Wednesday, March 26, 2014

3 Key Factors to Consider when Launching a Foreign Product in the USA!

It is no secret that the US is the largest consumer market in the world gobbling up almost 29% of the total market.  To put that in perspective, total household spending in the US is a whopping 3.4 times more than households of the next closest country.

It is this mass consumption of goods and services that beckons to manufactures the all over the world to bring their products to the US.  Thoughts of doubling or even tripling their current sales efforts run rampant and expectations skyrocket.

Although the right product sold in the US, in the right way can surely be a company game changer, there are several factors that should be considered before beginning your US product invasion.


  1. Market Experience - The first thing any manufacture should do when looking to expand into the US is find someone who has hands on, “real world” product sales experience.  I cannot stress this enough!  Every market is different, from packaging and product copy, to websites and social media, to buyers and logistics, the strategies you are accustomed to may not work on your new battlefield and your company will need guidance before, during and after your launch to be successful.
  2. Commit to the Long Term - If you are considering launching your product in the US, it is important to understand the process will be a marathon, not a sprint.  From manpower to capital, you must prepare to “slug” it out for at least 24 months before any significant, recurring sales will begin to flow.  Can it happen sooner than 24 months?  Of course!  However, strategically your company will be better positioned if your expectation is 24 months and the process goes a bit faster.
  3. Open a US Based Company - Once you have a qualified consultant and you have created a long term strategy, it will be time to open a US registered company.  Although this is not required to do business with US based retailers, the process of set up, payment, credit card processing and logistics will be vastly more efficient if you do.  I understand this takes some commitment and a huge leap of faith, however, it is very difficult to “kind-of” do business in the US.  The commitment is either there or it is not.

The US consumer market is the Holy Grail of product sales and as such is not tamed easily.  Much experience, patience and determination is needed to master this market.  However, once mastered, it will take you for the ride of your life!

As a retail product consultant and Costco expert, I am often asked about bringing products to the US.  Over the years, I have helped multiple companies prepare, launch and manage their US retail product business.  Below are some of the most common questions I receive during my free consultations.  I hope you find them helpful.


  1. Will US retailers buy full containers? - The easiest answer is yes, but not at the beginning.  All US retailers will want to test products to ensure they will sell prior to making a large commitment.  Once a successful test is complete, most large US retailers will be open to buying full containers FOB if there is a significant price advantage for doing so.  Please note:  Even if the retailer is buying full containers from overseas, you may still be required to maintain some domestic inventory for emergencies and quicker fulfillment.
  2. How many samples will I need to shop my product?  Depending on the product, I would recommend at least 50-100 production quality samples when introducing your product to the market.  These samples should not be “hand made” (if at all possible) and you must be prepared that in some cases you will not get the samples back, even if the retailers chooses not to carry your product.
  3. Will retailers prepay for product?  No!  Once your product is established and selling well, you may be able to request a retailer provide an LC on large shipments, however; unless your product is the new Cabbage Patch Doll or Power Ranger toy, you must be able to finance product and terms of up to 90 days to be competitive. 
  4. Does my product need a UPC or EAN?  Yes.  All products sold through mainstream retail must either have an EAN or UPC.
  5. Does my company need to have a US website?  The answer to this question is more of an opinion on my part.  Yes, I believe in order for your product to be competitive and have a real chance, it must be represented and sold on a website designed and written for the US consumer.
  6. Will I have to pay duty on my product when importing it to the US?  This is a product specific question as products are treated differently depending on what category the fall into.  I recommend contacting a US customs broker to help you with all importing product questions and fees.  Western Overseas Corporation out of Long Beach is a good one.  www.westernoverseas.com
  7. Is Product Liability Insurance required?  Yes.  All major retailers require you to carry PLI (Product Liability Insurance) with the specific retailer named in the policy.  A minimum of $2M per occurrence and $4M aggregate is generally required.

Wednesday, March 5, 2014

What do Trade Shows and SEO have in common?

A great trade show booth is like a great website.  No matter how much time, money and effort you put into building them, without promotion, no one will come!

