Working with big retail distributors has helped my company take its product growth to the next level, but forging these types of relationships doesn’t come without risk.
I’ve heard numerous horror stories about how large retailers end up putting startups out of business when entrepreneurs fail to conduct in-depth analyses of costs and sales before forming such relationships. Done right, however, one successful partnership with a chain store will inevitably lead to more down the road.
There’s no question working with a big chain will help grow your business. Yes, more customers are exposed to your product, but securing both valuable online and storefront shelf space also provides the opportunity to use chain store sales and distribution data when pitching to investors.
Selling a product to a big retailer is very different from selling it to a small company. It’s not something you can just dive into. You need to do your homework, and establish your company as successful with existing sales. You also need to make sure you have the bandwidth and resources to support the rapid growth that comes with big-box partnerships.
Once you determine your product is ready for mass production, follow these tips to get to woo the right buyers:
1. Attend trade shows.
Retail store buyers attend industry-specific trade shows to meet potential new vendors. Displaying your products at these shows will provide valuable initial feedback and great opportunities to network with retailers and other vendors.
2. Start small.
Start with small (and perhaps local) retail chains before attempting to tackle larger institutions. This allows you to simultaneously release and fine-tune your product with a relatively lower budget. Staying small and local also raises your chances of meeting chain owners and forging personal relationships with them. With the owner on your side, you gain priceless insight and advice straight from the source.
3. Work with metrics.
Numbers are everything in retail, and buyers will undoubtedly quiz you on metrics such as units sold per week, number of returns, profit margins and sales compared to competition. Know data for your company, your competitors and your target market like the back of your hand and be prepared to use it to your advantage.
4. Communicate correctly.
Retailers typically consider buying new products only once or twice a year. When you know they’re open for business, the way you communicate with them can make all the difference. I have successfully scheduled many meetings and agreements through this simple approach: Send a short, to-the-point email to the buyer to introduce yourself. Include a link to a website that concisely displays all of the relevant information he or she may need. At the end of the email, simply request a time to meet and further discuss your product.
5. Pitch properly.
Once you earn an in-person pitch meeting, you’ll likely have less than 30 minutes to impress the buyer. To make the most of this time create a PowerPoint with slides that are clear to read, have no more than five bullet points each and present data that shows why your product will sell. Slides should also cover your company’s background, its accomplishments, its product history, its proposed distribution plan and any press coverage it has received.
Don’t panic or feel dejected if it takes months to schedule a first meeting (and countless follow-ups) to drill everything down. Partnering with a big retailer is a big deal that neither side takes lightly.