From the Entrepreneur’s Perspective: Do retailers want me to do a show like “Shark Tank”?

Monday July 21stUncategorized Category

Your buyers/retailers care about their bottom line, as they should.  If that means you are driving sales to their doors, then yes you should consider a show like Shark Tank that has approximately 7 million  viewers and can create some amazing brand awareness, thus driving consumers to your retailers’ doors.

That said, your chances of making it on air are very slim due to tens of thousands of others applying. Additionally, your readiness to appear on air has to also be closely managed. Timing is sometimes everything – you want to make sure that you are fully ready to leverage such an opportunity and that means having a solid infrastructure and inventory readily available (i.e. you have the resources to produce that inventory).

So, are you ready to apply? Consider the following when answering that question. Do you have the time to apply? If you are already strapped for time, the answer may already be no and you can stop reading this blog post. The process is time consuming. If you apply and are invited to go to the next round(s), they include submitting a video, a ton of paperwork, researching the Sharks (you want to know who you are pitching to), familiarizing yourself with your financials so that you know them inside and out, practicing your pitch, a lot of communication with your assigned producers, travel, etc. If you film (and there are no guarantees that you will film even after going through the above steps), there is the time between filming and airing (and there are no guarantees that you will make it on air). Between the time of filming and airing, you will need to prepare for many steps (keep reading) – and you will have to make a leap of faith that you will air because there is not enough time to wait until you “know” that you will air. You will likely be given 2-3 weeks’ notice that you will appear on air. With this short lead time, consider the following short list readiness factors:

  • Is your web site prepared for the traffic (highly likely not) so you will need to get this all dialed in.
  • Do you have the inventory on hand to sell directly from your web site and/or ready to ship to your retailers should they request some in advance and/or wait to post airing and then suddenly want your product shipped pronto? This means investing in the inventory. Do you have the cash to do so? No one wants to wait for product. Not consumers and not retailers. Don’t put yourself in the situation of being in “reactive” mode and aggravate everyone in the process.
  • There are a lot of emails, social media posts, and phone calls that will follow in the days and weeks post airing. Do you have the support staff to handle these communications and stay on top of your day to day operations?

Ask yourself: Do you have the bandwidth to leverage and fully maximize these opportunities?  Opportunities include inquiries from press, retailers, distributors, investors, etc. It’s super exciting! But, would you be better served applying to the show next season? That’s for you to answer.

Building a brand is an ongoing effort though. So, whether you have a great platform like Shark Tank to spread the word, most companies won’t have this unique opportunity. So, like everything, stay the course and build your brand over time. Create a story and build upon it. Your retailers want to know that you are a partner for the long term. Show them visually how you are generating awareness for your brand over time. Example: http://psibands.com/press.html

What questions do you have for our retail buyer, Vanessa Ting?

Thursday July 10thResources & Recommendations, Tips for Retail Success Category

Hi friends!  Have you been finding our blog posts helpful? If reading our posts begets more questions, join my open-format Q&A call on Friday, Aug 1.

Ask ANY question you want about selling and marketing to retailers, distribution, PR/marketing, product development pricing, what buyer’s look for, etc. Here’s your chance to get access to me without the sticker shock!

Eventbrite - Q&A Teleseminar: Selling To National Retailers (Target, Walmart and More!)

~DETAILS~

Date: Friday, August 1

Time: 10:00am -11:00am Pacific

Cost: $5 per person session + MP3 recording.

Once registered, you will be sent the phone number and access code to call into the teleseminar.

Hosted by Vanessa Ting

From the Buyer’s Perspective: I have all these retailers who want my product line. How do I prioritize?

Tuesday July 1stTips for Retail Success Category

By Vanessa Ting 

What a great problem to have! No, really – it can be a problem.

Last week, I was at Target HQ to present a line that recently launched in market. How they were invited to Target for a line review is actually a crazy story. They launched in Spring 2014 at a trade show at which a Target buyer stopped by their booth and collected information. Fast forward a couple months later,  out of the blue, they received a call from (a different) Target buyer inviting them to Minneapolis to present their line for consideration for the 2015 assortment.

Let me be clear. This rarely happens.

So what does a new brand do when a huge retailer is knocking on their door?

I’ll answer that in a second.

