Top 5 Things You Should Never Sell to a Retail Buyer

There is nothing quite like it for a retail product vendor!  That moment you walk into the tiny room filled mostly with a table and too many chairs.  You’re a bit early, as the last thing you want to be is late for your big meeting with the retailer who is going to put your product on the map.  You lay out your presentations, go through some last minute prep in your mind and look at your watch about 50 times.  Once your meeting time has come and the buyer’s arrival is eminent, the last thing to go through your mind is, “don’t screw this up!”

How much control do you really have in a Big Box buyer meeting?  Can that meeting really make or break your product’s chances?  What about your product?  Surely the buyer is going to see how amazing it is and no matter what you say or don’t say the product’s merits will shine through.  Right?  The true answer here is that YOU are the only one who has any control in a Big Box buyer meeting and YES that meeting can make or break your product’s chances. 

I know!  The buyer is the one who makes the ultimate decision so how can you have all the control?  What the buyer learns about you, your company and your products comes from only one person, YOU!  What you say, teach, demonstrate and offer matters and can make the difference between getting a commitment to go to the next step, or getting a “follow up with me in a few months.” 

After participating in over 100 buyer pitch meetings in multiple countries, I have some definite do’s and don’ts that I find critical to my clients’ success. 

Today we will focus on 5 things you never want to sell to a buyer in a pitch meeting:

1. Never sell yourself – Unless you are a $20 million dollar per movie celebrity sell your company or product instead.  Retailers want to do business with companies, not a single person; so present to them your company and product, not you or what “you” have done.  Companies are far more stable than people and better for retailers to partner with.  If you invented your product by all means discuss that during your demonstration of the product, but don’t make the pitch about you.
2. Never sell your future marketing spend – Instead sell what you are doing right now with regard to marketing.  Retailers cannot force you to make good on the millions you said you would spend if they buy your product and for that reason they don’t base many decisions on what you say you will do and more on what you have done or are currently doing.
3. Never sell your product’s sales potential – Instead sell what your product is currently trending right now.  Buyers have no shortage of products that have potential, but what they are really looking for are products that are showing potential based on current sales history.  If you have a limited history that is ok, simply speak to what your product is doing, not what it might do in the future.
4. Never sell your product’s future look – Instead, if possible, have a production-ready product and packaging to show.  If a production-ready product is not possible, at the very least have a professional rendering of your product and packaging.
5. Never sell your friends’ opinions of the product – Instead, be ready to present real consumer feedback and testimonials.  If you don’t have this, you need to get it.  Your product is not viable until it has independent, consumer validation.

At its core, a retail buyer meeting is really just a conversation between people with a common goal.  That goal is to provide that retailer’s customer with the best products at the best prices.  Don’t freak yourself out, breathe and:

1. Come prepared
2. Know your market
3. Know your product
4. Know your competition
5. Know the retailer
6. Anticipate their questions
7. Don’t waste their time

Don’t worry, you will do great!!

We would like to hear from you.  Tell us about your experiences in the buyer meeting trenches.

Why “You” Should Always be the First Person to Sell Your Product!

Selling products online today is a given.  In fact, I would go so far as to say it is a prerequisite for launching or selling any product in today’s market.  If your product is not online in some way, shape or form, your company is simply not in the game.

Of the many different ways to get started in ecommerce the one we place 1^st in our clients strategy is getting their own site up and running and beginning the process of interacting face to face with their customers.  It is very common for clients to want to go big right out of the gate.  After all, they have put so much time, money, energy, sweat, tears and more into the making of their product, moving slow and methodical doesn’t always sound sexy as they are more than ready to hit the big time.  No matter how quickly they want to get rolling our recommendation is always not to skip this key step.

Below are the 4 reasons we suggest getting your own site up and running first:

1. Face time with your customers:  The fastest way to learn the maximum pros and cons of your product is to sell it yourself and have no one between your company and the customer.  Understanding your product inside and out before you take it to mass is critical to your companies overall success. 
2. Establish price:  Establishing your product's pricing strategy is key to your long-term strategy.  Although many factors go into pricing your product, typically your company’s website will set the price that all other retailers will look to when establishing their price.  (click here, if you need help establishing your product's pricing).
3. Product and company information:  Your website will act as the main go to place for both wholesalers and consumers wanting to know more about your product and company.
4. Work out the kinks:  Before you take your product to the main stage in mass retail or on Amazon you must first work out all the kinks in a more personal setting.  Selling one or two units per day on your own site will allow you to move through your initial buy of inventory and then make any necessary alterations to the product before placing your second order.  You certainly don’t want to sell 40,000 products on Amazon only to find there is a fundamental issue with your item.

