Thursday, November 19, 2009

Installment #4: 5 common mistakes companies make when selling their products to Costco!

Installment #4 “Thinking you should take your product to Costco first”

I am old enough to remember shopping at Costco or even Price Club back at the beginning. The value available was tremendous, as is true today; however the brands carried were not as recognizable. Back then we had to take Costco’s word they were as good as or better than what we were used to. This is not true in today’s Costco as top brands are begging to get into one of the world’s top retailers. The days are far gone when brands like Tumi, Sony, Panasonic and Calvin Klein would turn up their noses at the thought of selling to a club store. Today, not only are they selling Costco, but Costco is a large part of their overall business. Costco’s business model has shifted from selling items at a value to selling top brands at a value. It is exactly this brand name value statement which is the cornerstone of Costco’s business model and something they protect at all cost.

How is the above relevant to you and your pursuit to sell your product to Costco? Today Costco is looking for products with current distribution in mainstream retail. It is very rare today for Costco to be first to bring products to market in any category. Costco maintains their value statement by selling products or variations of products for less which are currently in other retailers. It is hard for Costco to show a value on a product that is not sold anywhere but Costco.
So the question shifts from how to sell your products to Costco to, how to gain distribution on your product in preparation for selling it to Costco. TLB Consulting specializes in creating a strategy for your product with the end result being placement in Costco. When taking your product to Costco you want to be able to answer the below questions:

1. Where is this product currently sold?
2. How long has it been on the market?
3. What is the average retail price point of this product?
4. Can your pricing structure and distribution model support a 20% discounted retail.
5. What is the sell through of your current retailers?

Each circumstance is different as is each product which is precisely why preparation must be a key factor in your overall retail plan. There is no substitute for firsthand knowledge when creating your strategy.

TLB Consulting can help you identify your company’s short and long terms goals, increase your brand awareness and open up multiple lines of distribution.
Let us build a strategy for you.

Feel free to email me directly at Tim@tlbconsulting.com
Or visit my website at http://www.tlbconsulting.com/

Happy selling

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#5: Hoping Costco will drop their current product for your product.