The average retailer is focused on their bottom line, and when it comes to suppliers, retailers will seek to maximize their profit margin and minimize workload and costs.
As Tim Potter, a small business marketing expert based out of London, says, “A retailer is a bit like having a salesman who demands the highest bonuses, the fanciest car and doesn’t want to work too hard for it.”
But as the old adage goes, “Everything is negotiable.” As a vendor, you want to make sure that your relationship with your retailer is both positive and balanced. This means developing a detailed communication and expectation strategy from the beginning (see our blog post “How to Maintain a Positive Supplier Relationship” for more information on this). During this process, there are four key areas the supplier can ensure they’re getting the most from their retail partner:
1. Knowledgeable sales staff
One of the best ways to ensure sell thru is making sure the sales staff knows how the product works, what its best uses are, and ultimately would use the products themselves. One of the ways other industries ensure their staff have a solid knowledge base is through qualifications. For example, the haulage industry wants to keep their staff’s fmcsa driver qualification file packet on file and up to date to make sure they know all that is needed.
Keeping up to date helps in retail by ensuring customers always get the best image possible. A few ways to create this positive product image are
- Supplying a training package – literature, videos, samples, etc.
- Training the staff yourself, including demonstrations
- Allow the staff to test out the products
- Give a discount for store employees to encourage them to buy the product
2. Return strategy
There should be a predetermined agreement on handling returns before you sign a contract. You’ll want to determine what qualifies for a return (ie if the product is malfunctioning versus if a customer simply does not want the product anymore), who should handle the return process, and what you and the retailer are liable for during the return process.
3. Marketing details
“Make sure that you get final sign off on all the marketing material (catalogue pages, web content, staff training) and point of sale (POS) about your product from the retailer,” says Potter. Some things to look out for are including the top unique selling aspects of the product, and minimize the technical mumbo jumbo. Remember that your goal is to increase sell thru, because if the retailer can’t sell the product, they won’t renew their contract.
4. Setting price points
If you’re a small firm, you might be tempted to set a lower price than you can afford in order to get your product in with big retailers. Don’t. Tom Whitney, a product and marketing manager at Hotelscence Ltd, says, “A major sale will put pressure on your business to meet the extra volumes. If margins are tight, you could find yourself losing money once you’ve factored in the extra investment you need to fulfil orders.” His advice? Know your value and the value of your product – do your research and remember that many customers are looking to support local and smaller businesses.
For more information on selling your product to retailers, check out Part I of our webinar series, “How to Sell Your Product to Retailers” happening on May 7 at 9 am CST. You can also check out our blog where you’ll find loads of tips for both retailers and vendors!