... are you sure they’re going to come? (continued from last week)

Last week I wrote about how to design your product to stand out in a store. That’s the easy part. But once you’ve developed your product, the next step is convincing buyers to carry it. Unfortunately there are tons of barriers to entry if you’re the new kid on the block. Not only do you have the challenge of identifying who the buyer is, but then you need to convince them to take on your product.

Create a product line, not a product

Retailers both big and small don’t like to take risks, and they typically aren’t huge fans of taking on a new supplier. Not only do they run the risk that the product won’t sell, but adding another supplier means more POs to open, more checks to write, more cartons to open, etc. They’re much happier when their existing suppliers come up with something new.

• Convince them you’re not a one-hit wonder. Retailers will typically change out their offerings at least twice a year, so don’t bank on your initial idea to last forever. You constantly need to be improving your product and adding new ones. Can you launch with at least 3 products? Do you have a lot of product futures in your back pocket?
• Show them some successes. Sometimes it’s good to test market your product. Can you find a few local retailers to carry your product. If successful, you can let other retailers know the huge success the product has had in your market. If you can get some media to generate some buzz, then you’re in much better shape.  
• Demonstrate you are reliable. Retailers don’t want to teach you how to do business in their industry. Make sure you have all the appropriate paperwork (order forms, T&C (terms & conditions), etc.) that are consistent with industry standards. If you don’t have the ordering process down, they may doubt your ability to deliver product.
• Allow returns. In many industries, you can sell your product on a non-returnable basis (at least to the mom-and-pop shops, major retailers typically don't allow for this). One way to get your foot in the door, is to let them return product that hasn't been moving off the shelves (on the first order). If you believe in the product, maybe they will, too.

Beware of the Big Guy

I can’t tell you how many people I’ve spoken to over the years who’ve told me about their new book / kit that’s going to sell like gangbusters at Borders and they’re going to be rich. I too had that fantasy for many years, but I now highly caution my clients about creating a distribution strategy based on major retailers. It took us nearly 5 years to finally get our product into Borders, and when we finally got in, we barely ended up breaking even thanks to their shelving fees and returns, etc. (typically they'll order far more than they expect to sell as it makes their displays look more interesting). Fortunately during the years that waited for that "big deal," we had forged strong relationships with the smaller gift / gourmet / book market and that the Borders deal didn’t really impact our sales. I’ve heard similar stories of people dealing with Target, Macy’s, etc. Until you have a HUGE line where you can take over a section of a major retailer, your best bet is to focus on the smaller stores and not get too hung up on big deals.

Next week, nuts and bolts on how to get into the stores...

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