From the Entrepreneur’s Perspective: How do I find a branding/PR/media firm to market my product line?

Friday March 20thTips for Retail Success Category

Marketing is a learned science, just like any other discipline. And it’s comprised of many components (social media, direct mail, public relations, advertising, telemarketing, and the list goes on). Each sub category requires a learned set of skills. Just like you would not hire an intellectual patent attorney to defend a bankruptcy, you would not hire a publicist to drive your social media campaign. And just like you would not presume that you are a skilled attorney (unless you are one), you are also likely not a marketing guru (unless you went to school and studied marketing and/or have a career in this area).

Marketing is an essential part of your business. It does NOT come last. If no one knows about your product, it won’t sell. You’ve probably heard this said: you can have the best thing since sliced bread, but if no one knows about it, it won’t sell.

There is no right marketing formula for everyone. Budget, competition, market size, channel, product lifecycle, and other variables drive how much you will spend and where you will spend it.

While most big advertising agencies have various specialists to round out your marketing team, they are also likely to charge you an arm and a leg. As entrepreneurs, we don’t have big fat budgets. We maximize every dollar and it better count.

It’s, therefore, important that you do the following:

  1. Put together a marketing plan. You have a business plan. It should include a marketing section. If it does not, create one. Like your business plan, your marketing plan can grow and evolve with your business – and budget. Define what area(s) you will invest in (and why). The “why” drives where you spend your $. And, once you know which area(s) you are prepared to invest in, then you can seek out the agency/consultant that fits this specific area (see below). It’s important to have the marketing plan well defined so that you are focusing your dollars and not chasing after “shiny objects” (those opportunities that come along but that are not currently in alignment with your business plan/strategy).
  2. Set your marketing budget. This will largely dictate how you will move forward. i.e. if you have a small budget, you are not going to invest in highway billboards. In other words, your budget will drive what marketing areas you can even afford. You might be doing everything yourself (DIY). In which case, you will be investing in free virtual classes and reading online sources and books. Starting small is fine. Grow organically. Regardless of your budget, flesh out that marketing budget and make it as highly targeted as you can. And, then hire the agency/consultant that can handle those specific functions that you or your own team are not adept in (see below).

Now, where do you find these marketing gurus if you don’t have the expertise or bandwidth to handle various marketing components yourself? Wait for Vanessa to post as she has resources for you. Note: Psi Bands handles our own marketing and PR.

FROM THE BUYER’S PERSPECTIVE: WHAT TO CONSIDER WHEN RETAILERS INCREASE/DECREASE INVENTORY QUANTITIES AFTER PLACING AN ORDER

Wednesday March 18thTips for Retail Success Category

By Vanessa Ting

Some retailers give you their purchase orders (POs) with plenty of lead time for you to turn around and place your orders with factories. For those of you who manufacture overseas AND sell to national retailers, you probably do not have the luxury of waiting for retailer POs before placing your production orders. In fact, you probably have to hedge and place production orders in advance.

Scary, right? I agree. You’re assuming risk when you do the above. But at the same time, there is risk either way you manage your inventory flow. Your decision as the business owner is to decide which risk you’re willing to take. There is no such thing as “no risk” when selling to retailers. Or in business for that matter.

To better understand the risks, read Romy’s blog post on the risks of fluctuating quantity orders

3 thoughts on how to manage the risk of fluctuating quantity orders from retailers:

  1. Safety Stock: Companies really should consider carrying larger levels of inventory on hand (“safety stock”) and decide whether the upside that presents is worth the downside. If it is too big of a financial stretch for you, that may indicate you’re not ready for big retail.
    Note: The aforementioned applies to companies that are on replenishment cycles with retailers and have SKUs that are not unique to one retailer.
  2. Just-in-time manufacturing is great in theory, but is hard to manage unless you produce domestically.
  3. This dynamic is yet another reason why I do not recommend newer product companies sell to national retailers. Many cannot afford or know how to manage the risk.

