Thursday, May 21, 2009

Installment #1: 5 common mistakes companies can make when selling their products to Costco!

Installment #1 - Item Value


Having the opportunity to sell your products to Costco is an exciting proposition and could be a huge game changer for your business.


With over 400 warehouses in the US
alone which cater to an average 30,000 members per week it would not take long for the right item to make a HUGE impact on your bottom line.


However; before you go making down payments on foreign property, there are a few common misconceptions to be avoided which make a major difference between who goes "On Vacation" and who has a "Staycation".
Misconception #1:

  • Believing Costco's #1 goal is making money off your item: If you are in sales, the phrase "you are going to make SO much money off this item" has escaped your mouth more than once. We have all been there at one time or another. You want so much to convey how viable of a product you are offering, you may get over zealous with the aforementioned phrase. Although there may be retail companies out there that are very interested in how much money they will make on any item, Costco is not necessarily one of them . Of course, everyone is in the game to make money, but even more important to Costco than money is "Member Value". Offering their members Significant Value is the mantra that marches through every buyers head! Memorize this! Not violating the member's trust with items that do not offer value is the foundation Costco is built on and it is what keeps their membership renewal rate Over 85%! When items have value, they sell! Members spread the word and they sell even more! Eventually the word will reach a non-Costco customer who will then buy a membership to take advantage of the value, and so on and so on. Are you getting this? Value drives sales! When speaking to Costco, speak about the Value your product will offer, either in $'s off or More in the box. Buyers always appreciate when you know their business model!
Happy Selling!




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#2 - Believing Costco will change their business model for your item

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Wednesday, May 6, 2009

How to sell your products to Costco, part 3

Hi all you Costco loving product sellers.

This will be the final post on the subject:

"The 11 crucial steps that should be followed before meeting with a Costco buyer."
If you recall we left off at step 6 which was "Other Costs", I hope these steps have been helpful let's finish it off starting with step 7.
  • Potential sell through quantities: : Based on what divisions of Costco you are going after create some scenarios that show potential quantity sales. Costco has 3 divisions in the US and an international division. 1. Costco warehouse, 2. Costco.com, 3. Costco Road Show, 4. Costco Canada (Canada is Costco's second largest market with over 70 locations), 5. Costco.com Canada, 6. Costco UK, 7. Costco Mexico, 8. Costco Japan, 9. Costco Taiwan, 10. Costco Korea.
  • PNL: Create an item PNL using all of the preceding information in the other Blog posts to determine viability of program. You never want to do this after the deal has been made. Entering into a program and finding out, after you are having success, that you are loosing money will be devastating.
  • Costco: Decide which division of Costco you should contact first. Make initial contact with Costco buyer and gauge interest. You will probably need help here as getting through to Costco buyers can be very difficult if not impossible. If enough interest exists set an initial meeting at Costco HQ.
  • Pre-meeting: Make a final decision on at least two, no more than three packaging options. Nail down your options as you will only have approximately 30 minutes to pitch your idea to Costco and you want to have time left over to discuss next steps. Make a final decision on cost pricing to include in presentation. Create your presentation and confirm your appt. one week prior to the meeting.
  • Meeting: In your presentation be thorough, but not over the top. Keep your pitch smart and to the point. Be prepared for Costco to have some questions not just about your product, but about you and your company as well. Know your competition and your market. They will test you. Lastly make sure you nail down next steps and follow up before you leave the meeting.

Helping you partner with Costco is my specialty. I can personally help you with all the 11 crucial steps and even help you get through to the buyer. For more information please visit my website.