How to sell your products to Costco and other big retailers

Software Advice (Content by Michael Koploy ERP Analyst)

2011-08-15T11:43:00.000-07:00

Retail software is a tough subject for many retailers. Their experience with retail technology usually begins and ends with a cash register, QuickBooks, Microsoft Outlook and Office. Trying to decide between systems that offer point of sale (POS), customer relationship management (CRM) and inventory management is bound to give inexperienced searchers a headache.

Here’s a guide to five systems that are affordable (under $2,000 for software), easy to implement for first-time or small retailers and offer the functionality needed to manage an operation that is smaller but looking to grow. You can check out the full guide at; Point of Sale (POS) Systems for Small Business | 5 Affordable Solutions, but here’s a quick overview:

1. http://www.softwareadvice.com/retail/microsoft-rms-profile/">Microsoft Dynamics RMS

This system is flexible enough to work for a wide variety of specialty retailers, from auto parts shops to book stores. Is offered in two different versions, one for single stores and another headquarters version for those that want to manage multiple stores. The system runs on Windows servers and operating systems, so it’s best for retailers that have a reasonable amount of IT resources.

2. http://www.softwareadvice.com/retail/goldtech-retail-manager-profile/">GoldTech Retail Manager

Since it is expandable for anywhere from 1 to 50 stores, it’s a great system for small retailers that are looking to grow in the near future. It’s also a good choice for apparel retailers because of the system’s integrated SKU-database. Offered as both an on-premise or cloud-based system, it’s flexible for retailers with minimal IT resources.

3. http://www.softwareadvice.com/retail/pos-prophet-systems-profile/">POS Prophet Systems

Good for both single-stores and medium-sized retailers. The system can be purchased on both up-front and monthly installment plans, depending on the retailer’s needs. Also has a module for quick food service. The system integrates with both Peachtree and Quickbooks, so transitioning retailers can feel comfortable adjusting from their traditional accounting and inventory software. This system must be deployed on-premise on Windows servers.

4. http://www.softwareadvice.com/retail/retail-star-profile/">Retail STAR

Retail STAR from Cam Commerce can be purchased on one of three purchasing plans: up-front, monthly installments, or yearly subscription. Retailers adopting Retail STAR receive consulting services and data conversion to help users adjust to the system. The software supports multiple data entry methods, including single-key and touchscreen. This system must be deployed on-site on Windows hardware.

5. http://www.softwareadvice.com/retail/comcash-profile/">Comcash POS

A popular solution for retailers since 1996, Comcash POS is used by more than 5,000 retailers now. It’s ideal for small retailers, as the system is compatible with touchscreen software. It can be deployed on-premise or hosted through the software vendor, and can be integrated with QuickBooks.

____________________________
Michael Koploy
ERP Analyst
Software Advice

(512) 364-0129
michael@softwareadvice.com

By the way, we're hiring...

How long will it take to place my product into a retail store!

2011-07-10T02:50:00.000-07:00

Under the frequently asked questions category "How long will it take" is by far the most prolific question asked.

This is not surprising as vendors are anxious to see their products on the shelves of big retail and finally be rewarded for the long hours it takes to conceive, create, produce and market a retail item. No one in the final stages of bringing a product to market is without significant battle scars, however in the foxholes of product development there are no pessimists.

There is no exact science when it comes to determining how long it will take to sell product into retail, however items generally fall into one of two categories. 1. Products that have a clear category and dedicated shelf space already in a retailer. An example of this could be flash drives. Perhaps your company has developed a new type of flash drive that will blow the market wide open. In a case like this we would only have to convince the buyer to purchase our new and innovative product not to create brand new space on the shelf as they are already selling like items. 2. Products that are brand new to the market and have never been sold before. Items like this create double the work, not only do you have to sell the benefits of the new item you have to help the buyer understand where they would merchandise this new product and why taking a risk on it will pay off.

Although the newer items to market will generally take more time and work you can expect the process to take 3-18 months or longer. I know this seems like a long time, however unless you are Sony, Campbell's, Johnson & Johnson or like companies the process will be lengthy and the sooner you begin the faster you will see results.

Below I have created a best case scenario to help illuminate the process. For the purpose of this example we are going to say that the buyer loves the product out of the gate, they don't go to China, get sick or go on vacation during the process. This example begins during the preparation phase.

