If developing and executing your retail growth strategy seems as simple as doing your taxes while skydiving… you’re not alone. How many new products do you see from VCs, crowdfunding, or inventors each year? After a few months, how many of those do you never hear about again?
Today’s post shows generic guidelines on how to build your product-based business in retail. You might be asking, “Why just generic?” Well….every business and product is unique, and what is appropriate for you might drive another’s business into the ground. So on that cheerful note, let’s begin!
Sections of this post:
Build gradual sales
Consistency & reliability
Scale strategically
Vendor partner
Preparation: Measure Twice & Cut Once
“He who fails to prepare is preparing to fail” and retail is no exception. Here are some topics that need to be addressed in your strategy:
Sales channel strategy (who do I sell to first, and why?)
Hiring sales reps (good vs bad, what’s a fair commission, where should I start looking, risks involved, etc)
Pricing structure (distributor vs retailer margins, hidden fees, margins for marketing costs, profit margin, competitor comparisons)
Logistics strategy (where are my customers located, reliability, support features, shipping costs, warehousing costs, etc)
Sales/marketing materials (do your reps have everything they need to present to buyers)
Marketing strategy (how will you help drive sales for your retail & distributor channels)
These are just some of the main topics to help you start seeing the bigger picture and give you a sense of just how much hands-on work retail requires. There are plenty of resources out there, but remember that you know your business better than anyone else. Take generic advice with a grain of salt, or try working with a professional towards your specific requirements.
This preparation stage sets your foundation for the future. Any missteps or mistakes in this stage will only compound later on usually resulting in more wasted time or money.
For example, trying to hire sales reps – even good ones – without providing appropriate sales/marketing materials and information to present to buyers could cost you months of wasted time.
Establish Selective Retail Channels
Even with an incredibly disruptive product, you’ll find retail to be a competitive place to do business. Everyone is looking to get shelf space and acquire the attention of consumers. Picking the right resellers should be covered in the preparation stage; however, it’s not enough to simply get your products into the store or on their online platform.
The reason you’re choosing selective reseller channels isn’t just to test the supply chain, control the brand, and control the price (all of which are important). You need to demonstrate strong success to be able to approach large retail accounts later on. Success breeds success.
Because large retailers will be extremely reluctant to place your product in physical stores without a strong record of success and consumer demand in existing reseller channels. Retail growth needs to have a long-term outlook. Many hardware companies or manufacturers assume that if you have an innovative product, that you can approach any retailer on planet Earth as long as you have a “connection”.
Modern-day retail is almost all based on data, numbers, and percentages. Would you buy $100,000 worth of stock in a brand new company with limited experience in the market? Retail buyers view their shelves like a portfolio.
This leads into the next stage…
Be Consistent & Reliable
Being consistent and reliable should obviously be the goal from the beginning; however, being a consistent vendor with your retail or distributor channels is extremely important to scale effectively later on.
Even with impressive consumer demand and high-performing reseller channels, if you’re a tough vendor to deal with it doesn’t take long for word to spread. How easy is it for your resellers to contact and communicate with you regarding marketing programs, shipments, or customer issues?
Although bottom-line is extremely important, time is also money. If you’re taking up too much of your buyer’s time, it won’t take long before they reconsider your product line with a competitor’s.
In fact, be proactive. How are you making your buyer’s job easier? Because if you can show that you’re saving your retail buyer’s both time and money, you’ll have a lot easier time getting that initial & repeat purchase orders.
Scale Strategically – Get Help
All successful CEO’s, investors, and managers know that achieving results means finding the right people. Just as you had to find the right team to help develop and manufacture your products, you need to find the right help to manage the increasing work load.
After you’ve established some consistent sales with retailers & distributors, it’s time to expand your capabilities to sell, market, and manage your products in retail. It’s also important to continue developing more products to stay competitive and add an incentive for your retailers to keep you as a vendor.
Scaling effectively in retail requires plenty of in-depth review of your current operations looking for strains or weaknesses as well as new opportunities of growth. There’s no right way to scale a business and the more you grow the more specific your challenges will be.
The End Goal – Become a Vendor Partner
So you’re established, you’ve been selling in retail for years, and you’ve built up a quality brand. What’s next? Becoming a vendor partner.
Being a partner still requires you to have hands-on management to drive sales; however, being a partner also comes with nice advantages depending on the channel.
Just like selling to distributors vs retailers, there are pros and cons. But if your business is ready to handle the requirements to be a vendor partner then it will only help you expand and grow as a company.
Benjamin is the Director of Business Development at Retailbound – a retail marketing company that develops and executes retail strategies for consumer goods manufacturers. Not a big fan of retail? Then have Retailbound do it instead. Contact Benjamin – bertl@retailbound.com