Facilitation vs retail

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When starting a hub, you are faced with the choice of becoming a 'facilitation' hub or a 'retail' hub. It's a very important decision, as it can't be changed later. With this page, we want to give an overview of the difference between the 2 systems.

Retail[edit]

Retail.png

Let's start with retail - a system that most of us know. The flow:

  1. Customers will place their orders via the webshop
  2. The hub will (automatically) order all the ordered products from the producer at the end of a week's cycle (via packing slips)
  3. The producer will deliver the goods to the hub. The hub becomes the owner of these goods, as he paid for them.
  4. The producer will invoice the hub for the delivered goods
  5. The hub will deliver the goods to the customer
  6. The hub will invoice the customer


Details of the retail system over the facilitation system[edit]

  • It's simpler bookkeeping wise
  • You'll confuse less producers, as this is the 'standard' way of working
  • direct payouts to producers are higher (even though in the end it's exactly the same with facilitation, it it takes longer for them to get the full amount)


Facilitation[edit]

Facilitation.png

Onto faciliation, a slightly different flow:

  1. Customers will place their orders via the webshop
  2. The hub will (automatically) inform the producer about all the ordered products at the end of a week's cycle (via packing slips)
  3. The producer will deliver the goods to the hub. The hub does not become the owner of these goods, as he did not pay for them.
  4. The producer will invoice the customer for the delivered goods.
  5. The hub will deliver the goods to the customer
  6. The hub will invoice the producer for the 'service' that he provided


Details of the facilitation system over the retail system[edit]

  • More producers will be able to join you, because contracts with 'the auction' do not prevent them from participating in facilitation hubs
  • More producers will be able to join you, because their sales on your hub won't count towards their 'B2B' sales (and thus not count towards the 30% limit of B2B sales for more flexible rules - this applies mostly to meat and dairy farmers)
  • The hub never becomes 'owner' of the products, which makes responsibility more vague. Making clear rules and expectations with your producers is important


Facilitation vs retail - payouts[edit]

In payouts, there's a difference between the 2 systems as well. In the end - the result is the same, but it's important to know the difference because the money comes from 'different places'.

Example (with 20% margin on sales price and a 6% vat product)
Facilitation Retail
Product price € 100 (€ 106 inc 6% VAT) € 100 (€ 106 inc 6% VAT)
Hub margin ex VAT € 20 € 20
Hub margin inc VAT € 24,2 (service = 21% VAT) € 21,2 (food = 6% VAT)
Payout to producer € 81,8 (€ 106 - € 24,2) € 84,8 (€ 106 - € 21,2)
Producer will have to pay VAT € 6 (6% of € 100) € 4,8 (6% of € 80)
Producer will receive VAT € 4,2 (21% of € 20) € 0
Net result for the producer € 80 € 80
Net result for the hub € 20 (€24,2 - € 4,2) € 20 (€21,2 - € 1,2)
Example (with 20% margin on sales price and a 21% vat product)
Facilitation Retail
Product price € 100 (€ 121 inc 21% VAT) € 100 (€ 121 inc 21% VAT)
Hub margin ex VAT € 20 € 20
Hub margin inc VAT € 24,2 (service = 21% VAT) € 24,2 (non-food = 21% VAT)
Payout to producer € 96,8 (€ 121 - € 24,2) € 96,8 (€ 121 - € 21,2)
Producer will have to pay VAT € 21 (21% of € 100) € 16,8 (21% of € 80)
Producer will receive VAT € 4,2 (21% of € 20) € 0
Net result for the producer € 80 € 80
Net result for the hub € 20 (€24,2 - € 4,2) € 20 (€24,2 - € 4,2)


In summary - there is no difference in actual earnings between the 2 systems, but in the facilitator system, the producer will receive a smaller initial payout, but gain more back from taxes (which can take a while)