Sample evaluation, pricing strategy and presentation prep - 30 Days
Sending the presentation to the buyer and receiving a response - 30 days
If requested sending samples to the buyer - 15 days.
Review of the samples by the buyer 15 days.
Filling out of vendor paperwork, negotiating the contract, receiving all necessary signatures, being approved and receiving your vendor # -30 days.
QA testing on the product or 3rd party audit on the manufacturing facility - 30-90 days if required
Cutting a PO - 14 days.
Lead time to manufacture the product - 60 days.
Delivery time to the retail warehouse - 15-30 days depending on where it is coming from.
Distribution time to the stores - 15 days.
Time to get paid - 60 days.

Remember the above is best case and even if we take out #6 above we are still looking at 91/2 months to complete the process with one retailer. There could also be the scheduling of a face to face meeting required which will add time.

The idea of the above example is not to discourage, but to encourage. The sooner you start this process the faster you will achieve your goals.

At TLB Consulting we can help you through every step of this process. We can help you maximize your time, effort and results. Let us help you prepare for success.

Visit out website or contact us now at Tim@tlbconsulting.com.

New Webinar Date - March 17th @ 10am PST

2011-03-02T19:13:00.001-08:00

Hey all,

If you have not attended our webinar on how to sell your products and services to Costco there has never been a better time.

We have reduced the price for a limited time to $49.99 and seats are filling up.

Visit www.tlbconsulting.com/webinar-1.html to sign up.

How to successfully sell your products and services to Costco / Webinar

2011-01-13T19:36:00.000-08:00

Folks, this is a quick note to let you know that our next webinar will be on Feb 16 at 10am PST.

Please visit www.tlbconsulting.com/webinar-1.html to sign up and secure your spot in the next live webinar.

The last webinar on 1/12 was a huge success. There was great interaction and terrific questions I think benefited everyone on the call.

Don't miss your opportunity to participate in a live webinar focused on how to make your products and services a success with Costco.

See you online......

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

2010-03-03T09:52:00.000-08:00

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

All to often when thinking about how to get product on the shelves of the best retailers in the country most manufactures think of better pricing, better cost and a better made product. Confident, they march off to their local retailer headquarters armed with these three elements and believing this alone will get them placement and remove their competition.

Before you make this mistake, a mistake made by many who came before you, please remember this: "You must be able to provide more than a great product at a better price to unseat the incumbent vendor."

What could be more important to Costco than better pricing and a better product? Listed below are three main factors that will hold Costco back from making a vendor switch even in the face of better cost.

1. Shipping and Logistics: Your Company’s ability to ship to all of Costco’s depots on time and with consistency is of great importance to Costco. Their floor plans are ever changing and if your product is late it could lose placement. They will also look at your ability to flow product to your own warehouse for them to pull from. Costco will not do transfers from location to location, therefore it is important for them to be able to flow goods to certain locations in smaller quantities from your warehouse.

2. Defect rate: New members and membership retention are the two engines that keep Costco moving and they will protect these like angry pirates on a treasure ship. A key factor in Costco’s image is the quality and durability of their products. Although your company will be paying for returns and defects Costco will not maintain an item with a large defect rate.

3. Depth of product line: Costco is interested in the vendors they partner with doing well. To this end they will work with current vendors on a multitude of products if they are available. This reduces their need to set up and train new vendors, obtain hard to get signatures and take chances on untested companies.

Costco is always looking for great products at tremendous value. If your company has such an item and you wish to replace a product currently in Costco please take into account and nail down the above items first. For a complete strategy on creating a partnership with Costco please visit my website TLB Consulting or contact me directly.

Here's to Conecting your product with the right people.

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

2009-11-19T10:14:00.000-08:00

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.

Installment #3 – Thinking you can leave logistics to the end

2009-09-29T15:27:00.000-07:00

As a company Costco has made it their business to perfect the movement of merchandise. If you have ever been fortunate enough to be in a warehouse prior to opening you know exactly what I mean. It is like a freeway in there, forklifts going 20 MPH, pallet jacks rumbling by and scaffolding towering above you. They even have a designated area for you to stand so you do not get hit. Costco works on the cross dock system meaning everything that hits their backroom is staged to go out the next morning, there is nothing permanently stored in the backroom. The end result to all of this movement is increased value to their member. The faster and more cost effective they can be at bringing products to the selling floor the more money they save and pass on to the member.