 

3 Reasons retailers change their quantities forecast:

  1. Store counts can change. More on that below.
  2. Sales forecasts are updated based on new information available (e.g., changing market dynamics, updated sales history, marketing activity, etc.)
  3. Program length changes. By that I mean, if you are given a one-time purchase order that covers 8 week program, but the buyer had to change your program to 12 weeks, that would impact the purchase order size.

 

4 Reasons a retail buyer will reduce or increase store count: To answer this, first it helps to understand how POGs work.

  1. Any retailer using planograms (POGs) usually has many versions of POGs for their different store locations, store sizes and store configurations. The size of these POGs vary. Smaller stores get smaller POGs. So your product may end up on both the smaller and larger POGs – or just the larger POGs.
  2. Some POGs are localized to their region, so not all products will end up in all stores.
  3. Because POGs vary across a retailer’s chain, it opens up space that retail buyers use to test new products. This is the reason that many of you get test shelf space in limited stores.
  4. So why does a buyer change store count? POG assignments change for reasons that usually relate to efficiency, specifically sales efficiency or logistics efficiency. If your sales forecast changed, your POG assignment might change. If the buyer rolled up their financials and see that they can make more money by changing POG assignments, then they will do so and your store count or program length might change.

 

4 Ideas for what to do if your buyer cuts your quantity order:  You’ll need to figure out what to do with all that surplus product.

  1. Build strong relationships with your factories so you can get out of inventory (“cancel”), especially if production is not yet finished.
  2. Keep unpackaged or packaged units on hand for future orders to any retailer.
  3. Take the excess inventory and sell it on deal sites like Zulily or Groupon (Groupon! Talk about deal sites we don’t talk much about anymore.)
  4. Don’t force the excess inventory on to the same retailer that just cut your order. You might end up having to pay markdowns on it or take the inventory back, which ends up costing more than just keeping the inventory in your DCs. Read more about the other downsides of this approach in one of my older blog posts (See Tip #2).

 

4 Ideas for what to do if your buyer increases your order quantities: You’ll need to ramp up production.

  1. Build strong relationships with your factories so you can turn up orders (who doesn’t want to make more money, even if it throws off production line schedules)
  2. Negotiate a replenishment schedule that allows you to deliver a smaller quantity first, then follow up with an expedited (e.g., air-shipped) replenishment order once product is off the line.
  3. Carry safety stock to mitigate the pain of chasing orders. Keep inventory state-side in a distribution center, in your office, in your garage…somewhere close by.
  4. Take inventory that was originally marked for another retailer (one that you have more flexibility with or is less important to you) and divert that inventory to chase this order.

As a good practice, you should always build a “chase or cancel plan”, which is a contingency plan that outlines what you do in either of the above 2 scenarios.  Note that if you are placing production orders before receiving POs from retailers, that’s your risk to assume. The retailer has every right to change their forecasts at any time before they place orders.  But if the retailer changes their quantities after an order is placed (which is not common in my experience), you have every right to go back and negotiate a remedy.

For more tips on retail, make sure to subscribe to this blog PLUS sign up for my Retail Path email newsletter which has tons more resources, tips and education events.

From the Entrepreneur’s Perspective: What to consider when retailers increase/decrease inventory quantities after placing an order

Friday March 13thTips for Retail Success Category

Let’s play out this scenario:

You receive word that your product will be launching at Retailer XYZ. You are told by your buyer that you will be going into 1000 stores. Awesome/congrats.

And, by the way, your PO has not been officially issued. It won’t be issued until approx. 1 month before you must deliver product to retailer’s DCs, but you have to get started on manufacturing otherwise there is no way in heck that you will be able to deliver on time to the retailer (you have to factor in time to get on your manufacture’s schedule, manufacture, import to your DC, and then ship to the retailer’s DCs). Yup, you are operating on a leap of faith. Sucks, huh! That’s how big box/big retail works. There is an upside and downside/risk vs reward. Yes, we may be the “small guy” but if you want to play with the “big guys”, that’s how it goes. This is not about fairness.

Then, sometime later, you are told by your buyer the store count has been changed.