While my clients were excited by the prospect of selling in Target stores in their first year in market, I was afraid for them.  As we prepared for the meeting, they began to realize what selling to any large retailer would entail. They had to figure out:

  • How to negotiate lower ingredient costs to meet Target’s margin requirements
  • Get a new manufacturer who could handle Target volume and do so with short order lead times.
  • Get a new warehouse, fulfillment, logistics and distribution system set up without any shipment history to base price quotes on. And get those costs down to meet Target’s margin requirements.
  • Get an expert in supply chain and inventory management on staff to manage operations.
  • Get EDI compliant.
  • How to battle the low brand awareness typical of new brands and how to scale up their marketing quickly in order to support national retail distribution
  • $$$$ to: fund these large inventory orders, pay for all supply chain partners, fund their marketing plan, and to hire their supply chain expert.
  • And after all that, their profit margins were shockingly slim.

All of a sudden, selling to Target sounded like a scary and financially risky idea to my clients.

And this is why it is rarely good to sell to a large retailer immediately. In fact, not only does it behoove brands to hold off on big retail, but to scale up smartly, slowly, and be choosy about which retailers you sell to and when.

What is a smart way to prioritize retailers?  In short, a smart way takes into account:

  • Diversifying your cash flow so that you are not dependent on one retailer to be providing your cash flow
  • A retailer that allows you to grow your brand building momentum and is well matched with your current brand awareness levels
  • Retailers that will give you sales history, which is the “currency” needed to sell to larger retailers.
  • Retailers that are within range of your infrastructure and operational capabilities.

I have a framework called a Strategic Retailer Roadmap that is appropriate for brands 0-3 years old. It breaks retailers into 3 broad categories or Account Types:

  1. Prestige builders (retailers that are pre-trend and get your product in front of influencers, but may not have high store count)
  2. Revenue drivers (retailers that have a lot of doors AKA store count but may not be brand enhancing for your products. They are not brand diluting either)
  3. Key accounts are retailers that hit the sweet spot between the above two categories.

I’m simplifying things here for the blog. But each brand needs to identify the right level of penetration within each Account Type for each stage of growth (e.g., Phase 1, Phase 2, etc). I create these Strategic Retailer Roadmaps for clients who are getting tons of calls from retailers but don’t know how to prioritize them or for brands trying to decide which retailers to go after first. It has helped provide them with clarity, has broken the growth stage into smaller digestible steps, and minimized the feelings of overwhelm.

retailer roadmap

Example of a brand’s growth plan. These numbers are for illustrative purposes only and do not apply to all brands.

So brands, if there is a takeaway from this blog post, let it be this: Build a plan for how you will grow your retail distribution and reference it often. When a retailer calls, see where they fit in the plan and do the math to see if you can handle the financial risk of taking on that account. And do NOT be afraid to say no. Ultimately, saying “no” is the defining difference between smart profitable companies and companies that seem like “overnight successes” but then crash and burn.  Which one will you be?

 

 

From the Entrepreneur’s Perspective: I have all these retailers who want my product line. How do I prioritize?

Tuesday June 17thUncategorized Category

Retailers lining up at your door. What a great problem to have, right? Maybe. If you are prepared. Let’s start with prioritization and then conclude with some preparation considerations.

You can help to prioritize who you do business with by examining a number of key factors.

  1. Know your target audience. If you know who you are trying to sell to, then you have a better idea of how to communicate to them (through packaging and marketing), how to reach them (marketing and distribution location), and what price they are willing to pay for your product (because you have researched their demographics).
  2. Partner with retailers who align with your pricing strategy (i.e. who will sell your product at your MSRP…and you know what your MSRP is because you have done market research to determine at what price your product will sell and how it needs to be priced against your competition).
  3. Study your competition. Where are they selling and where are they not selling? Both provide insight. If your competition is selling at certain retailers, maybe you need to be there, too, or maybe it’s too saturated at that particular retailer and you should go look for other possibilities where that retailer has little or no competing products but where you think you stand a very good chance of selling well (i.e. in more niche retailers and/or where your competition has yet to break ground).
  4. Spread out your distribution.  There are many ways to accomplish this …online, in store in boutiques, regional retailers, and/or mass retailers, and/or internationally.  Mix it up so that your business is not dependant on one or two accounts.
  5. Can you fund the inventory? Are you prepared to drive sales? Can you meet the demands of the retailer? Are your systems ready to go? … Read below.

Get Prepared – Questions to Ask Yourself

Do you have the inventory to fulfill demand? If not, you will likely have disappointed retailers. And disappointed retailers does not bode well for sustaining long-term relationships. Retailers are risk averse. Don’t put yourself in a position where you are unable to fulfill on orders. Additionally, some larger retailers assess chargebacks if you can’t deliver on those orders because they reserved shelf space for you and you are costing them money. Be honest with your retailers/customers on what you can and can’t do.