How does Costco manage this process and continue to move it forward? They make it a requirement to become a vendor. There is significant cost related to logistics (see routing guide) and should be evaluated prior to giving Costco final pricing.

Below are some of the logistical items related to doing business with Costco:

EDI – Electronic Data Interchange is required by Costco warehouse in order to launch a full campaign. If you are not yet EDI compatible and starting from scratch this can be quite expensive. If you need help getting set up on EDI feel free to email me, TLB Consulting can offer you very competitive pricing on EDI set up.
Delivered pricing – Costco will usually require delivered pricing to their Depot. This means whatever price you quote them should include shipping to all of their facilities. Costco has Depots all over the country and you will need to cost average shipping to all of them in order to know how much to build into the price.
Display cost – Will your product have a display? If so Costco usually wants this for free. Build this into your cost to ensure you are covered.
Packaging – Remember there are no sales people pushing your product at Costco. Your packaging and copy is there to be your silent sales person, don’t skimp on this area it can make or break you.
Pallets – Costco usually requires a special pallet as product will probably be sold on the pallet you send your product on. CHEP pallets are most common at Costco and can be costly.

I am not trying to scare you away from Costco by giving you this information, just the opposite. Costco can be the best retail partner you have ever had, however if you are unprepared and provide them with a cost that does not take into account the cost of doing business with Costco you could end up making far less than anticipated.

Don’t hesitate to visit my website or contact me directly to learn how TLB Consulting can help you successfully navigate this process.

Press "Follow" at the top of this page to recieve updates when new articles are posted.

Here is to your sales.

Installment 4 - Thinking you should take your product to Costco first.

Installment #2: 5 common mistakes companies can make when selling their products to Costco! Installment #2.

2009-06-28T10:12:00.000-07:00

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

It is no secret at this time of year the wholesale and retail business is crazy. One unique characteristic of Costco is they will accept product all year round as long as it fits into their business model while most business retailers are already finished with their merchandising plan for the rest of this year and are already working on 2010.

Costco has been successful over the years by sticking to what works and not compromising their formula. It would be a mistake to think they are going to alter their long standing and time tested business model for any one item.

When deciding whether your product is right for Costco, it is imperative to put your product into Costco’s model to see if it will work and if you can live with the result. Preparation is the key here! If you do not know how to prepare for a meeting with Costco and how to see if your product will work in their model, then feel free to contact me via my website.

Outlined below are a couple of main features to their business model that will get you started. Brand – Costco is generally looking for items with an established brand image although there are some limited exceptions to this rule. If your product is new to the market then you may want to gain some distribution and brand awareness prior to taking it to Costco. TLB Consulting can help you create an overall marketing strategy for your product prior to taking it to Costco.
Value – Costco must be the lowest price or offer the most value in the market, no exceptions. Costco’s members pay a premium to shop at Costco therefore Costco will not bend on offering value. As a rule they generally like to be a minimum 20% below any advertised price. It will be important to look at your current distribution and evaluate how selling to Costco may disrupt your current sales.
Packaging – Costco has made their packaging and pallet displays an integral part of their overall value statement. The faster Costco can take a pallet display from the truck to the sales floor the more value they are able to offer their members by keeping their overhead low. Be prepared to understand and adhere to their packaging requirements. Note: Costco moves product around the sales floor daily and the more mobile your product, then the easier they will be able move it without damaging the display. Click here for Costco’s routing guide.

If companies are lucky, they get one chance to sell their products to Costco. Doesn’t it make more sense to be prepared and know their business? You will go a lot faster and farther if you are in the same boat rowing with Costco and not against them.

Happy selling.

Stay tuned for installment #3 – Thinking you can figure out the logistics later.

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

2009-05-21T20:19:00.000-07:00

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

For more information on me or my company visit my website!

How to sell your products to Costco, part 3

2009-05-06T13:48:00.000-07:00

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.

How to sell your products to Costco, Part 2

2009-04-29T16:51:00.000-07:00

Last week we left off just as I was about to get into the nuts and bolts of the critical steps required before ever stepping foot into a meeting with a Costco Buyer.

These steps are in order, but feel free to change them around a bit to suit your work schedule and time lines.

