5 Secrets To Getting In To Retail Stores
Core Principles To Get In, STAY In And Get Sales
When you see products like Dyson Vacuums, the George Foreman Grill, Ray Ban sunglasses or Jay-Z’s Rocawear clothing line suddenly in stores everywhere, it can make the process look easy and like these products were an “overnight success”.
Here’s the reality:
Dyson: 5127 prototype designs between 1979 and 1984. 1983 sales = 500 units. 2015 sales = $2.2 Billion. A 36 year “overnight” success.
Ray-Ban’s have been around since the 50’s, became popular in the 70’s when Robert de Niro and Peter Fonda wore them and again in the 80’s with Tom Cruise’s famous Risky Business performance. A 20+ year “overnight” success.
George Foreman Grill – Appeared at numerous trade shows in the early 90’s with poor reception. In 1994, after being introduced to George Foreman by Salton, the grill’s infomercial run started. After 6+ months of running, testing and adjusting the commercial, the George Foreman Grill became an “overnight success”.
Jay Z: 1995 – selling CD’s out of his car. 1999 – the now platinum recording artist founded the clothing line Rocawear. 2006 – sold stake for $204 million. An 11+ year “overnight” success.
There are many more examples like these. But the point is that there is no such thing as an overnight success. The same is true for having your product in thousands of stores flying off the shelves.
It doesn’t have to take years, but it will take time.
Rome was not built in a day.
Here are 5 key secrets to getting your product on to store shelves, and more importantly, moving it off of those shelves quickly, through high volume sales.
Retail Secret #1: Packaging
Make sure your product is ready for retail with proper packaging. I’m continually amazed at how many inventors and entrepreneurs forget this point.
Your packaging should include complete, easy to understand instructions for the use of your product with pictures and diagrams.
The packaging should be eye-catching, to lure customers toward it on the shelf. Retailers will look at your packaging and will expect it to be very attractive and sell the product.
Surveying different packaging styles, wording and labeling layouts can help hone in on packaging that makes your product move and minimizes returns.
Retail Secret #2: Inventory
Stores want to be sure you’ll have enough inventory to keep their customers happy if your product starts selling. To a retailer, nothing is worse than having empty shelf space in the store. And believe me, they will give your shelf space to someone else rather than have it empty.
You need to make sure you have enough inventory on hand and ready to ship to as many of their stores that want to carry your product.
For example, if you’re targeting a big box retailer like Target or Home Goods, you should plan to be able to supply several dozen of your product (or gross – depending on your product size and price point) to 500 – 1000 stores. Some stores will even order hundreds of a product if it’s hot. Do the calculation yourself to see how much you’ll need to have on hand.
Retail Secret #3: Margins
Most retailers will want to make 50% of the retail price. This means they will double the price of what you sell it to them for. So if your product retails for $19.95, expect the retailer to pay you about $10.
To remain profitable yourself, your product should have a landed cost – meaning the cost to manufacture and ship your product to your warehouse of around 33 – 40% of wholesale which would be $3 – $4 in this scenario. Ideally, your product should cost about 1/5 of the retail selling price or less.
You should also do the math on your fulfillment and warehousing costs as well as marketing costs (more on that later).
And last but not least, check pricing for comparable products in the marketplace. If your product costs too much more than the competition, retailers may stay away.
P.S. Don’t be so vain as to think your product has no competition. Everyone’s product has some type of competition. It doesn’t mean your product isn’t innovative, groundbreaking or wonderful. But you need to be realistic about what people expect to pay for a product that solves the same problems yours does and price accordingly.
P.P.S. Even if your product costs a little more, you’re going to have to justify that to the retailer and the public with your marketing (more on that later too).
Retail Secret #4: Marketing
Yep. That dirty word.
Don’t think for a minute that retailers will simply put your product on their shelves because “it’s so awesome”. They won’t.
They want to make sure your product is going to move. And they know that your marketing is what will make this happen. Do not expect the store to promote your product. They won’t. Not for a brand new product at least.
If you’ve seen in-store, television or other promotions for a product, it’s likely because:
- The product already has a huge demand from customers, (achieved through MARKETING); or,
- The product manufacturer, (that’s you), is paying for it.
It is true that retailers will sometimes share promotional costs for a product or contribute to helping sell the product in some way. But this only happens AFTER the product has achieved a critical mass in consumer attention and demand. That critical mass of attention is ALWAYS achieved through some type of marketing.
The retailer WILL want to know your marketing plan. They’ll want to know what you’re doing currently and how you plan to support the product with marketing once it’s in their store.
The good news is that having an attractive marketing plan developed and underway BEFORE approaching the store can help you negotiate a better deal with the retailer. It can even make them come to you.
Retail Secret #5: Capitalization
Yep. That other dirty word.
You’re gonna need some cash bud.
You will need capital for multiple reasons:
Θ The store will likely not pay you for at least 90 days. Some stores do pay in 30 days, while others pay net-180. Yep, 6 months. So you’ll need capital to keep your business running (and eat) while you wait to get paid.
Factoring is an option here, but you’ll be giving up a significant chunk of your future revenue so it’s not recommended as a standard practice. In the short term however, until the product is selling and you’re getting paid consistently, it can be a life saver.
Factoring can chew up your profit quickly and put you in the red, thus making you dependent on it for cash flow. So do the math before entering into any factoring arrangement. And if possible, don’t factor all your invoices. Just use it to get enough cash to tide you over.
You can also seek out an investor or even a bank loan or line-of-credit which will probably be more affordable and easier to get once you have a purchase order in hand.
Θ You must keep the product stocked constantly. This is true whether the store has paid you or not. So if you’re product sells out in 30 days (or a week), you’ve got to restock those shelves.
Stores will send you orders and you’ve got to fill them and fill them FAST.
You need the cash on hand to keep the inventory flowing and on those shelves. Doing this right can be the difference between keeping that retailer as an account or losing them. Remember Secret #2? NOTHING is worse for a retailer than an empty shelf.
Θ You have to keep the marketing going. If the marketing suddenly drops off because you only budgeted for a 30 day campaign, and the product sales drop-off as a result, the store may not re-order. Worse yet, you’ll be stuck with unsold inventory and you may owe the lender.
We recommend planning a 6 month marketing campaign to coincide with the retail store placement. This assumes that marketing has been going on prior and product demand is already built up. If not, and it’s brand new, then a 12 month plan is in order. 6 months to get the demand going and 6 months in store.
The reality is that marketing needs to always be happening. It’s not until your product is a household name that you can ease off of marketing. And even then, you should pick it up again from time to time to keep the wheels greased.
So as you can see, there is a bit more to getting a product on the shelf than our Rolodex. For although we have access to many major retailers across all categories and can make that phone call to get the “yes”, there’s more to it than just picking up the phone.
Hopefully this article has helped you get a handle on at least some of the necessary prep to getting into retail stores if you didn’t know these things already. And, if you did know some, all or most of them, hopefully it’s confirmed and reinforced that knowledge or at least served as a nice refresher.
If you’d like help getting into retail and developing the plan to make it work, feel free to drop us a line.