You had planned for the 1000 stores. You ran projections on how many turns per store per week per sku. You may or may not have issued a PO to your manufacturer depending on when you learned of this store count change. You have accounted for the financing needed for the 1000 stores – for the initial fill, back fill and ongoing reorders. You may have even gotten as far as implementing marketing programs in light of this launch.

Scenario 1/Store Count is Decreased

Then, the buyer tells you the store count has changed. It will actually be 500 stores. Well, you have planned for 1000 so your cash flow is likely in a better position because if you were able to finance the 1000 stores you can certainly handle the 500. But, you may have issued a PO to your manufacturer for 1000 stores so now you are heavy on inventory. You can try to sell it to other retailers and/or consumers, including flash sites. If you are stuck with that inventory, then you are going to likely be having a conversation with your buyer. If you have implemented any marketing programs, is that investment fully realized? You may have to shift gears and re-think that marketing program.

Scenario 2/Store Count is Increased.

Then, the buyer tells you the store count has changed. It will actually be 2000 stores. Well, you have planned for 1000 so you may not be in the cash position to finance the full 2000. Is there still time to manufacturer and ship to the retailer on time? Will you have to air freight product to make the deadline (how will this impact your margins)? If you committed to free inventory (like one free unit per store) as part of the initial sell in offer, how much will this impact your margins/can you still afford to proceed as initially negotiated?). Will you be able to invest more into marketing as a result of this increased store count (the increased store count size may or may not necessitate more marketing dollars).

Sometimes more is great. Sometimes less is more.

From the Buyer’s Perspective: Exclusivity – How to Respond When Retailers Ask for It

Monday March 9thTips for Retail Success Category

By Vanessa Ting

Exclusives is a tactic retailers use to gain (and defend) market share from their competitors. It’s a distant-relative of channel management. Both concepts endeavor to minimize sales cannibalization, fuel category growth, and grow market share.

All retail buyers love exclusives – whether it is in the form of exclusive brands, exclusive SKUs, exclusive designs or exclusive packaging. They’ll take exclusives however way they can. They’ll ask for as much as they can get, whether they need that level of exclusivity or not. Regardless, they will always ask for exclusives – because they can. Your job, as the smart vendor, is to determine if it makes good business sense for you to provide exclusives. And to negotiate the terms so that it is mutually beneficial.

Like I always say, everything is negotiable.

When a buyer asks you for exclusivity, do the following:

  1. Consider the factors below
  2. Prioritize these factors based on importance to you
  3. Determine your BATNA (Best Alternative To No Agreement), otherwise known as your bottom line before walking away from the deal. And then,
  4. Define the exclusivity in YOUR terms. Don’t make assumptions on what the retail buyer wants. Decide what your opening offer will be, and begin negotiating. This is a conversation. Not a mandate from the retailer. So take control over defining the exclusivity!

Exclusivity: 6 Factors to Consider

  1. Your opportunity cost: What business will you be giving up as a result of giving this retailer an exclusive? Think about that as you read the rest of this list. I even encourage you to run the numbers on the “lost sales” as a result of an exclusivity.
  2. Product: What level of exclusivity are you willing to give? Are you willing to give the retailer exclusive rights to sell your brand? Or just a certain SKU? How about limiting it to a style (such as a colorway, certain pattern or maybe a specific fragrance or variant)? Or maybe it’s a certain pack-size or piece-count?
  3. Distribution channel: Is it an exclusivity for all of brick and mortar retail? Or is it just for the channel (e.g., Grocery channel exclusivity or independent boutiques exclusivity, etc.) or geography (e.g., region of the US or country, etc.).
  4. Length of time: It can be six months, one year, or two years. Obviously the retailer will ask for as much time as they can get. To determine how much time you’re willing to give, look at your internal operations and timelines. Depending on internal factors, giving a retailer 6 months exclusivity may not be a big deal (although you can act like it’s a big deal). Likely it would take you 6 months just to open up another retail account, so maybe 6 months is not too huge of a sacrifice. Maybe the opportunity cost of one-year, while not ideal, is a manageable sacrifice. Figure out at what point the exclusivity becomes prohibitive to your business and based on those factors, come up with your ideal outcome.
  5. Quid Pro Quo: What will the retailer give you in exchange for this exclusivity? In my opinion, there should be something. Whether it is giving you prime real-estate like on an endcap, advertising/marketing support, or maybe a guarantee they will not issue chargebacks for markdown liability on the exclusive designs (final sale). If this inventory cannot be resold elsewhere, I highly suggest you enforce the “no markdown relief” policy. Or maybe it’s a commitment to keeping you in their POG for a certain amount of time. This is one place you can get creative. Just like the buyer is “aiming high” with their exclusivity request, “aim high” with your quid pro quo request.
  6. Financial Cost To You: Obviously a huge factor is how this exclusive request drives your costs. If you are having to create exclusive packaging in addition to an exclusive product design, the costs will start adding up. But if this is an item you have in your pipeline already and you have plans to roll this product out to other channels in the future, maybe the costs are minimal relative to the upside.

