As a young product brand trying to make it big in the retail space, you get a lot of advice. Some advice may be good while others may be harmful for your product or for your company. In this short blog piece, I want to bust the common myths when selling to retailers.
After 10+ years as a retail consultant and talking to more product brands than I can count, these are 3 most common myths that I have heard along the way:
- Myth # 1 – You have to be a large name brand to do business with a retailer
- Myth # 2 – Retailers will beat me up on price so I will not make any money
- Myth # 3 – Retailers don’t pay on time and will make me wait many months for payment
You don’t have to be a large name brand like Sony or Whirlpool to do business with a retailer. At Retailbound, we have helped several young brands to be successful with retailers of all shapes and sizes. Here are 4 reasons why:
- Retail buyers are always on the lookout for that new breakout product. Look at brands like Fitbit, Nest or Ring as 3 great examples. They were not big brands when they first entered the retail space.
- Retail buyers like working with smaller vendors. It takes less time to get things accomplished with smaller or young vendors as they have less layers of management and are usually more hungry than their larger competitors.
- Retail buyers like product exclusives to separate themselves from the competition.
- Many large retailers are encouraged by “the community” to use minority-owned and/or woman-owned suppliers.
Retail buyers are tough negotiators. If there was an official retail buyer’s training manual, the first word that buyers will learn to say is “No”. Retail buyers are put in place to help the retailer drive sales but more importantly, make money. Here are 3 reasons why most retail buyers will not beat you up on price (generally speaking) so you won’t make any money:
- If the particular item is not a commodity and is not identical to a current supplier, then price would not be the main issue.
- Retail buyers know that lowest cost supplier may not be the best service provider or has the best quality products. There were times when I was a young in-experienced retail buyer I wish I did not chose the lowest price supplier as the outcome was not as I expected.
- Other than price, there are other ways to deal with the retail buyer. From expanding the store count size to tweaking the back-end program, there are several options in negotiation other than using the “price card”.
Finally, the myth that retailers do not pay on time and make you wait a very long time for payment is untrue. Granted, there are a small handful of retailers out there who are notoriously late. I am a big believer of Karma. Those retailers who abuse the payment process with their vendor community end up not getting the best deals or the best products. There are a couple of reasons why this myth is not true:
- Many retailers do actually pay on time. Most retailers payment terms vary between net 30 to net 90, with net 60 being the average for large retailers. If you can’t wait for a retailer to pay you in 60 days, offer an early payment discount such as 2%30,n60 meaning that if the retailer pays your invoice in 30 days or less, they get an additional 2% discount off the invoice.
- If vendors follow the retailer’s procedures for payment, they will get paid on time.
- More and more vendors are using EDI to transmit payment to their vendors. No more waiting for “the check is in the mail”.
I hope this short blog post helps clear some of the common myths when selling to retailers. If you need help with scaling your business in retail, please reach out to me directly at firstname.lastname@example.org.