Despite the mad rush in retail to sell everything online there is can still be place in your business plan for major brick-and-mortar retailers. While selling to them isn’t always easy, they can be great brand partners and an excellent source of revenue if the relationship is handled properly. Avi Levine from Star Funding provides Purchase Order Funding to small and medium sized brands that are expanding into wholesale markets. Having coached a number of consumer product companies looking to enter the majors, Avi knows the ins and outs of wholesaling a brand.
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Making it Big: Major Retailers vs. Online
Making it to the shelves major retailers was once a sign that you made it as a brand. It meant that these big, prestigious stores had faith in what you were doing and were ready to take a chance on you. Your product would sit alongside already established brands. It was the primary way to scale your business. While the rise of e-commerce has certainly taken some focus off of business through major retailers, let’s take a look at what it means to sell to major retailers in today’s world.
Is it for you? A Checklist
Selling to major retailers isn’t something every brand needs to do. While it may seem like a great way to scale and get cash in the door, it isn’t always the best answer. Before going down that road there are a number of things to consider.
1. Are these potential buyers “on brand”? When considering which retailers to partner with, you should be thinking about how they will sell your brand. How do your products compare to the others on the shelves, and how will the retailer position your product? If a retailer isn’t going to add value to your brand, stay away.
2. Can your manufacturer manage the quantity? Before searching for that first large retail purchase order, make sure your current supplier can handle the quantity. The last thing you want is to accept an order and not be able to deliver or deliver less-than-perfect quality for the sake of high volume.
See here for a list of Maker’s Row manufacturers that work with bigger brands to produce large quantities.
3. Can you handle post-sale customer support? Increased sales also means increased feedback and need to support your customers. Lack of appropriate customer service can upset customers and increase purchase returns. If you prepare, you can avoid such outcomes. If you keep a small support staff, consider investing in customer support software or outsourcing your support services.
4. Are you willing to take a loss? Sometimes selling to major retailers can flop. Many retailers’ vendor agreements bind you to unnecessary chargebacks, returns, marketing and co-op fees, and lost control of promotional pricing. In some cases, these unexpected costs can even lose you money on the transaction. Before committing to production, make sure your margins support a 10-15% cushion for miscellaneous deductions.
OK, now that’s all out of the way. Even though the checklist is scary, it’s a suite of honest questions you should ask yourself. Once you’ve done that, the process of making your way into major retailers is still very exciting!
Hitting the Shelves
The process of selling to major retailers can vary from store to store. For the most part, it can be broken down into 4 separate stages: 1. Research, 2. Sales, 3. Vendor Setup, and 4. Delivery.  It can take months to actually get a product onto the shelves, so don’t be too concerned if the process feels like it takes forever.
1. Research appropriate buyers: Finding a buyer can require a bit of creativity, or a good friend with some great connections. Some organizations employ hundreds of buyers, so pinpointing the right one is crucial. You can research on LinkedIn, call the buying office directly, or just submit a vendor inquiry online. Test different methods and see what bites.
2. Close sales: Once you locate the appropriate buyer, it’s your time to shine. Have your elevator pitch on point and samples ready to ship out. Be prepared to speak about other products the store currently carries, your lead times, and your company metrics. You are much more likely to get an order if you demonstrate knowledge of the competitive landscape and how your business fits into it.
3. Set up as a vendor: This stage can get tricky. Many large retailers have an extensive vendor onboarding process. First, you will have to sign a number of lengthy agreements. Then, you will be required to show proof of insurance (satisfactory to the retailer) as well as documentation of product tests and inspections showing that your products meet certain criteria. Proper planning early on pays off here – it’s easier than going back to change your products at this stage.
4. Fill purchase orders: Now the fun part! Every retailer has a different process for filling purchase orders. Pay close attention to the required packaging, labeling, and shipping directions. If your package shows up late or mislabeled there is a good chance the retailer will send it right back to you or draw a monetary deduction.
Sounds easy right? Sure it is, if everything goes smoothly. It’s important to remember that some retailers only give you one chance to do a professional job. Make sure to pick the brain of other brands with experience shipping to major retailers, if you have access to those experts. When building your supply chain, you can also seek advice from your vendors, accountants, bank, service providers, and others who may have experience interacting with major retailers.
Build Your Product
Before you start considering various retail methods, create samples and early runs of your product! Maker’s Row is home to over 10,000 factories that can help you build out your idea.
