A frequent question we hear from consumer product startups, is “Is my product right for retail?” If you are currently considering this question, here are a few factors to consider that may help you reach the right conclusion.
First and foremost, you should think about the product itself and the target market that it’s intended to reach. Is the product something that would attract customers in a store, catalog, or TV shopping setting? For example, digital or highly commoditized products are not typically good retail store items. Innovative products, or products that expand an existing category (price, features, service) or even define a completely new category are typically ideal retail contenders. Also, does the target market have access to retailers who carry products like yours? It won’t make sense to sell your product in a suburban based retailer if most of your target market is rural or lives in the city.
Second, you should consider the availability of your product. Are there already established retail outlets in your area that would be interested in carrying it? If so, you’ll need to factor in the costs associated with stocking and promotion. Retail requires marketing and investment, having positive cash flow is required to support several months of ‘running-room’. Additionally, what kind of return on investment could you expect from selling through those retailers? Do you have enough margin, what is your anticipated shipping, warehousing, and distribution costs? This can help you determine price point, forecast inventory, and sell through. By considering these questions, you can gain a better understanding of whether your product is right for retail.
Thirdly, think about the potential market size. If you’re introducing a new product to an existing market, how large do you estimate the potential customer base to be? Is your product a niche product that will only be sought out by a highly targeted audience, or limited to only to a certain segment (men, women, kids, sports, pets, etc.)? Will you be selling only in the US, or Globally, and how will you reach them to make them aware of your product? Having a good estimate of the demand for your product will help you make an informed decision about whether or not the cost to reach them once your product is in store makes sense.
Finally, consider the marketing strategy you’ll use to promote your product in a retail setting. Often, selling “to” buyers can be the easier part of selling to retailers. The harder part being “selling-through”. As a team of ex-retail chain buyers, we’ve seen many “one-and-done” companies. Brands who get there first purchase order and then end up buying back their inventory within 60 days because their product isn’t selling. In-store demonstrations, special offers, and promotions are all popular strategies used by retailers to increase visibility and sales of their products, but it is up to you to take advantage of them. When considering if you are a good fit for retail, think about the various marketing tactics you will need to deploy to ensure product sell through, and if they’d be worth the investment.
Lastly, remember that figuring out if your product is right for retail is just the beginning. Determining which retail channels (stores, catalog, TV, reward, B2B) and which retailers within those channels (big box, specialty, online) is the right fit (i.e. margin, discount, support, reach) can be the more difficult part. Often referred to as retail alignment, outlining your go-to-market retail strategy ahead of time can significantly enhance your chance for long term retail success.
By considering these and other factors, you will be better able to make an informed decision on whether or not your product is right for retail. At the end of the day, however, only you can decide what’s best for your business. But by researching these issues thoroughly, you’ll be in a better position to make the right call.
Interested in getting your product in front of major retailers but lack the time or experience? Contact Robert Bruza, our Director of Business Development to get more information. Robert can be reached by email at [email protected] or by filling out our contact form.