Remember, even though you agree to an exclusivity, that doesn’t preclude you from pitching it to other retailers. As long as those retailers are not selling that exclusive item nor marketing it, you can go as far as setting it up so that it’s ready to ship once the exclusivity is over.

Truthfully, the buyer will take whatever they can get. Any exclusivity is an advantage for the retailer. Letting them claim “exclusive” to shoppers is almost more important than the exclusive itself. After all, if no one knows it is an exclusive, the retailer doesn’t get credit for it in the eyes of the shopper. Remember, the retailer is using exclusives as a way to drive shoppers into their stores and prevent them from shopping at their competitors. And thereby drive category growth and gain (or defend) market share. So knowing this, shape your proposal in a way that meets retailers’ need to claim “exclusivity” as well as the needs of your brand. Win-win.

From the Entrepreneur’s Perspective: Exclusivity – How to Respond When Retailers Ask for It

Monday March 2ndTips for Retail Success Category

Can’t blame a buyer for asking for an exclusive. Whether you give it to them is a different story. Ask yourself the following questions to determine if this is the right opportunity for you.

  1. Is this the only option for landing the deal? Probably not. Explore other options first. When you offer an exclusive, you will need to manage the inventory of that sku(s) for only one retailer. This is not the most efficient use of your time/resources. And it’s a lost opportunity for selling that sku elsewhere.
  2. What objectives are you benefiting from by giving them this exclusivity? Maybe you move forward because the exclusive deal puts you in a better cash flow position, increases your top and/or bottom line margins, helps to reduce costs due to higher volumes, gives you brand or marketing exposure that you would not otherwise receive, and/or builds credibility by aligning yourself with this particular retailer. But, as I mentioned above, could you have negotiated a non-exclusive deal and still accomplish the above?
  3. How custom is this exclusive sku? Is it so custom that the packaging or the product itself makes it unsellable to your other retailers/customers? If the sell-through doesn’t meet the buyer’s expectations (and find out what those are ahead of time), will you be able to re-sell the inventory?
  4. What is the retailer’s commitment to you? Will this be a final sale or guaranteed sale (a guaranteed sale means YOU are responsible for it selling)? If the sales projections are not met, what is the buyer’s expectations of you (are you expected to contribute to mark downs and/or ship product back to you on your dime – not only for what they paid for it per unit but also a handling/shipping fee tacked on)? Find out ahead of time.
  5. Be clear on the terms. What is the time frame for this exclusivity? What channels? National/international?

From the Buyer’s Perspective: Impact of West Coast Port Delays

Sunday February 22ndTips for Retail Success Category

By Vanessa Ting

As of today (Sunday, 2/22) West Coast ports are expected to come back to life. The backlog will reportedly take up to 8 weeks to clear. So the impact to importers and retailers will be felt long after the labor contract dispute ends.

While all my clients who import felt the pinch (more like ‘crush’), some felt it more than others.

