Crowdfunding platforms have afforded many entrepreneurs a cost-effective way of funding, gathering early market feedback, and creating buzz around their innovative products.
Inevitably this funding and momentum quickly fades post-campaign, and it becomes time to look for ways of continuing momentum, sales, funds, and ultimately growing the business.
This often leads brands to leverage customers and marketing levers of channel partners to grow faster without expending as many resources. These channels can be online, offline, catalogers, specialty stores, TV, or even b2b customers such as education or hospitality.
Mistake 1: Underestimating the Work and Time
Ideally the hardest part of creating a product would be, well, creating it.
Selling is the fun and easy part, right? You’ll list it on Amazon with high-resolution images, assign a distributor or two, find some sales agents, and you’re a millionaire.
If it were that easy, everyone would be successful. Most startups underestimate just how much (continuous) work goes into succeeding at retail.
Because we work on the retail side of things at Retailbound, it’s common for us to see startups who’ve signed deals with big-box retailers (online or offline) only to realize that the finances, time, and experience required eclipses what they anticipated.
Earning an initial PO (purchase order) from a retailer is tough work; however, more often than not it’s what happens after the PO that causes problems for these startups. Common issues we see include:
- Fulfilling the order correctly, on time, and communicating if delays exist.
- Not actively participating in your retailer’s or distributor’s marketing programs in a way that drives meaningful traffic and sales (or underestimating costs).
- The brand’s omni-channel approach quickly leads to difficulty in controlling your MAP (minimum advertised price) and cross-promotional efforts leading to channel conflicts.
We hear CEOs and VPs acknowledge these common challenges all the time only to find that 6 months later they’re just another statistic – another startup that confused “knowing” with “doing”. And in retail, the workload and environment can change quickly.
Mistake 2: Fulfill Your Backers First & Work Out Issues First
The reputation and image of your brand is very fragile in the early days. It doesn’t take many negative reviews to mudslide your chances at scaling into the multi-million dollar organization you could be.
If your product has bugs or issues that cause customers to get upset, fix them. It’s worth delaying a launch to avoid negative online reviews.
If you haven’t fulfilled your backers yet, don’t start selling elsewhere. It’s not worth the negative reviews which will inevitably make it much harder to convince customers or future retail partners to believe in what you’re selling.
What exactly do I mean? Here’s some articles citing examples:
Mistake 3: Know What You Don’t Know
Operating a consumer brand in retail (online or offline) means dealing with a lot of moving pieces and people. We try to simplify it as best we can – pricing, promotions, placement, etc – but the truth is that retail is a very dynamic place to do business.
Vendor paperwork, point-of-sale requirements, margins & fees, returns, competitors, logistics & inventory, marketing expenses and channel KPIs, and the list goes on.
Perhaps more important is understanding the various roles that certain partners take care of and which ones they don’t. This way finding the right help to take your brand to retail doesn’t feel such a big leap of faith.
For example, sales agents and distributors can be very useful. But many mention that they “cover marketing”… but what exactly does that mean?
Are they providing suggestions and advice? Are they developing marketing campaigns for you specifically? Online or offline? How much time are they actually spending on your brand vs others they carry?
Educating yourself on the process from factory to end-consumer – even just a high level understanding – will greatly improve your ability to find the right partners.
All of our startups are comprised of brilliant entrepreneurs. It’s not a matter of intelligence. It’s a combination of experience, available time to commit, and industry relationships.
Launching A Product Into Retail?
We’ve worked with hundreds of startups from the pre-order stage to big box, brick-and-mortar stores. If you’re having specific challenges or questions growing your brand’s sales at retail, talk with Benjamin Ertl, our Director of Business Development – firstname.lastname@example.org