You have a great idea for a new product. You’re convinced it’s got wings. You dream big. You just know it will absolutely fly off the shelf. There’s just one question, how do you get it on the shelf in a store?
I launched a functional beverage, Sleepyhead, designed to help with occasional sleeplessness. 2 years later, we created a profitable distribution network stretching across multiple states. I started it without any contacts or knowledge about the industry whatsoever.
I lived the answer to this question. It goes like this.
Step 1: Product Development
Never, ever, assume you know what consumers want. Do your homework. Create surveys (free via surveymonkey.com) and send it to everyone you know. Learn what people want from a product like yours. Packaging? Pricing? Use frequency? Apprehensions? Marketing? You’d be amazed the insight you can discover.
Step 2: Self-Distribution
Now that you have product, time pick up the phone and call Wal-Mart, right? Hold on Sparky. You don’t have a story. Retailers (especially big ones) don’t like being Guinea pigs. They won’t pick up a product unless it’s proven.
Time to roll up your sleeves and start with small, local, independent stores. The sales process resembles this:
Visit a target store (preferable when they’re not busy)
Ask for the manager
Offer free case of product
Guide them about pricing and margins
Offering a no-risk proposition makes it much easier to get in. Once on the shelf, follow up weekly to monitor movement rates (how quickly it sells) very closely. This rate will be your greatest asset when approaching bigger retailers. It will also give you an indication regarding which marketing efforts are generating the most sales.
Remember, it’s all about how quickly your product sells relative to other products shelved nearby.
WARNING: Be consistent with your pricing to retailers. Distributors frown on special deals you cut. It makes their job harder with the transition.
Step 3: Distributors
With rare exception, self-distribution is not scalable. That big retailer you’ve always dreamed of doesn’t want to work with a little company like you. You need a distributor.
Distributors make deliveries, stock shelves and invoice retailers. Distributors are great order takers, but they’re lousy salesmen. DO NOT count on them to introduce your product to new accounts. Just because a distributor has 1,000 accounts doesn’t mean you’ll get into any of them.
You have to motivate the sales force to push your product. It’s often effective to work alongside their sales reps to open new accounts. Be proactive about asking for meetings with retailers.
Step 4: Brokers
If distributors are lousy salesmen and big name retailers don’t want to work small companies, how are you supposed to get into that big account? Use a middleman.
Brokers are manufacturer’s representatives who have relationships with large retailers. Large retailers like working with brokers because if anything goes awry, they have someone to hold accountable.
They’re notoriously allusive. Brokers are interested in hand-picking the best, most likely products to survive. After all, their precious relationship is at stake.
Many manufacturers find brokers at trade shows and other contacts in the industry. Brokers can help navigate through the red tape associated with large accounts.
All-in, here’s what you can expect to give up to each stage of the process:
Retailer: 30-50%
Distributor: 20-35%
Broker: 6-10%
Perhaps the most valuable lesson is this; nobody cares about your product as much as you do. So selling never ends. Ultimately, you are responsible to make sure consumers, retailers, distributors and brokers are all happily buying our product.
Believe in your product and selling will be quite fun.