The companies that minimized the impact of port closures did so because they could:

  • Divert boats on water to the gulf coast ports (or be ready to pull that lever)
  • Leverage their safety stock in domestic warehouses (one client always keep 6 months of supply on hand)
  • Air ship some inventory as needed
  • Leverage their early (and heavier) orders placed in anticipation of Chinese New Year to fill the unexpected holes due to the port closure.

Why Inventory Management Is A Critical Skill For Working With Large Retailers

Generally speaking, those who manage their inventory well will have suffered less greatly than those who aren’t able to keep safety stock or have built a contingency plan. As a general principle, if you ship to large retailers, you should ALWAYS carry some level of safety stock. You should always have a contingency plan to “chase sales” or deal with the situation where demand outpaces inventory. There will always be some occasion where you have to chase sales. Even without a port closure.

You hear me preach often that there are three primary factors retailers use to evaluate vendors. Vendor execution is one of them. Times like these really expose which vendors are positioned to execute well and which ones are not. Inventory management is a key indicator of strong vendor execution. And while a huge port closure doesn’t happen too often, something unexpected in the supply chain almost always does. So this unusual event should serve as a powerful wake-up call to fine-tune your inventory management and supply chain operations. Or just as importantly, make vendors realize they are NOT ready to sell to big retail yet.

Will Retailers Hold Vendors Responsible For Port Closures?

So what impact did this West Coast port closures cause? We’re still waiting to hear the reported financial impact, but I anticipate it will be grave. I anticipate small retailers and small companies will have been hurt the most, as well as those who ship and sell perishable goods. I hope no business went upside-down financially as a result, but I wouldn’t be surprised.

But the one possible relief is that retailers may not hold vendors accountable for the loss revenues due to short supply. It’s an opinion based on my experience, but in practice, we’ll see how retailers handle it.  I’m no lawyer but your contracts with retailers may have a force majeure clause.

“The force majeure clause in a contract excuses a party from not performing its contractual obligations due to unforeseen events beyond its control. These events include natural disasters such as floods, earthquakes and other “acts of God,” as well as uncontrollable events such as war or terrorist attack. Force majeure clauses are meant to excuse a party provided the failure to perform could not be avoided by the exercise of due diligence and care. However, it does not cover failures resulting from a party’s financial condition or negligence.”  Source:  Yahoo Small Business

It would seem a port closure qualifies as a force majeure event.  Ask your lawyers about this if retailers put pressure on you.

As unreasonable as most retail buyers may seem sometimes, this is one time they may not hold you at fault for inventory shortages or late in-store dates. Some retailers have reportedly sent out letters to vendors saying they still expect on-time deliveries. But when it comes down to it, I will be shocked if any retailers force chargebacks upon vendors for late deliveries or loss days of sales.

What Can Vendors Do Moving Forward?

So what can you learn from this?  Plan your inventory better. Build contingency plans for foreseeable events like Chinese New Years.  Keep abreast of news (subscribe to industry newsletters, join trade organizations, or easier – read the news daily) to anticipate somewhat foreseeable events. While I did say this event likely qualifies as force majeure, the reality is that it was somewhat foreseeable. The news reported that we should all expect a port slowdown because of this simmering labor dispute. I’m not sure anyone expected a closure to actually happen. And I’m not sure there would have been much time to proactively respond to the port slowdown and subsequent closures anyways. But the lesson learned is to plan for the unforeseeable within reason (as much as your cash flow and financial position allows) and proactively communicate with your retail buyer .  Doing so will hopefully help future headaches become more manageable.

From the Entrepreneur’s Perspective: Inventory Management Considerations – West Coast Port Delays

Saturday February 14thTips for Retail Success Category

If you do not provide on-time delivery of your product, you are going to give yourself and the buyer a headache. And, it’s going to cost you and them.

Now, more than ever, if you are importing from Asia, you and your retailers are at risk for significant impact/delays due to the West Coast port dispute. There is no telling when business will return to normal. As such:

  • Get your product on a boat or plane much sooner than you normally would have in order to avoid not having product to sell. Boats are backed up…and you are looking at 3+ weeks in delays.
  • Start manufacturing ahead of schedule to allow for this delay.
  • Consider what impact this will have on you financially (do you have the cash on hand to pay for this inventory that will need to be produced sooner than expected and for it to sit on a boat for weeks on end and/or pay for it to be air freighted at a higher cost?).