Many first time show attendees believe that if they build a great booth or have a great product, buyers will magically come.  The problem with this strategy is that most major retail buyers have already pre-scheduled their time and are running a very tight schedule.  These buyers are running from one appointment to another and are not simply browsing down each aisle to see if something catches their eye.  Having a great booth with no list is like having a great website and not doing any SEO.  Building your list begins well before the first day of the show and is crucial to your shows success.

I am sure you are asking, “What the heck is My List?”  Your list should consist of the people you have reached out to prior to the show and let them know who you are, where your booth is and why you would like them to come by.  Remember, this is a numbers game, the more people you reach out to and introduce to your company; the more buyers will make time in their schedule to come visit you.

You might be saying "isn't the entire reason for having a booth at a show to capitalize on the buyers and media that are walking the show?"  Perhaps!  However, do you really want to spend upwards of $5,000-$6,000 for the mere possibility someone will wonder into your booth?  If so call me, I have some property in Florida I want you to look at.  In all seriousness preplanning is the key to trade show success.  Below are 3 hints to get your started on your list.


  1. Gather your key contacts - Who is it you really want to see at the show?  Gather your contact list together and make it as thorough as possible.  Names, addresses, phone numbers and emails.
  2. Create an invite - Put together a simple, emailable postcard inviting your key contacts to come visit your booth.  This postcard should be professionally done as it will serve as your first impression.  It should be short and to the point, no one wants to read through a long paragraph to find out what you could have told them in one line.  "Come see what is new in American Made Cookware"!  Call for an appointment or come by booth 1234.  This simple sentence tells your buyer a couple of key facts about your company.  1.  You sell cookware, 2.  You have something new,  3.  Your product is American Made and 4.  You are busy enough to be setting appointments.
  3. Don't wait to the last minute - Do your best to get on buyers schedules early as they will fill up quickly.  Start sending out your information 3-4 weeks prior to the show. 

Sunday, March 2, 2014

4 Program Costs you should always factor into your product pricing!

Program costs can be considered any additional cost a retailer is going to ask you to be responsible for paying.  These costs should be built into your cost structure prior to quoting.  Not building in these costs prior to quoting a retailer is a a recipe for disaster.  Your company must be able to incur these costs and still produce a healthy margin for your overall long term retail strategy to work.  

Some common program costs that must be considered are:

  1. Returns - A retailer might ask for a % off invoice to cover any returns.  This % can range from 2%+ depending on the product and as an allowance can be agreed upon up front.  An allowance allows a retailer to deduct the same amount from all invoices irrespective of the actual returns percentage.  At times this may be a win for the retailer as the returns could come in lower than the agreed upon amount or at times this can be a win for the vendor as at times the returns can come in higher than the agreed upon amount.  If an allowance is not possible the retailer will generally ask the vendor to be responsible for all returns.  If this is the case you must accrue an amount on your own to ensure you are not left short when the retailer takes this deduction.
  2. Freight - At times retailers will ask for a “Delivered Cost”.  Delivered cost means that you will have to pay to deliver the product to the retailer therefor you must factor this cost into your pricing structure.  
  3. MDF - MDF stands for Marketing Development Fund.  This would be money your company would accrue for future promotional opportunities or a retailer will require that you contribute to a fund.  For example, when working with Amazon they will ask for 12% coop or MDF.
  4. Mark Downs - This is a fund you would accrue for use in liquidating slow moving inventory from a retailer.  Many times retailers will not mention this, but will come to you later asking for money to help move stagnate product.  It is best to accrue for this on your own so you have money when the time comes.  For example; some club stores do not transfer merchandise from warehouse to warehouse which means you might get an order from warehouse A, while getting a markdown request from warehouse B only 5 miles away.  So at the same time your product is growing nicely in one warehouse you are marking it down and clearing it out of another.

It is important to note that some retailers will negotiate program costs with you upfront and will deduct the negotiated percentage direct from the invoice when paying you.  Other retailers will not negotiate this upfront, but will still make deductions from your invoice when paying.  It is always the vendors responsibility to ensure the proper program costs are factored into pricing prior to quoting as it is very hard to go back to a retailer and increase their costs simply because this was missed the first time.

TLB Consulting has created several easy to use pricing templates for all types of retail.  These templates are completely fomulated and offer recommended program cost percentages for different retailer types.  Simply plug in your unique numbers and let the template price your product for you.  Click here for more information on the pricing templates.