expenses like technology fees, for example.
Commissions on sales go towards covering all of the expenses having to do with running the sales floor. This includes:
- Cash Wrap Supplies: Shopping bags, tissue paper, receipt paper, etc.
- Transaction Fees: These include the fees we are charged when a customer pays with a credit card.
- Guest Services Payroll: Our payroll expenses for our dedicated Guest Services team who work hard to sell your merchandise.
We track our progress daily by calculating the sales revenue our merchants generated and the commissions we earned from those sales minus these expenses. It's this calculation that determines such things as our Guest Services recruiting efforts and what our operating days and hours will be.
The Merchant Report Card
Part of sticking to our budget is ensuring that we're all on the same page.
Over the next few days, if you haven't already, you'll be receiving a Merchant Report Card. This is something new that we're launching to ensure that our merchants have a clear understanding of their previous month's sales, sales history, and how it relates to the Market's overall goals and sales expectations.
We typically measure a healthy sales period by taking a merchant's monthly rent and multiplying it by 3. This ensures that the merchant is making enough to cover their rent and cost of goods, while still remaining profitable.
Example: For a merchant paying $100 in rent, your monthly sales goal would be $300. From that $300, subtract $100 for overhead, $100 for cost of goods, and you're left with a $100 profit for the month. Well done!
We review this formula on a 3 month average. If you've been in retail long enough, you know that one month could be your best ever and the following month could be your worst ever. By looking at it on a 3 month average, we're typically able to ensure that the market/merchant relationship remains strong and profitable for everyone. Consider the busier holiday months an added bonus!
This calculation is what helps us to budget for the expenses paid for by your monthly sales commissions.
We're All in This Together & We're Here to Help
From day one, our mission with Belleville Market has been and continues to be two-fold: to offer our customers a one-of-a kind shopping experience and to offer our merchants a foundation to grow their businesses.
We hope the above breakdown on commissions and sales expectations is helpful as you continue to develop your business with us here at Belleville Market. We're always here to help, from a quick question to broader assistance utilizing our new Belleville Trade program, we're excited to continue growing our businesses, together. In the coming weeks and months, we'll be rolling out even more opportunities for merchants to grow their businesses, locally and beyond.
We always say that our successes is your success, and we mean it. If we've learned one thing over the 40+ combined years in retail that we (your Belleville Management team, collectively) has behind us, it's that the world of retail is always changing and we're all better together.