The Product-based entrepreneur’s headache when evaluating inventory needs:

We are faced with managing cash flow. We don’t want to manufacture and/or import too much inventory because that costs us in manufacturing fees, shipping, storage, and possible financing. However, we can’t under produce because then we are not selling product. And, clearly we need to be selling product to keep all cylinders running.

We must properly project inventory needs. This is a best-guess game based on familiarity with the past, present, and future landscape of our business, industry, and outside influences.

The past: review prior sales data. What have you done month over month, year over year? How does seasonality impact your sales? Did you have past press hits, place ads, and/or participate in promotions that may have skewed your sales? Did you launch at a new retailer where their initial fill impacted your sales? Did you lose any accounts that need to be accounted for? Keeping “financial notes” (notes that impact your sales positively or negatively) throughout the year is one way to remind yourself of these types of influencing factors when you are reviewing past numbers.

The present: Take into consideration any trends that may influence your sales, positively or negatively. You can stay on top of trends by subscribing to industry newsletters/digests, reading headline news, and reviewing media calendars (often posted on national magazine web sites). How are outside influences, like PORT DELAYS, going to impact your business? For example, if your competitor is unable to get their inventory to their retailers on time due to port delays – and you can, that means more sales for you because there is less on shelf to compete with.

The future: You know that Chinese New Year (CNY) is coming up. It’s the same time every year. During CNY, manufacturers shut down or operate on skeleton crews and exports become much more costly and difficult to coordinate. This is supply/demand at its finest. We importers still need our goods; there are less workers to get it to us. Plan for it so you are issuing POs in November, manufacturing in December and/or January, and shipping in January, thus avoiding unnecessary inventory shortages or costly shipping charges. Also, back to those PORT DELAYS…negotiations may continue for many more months. Plan ahead.

The retailer’s headache:

When shelves sit empty, the retailer is losing money. The buyer is evaluated based on many criteria, including how much revenue he/she contributed to his/her category. You don’t want the buyer popping Advil at your expense. Read Vanessa’s upcoming blog on the retailers’ perspective.

 

 

From the Buyer’s Persepctive: How To Price Products For Wholesale and Retail

Saturday January 17thTips for Retail Success Category

By Vanessa Ting

There is plenty to consider when creating wholesale and retail price points.

Here are the primary considerations using the most simplest, rudimentary explanation. Note: Pricing for profitability can be more complex. But we are keeping things simple since this is a blog.

1) Bottoms-Up Pricing: Start with your COGS and add in all your other expense line items (e.g., promotions, duties, international shipping, insurance, etc.). Then add your internal profit margin (this is a personal decision). What results is your Wholesale Price. From there, add your retailer margin (most common is keystone at 50%, but it varies by distribution channel and product category) and what results is your Retail Price.

Note that large retailers will request ELC or FOB pricing, if your items are imported. ELC=Estimated Landed Cost (Your wholesale cost with shipping to US included) FOB=Freight On Board (Your wholesale cost assuming the retailer would take ownership of your inventory at the international shipping departure point. Larger retailers usually have better shipping pricing because of the volume they import).

As a checks and balance, you’ll want to run the price point above against the next step of “Tops-Down Pricing”

2) Tops-Down Pricing: Look at the brands that would sit beside you on shelf. Look at their claims and benefits. Do they have more “bells and whistles” than your brand? Less? Your market-acceptable price is one that is priced relative to the other brands and where you all fall on the “bells and whistles” spectrum. Remember that most retailers create 3 pricing tiers, called “Good/Better/Best” and you’ll want to occupy one of those tiers. And you should aim for a pricing tier that is currently unoccupied. If not, your brand positioning must be significantly differentiated from the other brand in your pricing tier. From whatever retail price point you arrive at based on the competitive landscape, work backwards. Subtract the expected retailer margin to arrive at your wholesale cost.