Product selection: Determine if a single product or multiple products will be offered. At times, in order to create the value needed to meet Costco's standards, you may have to bundle products together. Bundling products can also help with your distribution as you have created a unique item number.
Pricing: Research distribution network to determine lowest sell prices in the market on the products you would like to offer Costco. Ensure you have a handle on all prices and products being offered for sale. If you don't you can be sure Costco will. They will do their research which means you need to as well. Create a possible pricing structure taking into account prices currently being offered.
Distribution affect: Determine how selling product to Costco at reduced pricing or added value will affect your current distribution network. Distributors and dealers can sometimes become difficult if they believe you are undercutting them by offering the same products to Costco for less.
Packaging: Determine what type of packaging you will be offering to Costco. Costco is very specific on their packaging and palletizing requirements. Price out packaging and graphics.
Logistics: Take a look at your current logistics capacity to determine if you are able to service a large client like Costco. Knowing your capacity will help you calculate what you potential sell through might be. Analyze Costco's routing guide to ensure you are including all required aspects when looking at logistics. Click here for routing guide.
Other Costs: Review these additional costs: 1. Customer service support - Do you have the phone support required to handle the influx of customers or will you have to hire a company to handle this aspect? 2. EDI costs (Electronic Data Interchange) - Price out EDI to include in your financials. 3. Promotional costs - Will you want to participate in any promotions? The various promotions at Costco are where the sales really explode and should be planned for accordingly. 4. Shipping - Costco will require a delivered cost to their depots. You must cost average this out and include in your cost structure. 5. Returns and defects - How will you manage the return and defect portion. This can get expensive and should be carefully evaluated.

Stay tuned for the final post on this subject. As always email me with any and all questions.

How to sell your products to Costco

2009-04-24T09:28:00.000-07:00

The Crucial decisions that need to be made before doing business with Costco.

Making the decision to do business with one of the countries most successful retailers is not one of those quick brainstorm ideas hatched over coffee and a bagel at your local Starbucks. I am sure you have lain awake at night dreaming of your product prominently displayed at Costco with thousands of members clamoring around to grab a hold of the last item before they are all gone. No doubt you have rehearsed your response to the frantic phone call from Costco begging for more product, offering anything to get just one more shipment. Cool and unbothered you pause before letting them know you will see what you can do, while at the same time, asking for better terms.

Fortunately this has happened and could happen to you. You may never find yourself invited over to Jim Sinegal's house for holiday dinner, but that doesn't mean you will never be successful selling your products to Costco if you are prepared.

Thousand of companies just like yours have made it into Costco and sold their products successfully for years. What makes the difference between companies that are in and the one's that are out? The successful companies that have made it into Costco and stayed there had the following things in common.

They were prepared: They did their homework and had a plan. They knew what they were getting themselves into and had already made the necessary adjustments for success.
They hired a company or individual who had expertise in selling Costco to fill in the gaps in their plan and advise them during the process. Click here to find out how TLB Consulting can help your company.
They understood Costco's business model and that Costco would not bend their rules even for them.
They were in the right place, at the right time with the right item.

Will your product be the next big item at Costco? Only time and preparation will tell. To get you started I have outlined the first 11 steps which are critical to preparing for a meeting with Costco.

The first 6 of these steps will be featured on my next blog. Stay tuned.

Blog overview

2009-04-17T06:29:00.000-07:00

Hello to all and thank you for visiting my Blog.

I thought it appropriate to speak to the purpose of this Blog and what you might expect when visiting. This blog will be used as an extension of my website http://www.tlbconsulting.com/ . The sole purpose of this blog and the website is to connect companies and their products with Costco. My hope is to provide you with a constant stream of information that you will be able to use while deciding whether doing business with Costco is right for your company.

I am a corporate retail sales strategist specializing in Costco. My company, TLB Consulting can help you understand and negotiate every aspect of doing business with this successful retailer from pre-initial contact to seeing your product for sale at Costco.

It is important to remember and should be noted that you do not have to be a large company to do business with Costco, you simply need to have the right tools. Connecting with my company can give you those tools. Many make the mistake of feeling they don't have the finances or logistical support to mount a campaign with Costco. What you might not know is many successful Costco vendors started very small. Selling your products on Costco.com or in a Regional area is a great way to break in and show Costco how your product will sell.

I am sure if you are considering partnering with Costco you have questions. At TLB Consulting we have the answers.

Stay tuned for more information on doing business with Costco.

If you would like to contact me to discuss how your company might benefit from selling products to Costco email me at Tim@tlbconsulting.com.