Case study:  We have a client who sells a dental product.  Prior to taking this product to mass retail it was sold on it’s own website and Doctor to patient in the dentist office.  Although we had huge interest from Bed Bath and Beyond, Costco and HSN the owners noticed a flaw in the floss that was being used.  This flaw caused the floss to break quickly and was causing some customer issues.  Because they had started small these issues were researched and resolved resulting in a design change.  The product now being sold in Costco and on HSN is better as a result of the identification of this issue.  Had they bypassed the first steps this issue would have been caught long after 100’s of units had already been sold jeopardizing future relationships with these retailers and consumers, not to mention virtually killing their "Customer Lifetime Value". 

How To Get Your Products into Big Box Retail: A Spreecast Event!

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What do Costco Buyers Want? The 3 Key Must Haves of a Successful Costco Product!

Is your product too big, too small, too short or too tall?  Is it too expensive, too cheap, too old or too new?   What exactly are Costco buyers looking for in the next big product?

If there was one exact formula that answered this question, one that would guarantee success, you can bet I would package and sell it all day long.  If we could simply say, “do these things and you will get in” you can rest assured I would be shouting it from the rooftops.  The real answer, the honest answer is that there is no exact formula, no magic bullet that will guarantee your immediate success when it comes to one of the worlds biggest and best run retailers.  Every day 1000s of products are rejected while only a select few make it past the front door and over the years I have noticed that those select few have a couple things in common.

Below are, what I believe to be, 3 key aspects that can help any products chances of success at Costco.  If all three of these aspects exist in one product, they have a much better chance of gaining the interest of buyers and a possible test.

1. Flexibility – With just fewer than 4000 skus in any one Costco (compared to over 45,000, in some of it’s competitors) the company does not have the ability to service extremely segmented niche markets.  Could every member walking through the doors of a Costco purchase your product?  Not that every member would, but could they?  Before you answer yes, consider this example.  If the product were an Electric Food Composter that could compost kitchen food scraps in just a couple hours, this would be interesting to Costco, as every family in Costco will have food scraps.  Not that all families would buy this product, but they all could, as food scraps is the common thread.  Contrast this with a Beer Pong Table.  Let’s forget for a moment that Costco would probably not sell a game that promotes heavy drinking and instead look at the very segmented population this would appeal to.  Because this item would primarily appeal to college students it would not generate enough revenue to pay for the space it takes up.
2. Product Value – Product value can be a deceiving factor when vendors are bringing products to Costco or any club store.  As value to the member is the driving force behind the success of Costco, vendors often believe that offering a better deal on their product is just what Costco is after, however they would be only partially correct.  Costco does want to offer a value to the millions of members who pay an annual fee to shop there, however value is only partially shown in price.  If not price, then what you ask?  The other half of the value proposition is comparison.  Costco wants it’s members to have the pleasant shopping experience of buying a product at Costco that they have seen at a different retailer for more.  Let me give you an example:  While in the market for a new printer I had narrowed my search to a specific HP Photo ink jet unit.  This particular printer sold at Office Depot for $179.99, which I thought was a good deal and almost purchased it on the spot.  Later that week I came across the exact same printer at Costco for $149 that also included a set of full size ink cartridges.  I was delighted and thus had no issue renewing my membership that year as the savings on that one purchase more that covered my membership.  Now, contrast that experience with the following hypothetical scenario.  I am in the market for the same printer and come across a printer at Costco I am not familiar with.  The price seems good, but I have nothing concrete to compare it to.  The value proposition to the member is there, however it is much less tangible and does not create the same emotional response as knowing I received a great value. 
3. Uniqueness –In order to get placement in Costco and be part of an exclusive 4000 sku assortment your product must have a uniqueness that can be quantified.  In today’s competitive market   it is not enough to say your product is cool or different, you must be able to speak to why it is different and how it’s differences make it attractive.  Remember, Costco doesn’t have a hard time finding products to sell, so if you are going to go after them you had better be loaded with why they should consider your product, why the category is trending and what puts your product at the top of it’s category today.

The right product at the right time with the right preparation can have a shot at getting into Costco or any other large retailer irrespective of how big or small the vendor is.  The above is simply my opinion on ways to improve your odds of success. 

For more information, tips or to contact me, visit my website at www.tlbconsulting.com.

Happy Selling.

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.

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. 

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.