Compare your Bottoms-Up price points with your Tops-Down price points. They should be in the same ballpark region. If not, you likely have an inflated COGS and need to work on getting those costs down. Or, you’ve got tons of margin upside (yay!). Unfortunately, margin upside isn’t usually the case.

TIP: Again, I’m generalizing tremendously here. Take the above suggestions and apply your own research (starting with Romy’s blog post on this same topic) and instincts. And you will be better off than most who fail to do the “Tops-Down Pricing” analysis. Most default to the “Bottoms Up Pricing” method only and end up with retail price points that are not sustainable or rejected by  consumers and consequently, retail buyers.

3) Test-And-Learn: Most importantly, test your pricing. Test it online or in a “test and learn” set of stores. My clients are familiar with the tremendous value of “test and learns”.

4) Channel Pricing: Don’t forget to create MAP policies (Minimum Advertised Price) and wholesale costs and retail pricing by channel. Your pricing (and in some cases, product configuration) should differ by retail channel. See my LinkedIN post on the topic of channel management.

 

 

 

From the Entrepreneur’s Perspective: How to Price Products for Wholesale and Retail

Saturday January 10thTips for Retail Success, Uncategorized Category

Several factors must be considered when establishing your wholesale and retail pricing. You have to price up (make sure you are covering your costs) and price down (what will your target audience bear). There’s no one right answer or easy solution. It takes a lot of research and often trial and error. Minimizing those errors through planning and organic growth are good strategies for long-term success.

  1. Think through your long-term distribution plan. If you are only planning to sell online via your own website and never, never through a distributor or retailer, that’s one thing. It’s highly unlikely that this is the case though. You will likely be selling through a distributor and/or a retailer, and everyone wants their cut, which means you have to factor in margins of approx. 30% for the distributor and 50-60% for the retailer. Additionally, consider your various distribution channels, both nationally and internationally, as they will have different margin requirements, set up costs (i.e. license/registration, insurance, EDI), MOQs, shipping/handling costs, etc.
  2. Cover your costs and factor in a realistic profit margin. In # 1 above, you have priced down. Now price up. Budget for COGS, and all your below the line costs (i.e. insurance, marketing, payroll, storage/handling). How much do you need to sell your product for and make a profit?
  3. Project sales movement over time. The greater your volume, the greater your economies of scale. Set your wholesale/retail where you can land the sale – while keeping in mind that as you scale up your volume you will help to drive your unit cost down.
  4. Define your ideal customer/target audience – this includes distributors, retailers, and the end consumer. What are they willing to pay for your product? Pricing too high or too low can greatly impact your sales movement, and the perception of your product. And changing pricing over time is no easy feat.
  5. Research your competition. What are your competitors charging? How do your products compare? Walk store shelves. Go online. How do their features/benefits compare to your product? Is yours more or less premium? Factor these answers into your decision making.

From the Entrepreneur’s Perspective: Top 3 Traits of a Successful Product Entrepreneur

Tuesday December 16thTips for Retail Success, Uncategorized Category

There are many attributes that I would consider to be critical to a product entrepreneur’s success; however, the following are my top 3 picks.

Are your decisions well thought out? Are you willing to go the mile? Can I count on you?

  1. Strategic. Without a sound business strategy, you will be distracted by all the “shiny objects” dangling in front of you. There are always going to be many opportunities before you; however, which ones you choose to pursue are going to be critical. Make sure that those opportunities are in alignment with your goals.
  2. Persistent. There is not a day that goes by that is “easy” as an entrepreneur. Even when things are going super well, there are challenges, even if they are good ones. And when the going gets tough, the tough need to get going. The most successful entrepreneurs are going to dive deep…they are going to evaluate the problem and find creative and strategic solutions.
  3. Accountable. If you tell someone you are going to do something, do it. If you are unable to follow through on that commitment, be proactive and explain the situation succinctly ALONG WITH your proposed solution. Providing clear expectations leads to trusting relationships.