  1. Can you front the cash for the inventory that this retailer is requesting? You are likely looking at MONTHS before you actually get paid (i.e. timeframe considerations: from the start of manufacturing to delivery at your warehouse to delivery at the retailers’ DCs to the net 30, 60, 75 or 90 day net terms that they offer you).
  2. Do you have the systems in place to support these sales? For example:
  3. Do you have someone on your team who can manage the order fulfillment process from order acknowledgment to the actual fulfillment to the invoicing? Are you set up on EDI?
  4. Do you have product liability insurance that may be required by the retailers? What will this cost you?
  5. What marketing programs will you implement to drive sales and stay on the store shelf? And what will this cost you in time and/or cash?
  6. Are you prepared and educated in how to negotiate with these retailers? They speak their own language (ie. do you know what I am saying when I say “markdowns”, “TPC”, “UPSPW”, “POG”, “chargebacks”).  Many large retailers charge a hefty noncompliance fee if you do not ship within the specified shipping window, if you are missing a label, the label is incorrectly completed. If you are not well versed in this retail lingo, are you going to hire a retail sales consultant &/or rep (you may need both) to help you navigate these negotiations to help minimize your risk and increase your margins, and actually seal the deal? That, too, costs money in sales commissions and/or upfront consulting fees.

From the Buyer’s Perspective: What product safety testing do I need to conduct for retailers?

Friday June 6thTips for Retail Success Category

By Vanessa Ting

Product testing is a biggie. Here are some things to know about product testing:

  • Virtually all big retailers require product testing. Even if you have done your own independent testing already or tested with other retailers, you will still have to undergo each and every big retailer’s product testing process that you sell in.
  • Smaller retailers’ product testing requirements vary across the board. Some will require that you show proof you passed product safety testing, others may just take your word for it. Others may not even be up to date on the latest safety regulations.
  • It’s *your* job to be educated on your product category’s safety regulations and all ongoing changes.
  • And it’s not just product safety testing you need to submit your product for. Many retailers require product durability testing to ensure that it doesn’t break from and/or can withstand reasonable use (i.e., drop testing, stability testing, etc.) and transit testing (i.e., your product doesn’t damage in shipping). Then there is product safety testing like CPSIA testing for lead, phthalates, and labeling requirements.
  • Many of our readers operate in the juvenile industry. So it is important to know that infant, toddler and children’s products are among the most scrutinized product categories and the testing regulations are strict and always changing.

In my experience, product safety testing is the most misunderstood by vendors because of the depth of testing and constant change in regulations. But once vendors figured out the requirements, how to stay on top of changes, plus created an ongoing testing protocol, subsequently it was easy for them to remain compliant.

But it is durability testing that vendors most often failed, despite all efforts. During my watch, many products, especially those at low price points or manufactured overseas, frequently failed durability testing during my watch for reasons that aren’t surprising to those in the manufacturing business.  To combat this, retailers do routine surprise factory inspections and randomly pull sample from production runs for testing. And these are all things you have to stay on top of. It’s your job to ensure you pass those surprise visits and tests with flying colors.

What happens when you fail any of the aforementioned testing? You lose your spot in that retailer’s assortment. Often times you are given a second chance to make corrections and retest, but usually timelines are so tight that even if you pass the second test, you will have missed your ship date. Retailers will have little sympathy in this situation and cancel your order.

So what’s the lesson here? Be a master of your industry’s testing requirements and err on the side of caution. Like Romy said, join trade associations who are at the forefront of regulation changes. For example, Juvenile Products Manufacturers Association (JPMA) is the leading trade organization for infant, toddler and children’s products and offers educational programs and certification services to keep you compliant. I recommend all vendors join a trade association, not only to get this product safety requirements but because of the many other upsides it provides for your business.

Lastly you can ask your large retailers which labs they test with and those labs (and the retailer’s QA department) will tell you the requirements you need to pass. For example, at Target, we used Bureau Vertitas regularly.  For smaller retailers, ask them for their product testing requirements and what documentation you need to show them. You may find that all they require is product testing certification by trade associations.

 

From the Entrepreneur’s Perspective: What product safety testing do I need to conduct for retailers?

Wednesday May 28thTips for Retail Success Category

There is no easy and straight forward answer to this question. This is largely dictated by the product type and retailer. So, it’s time to start asking questions, and the earlier you start asking, the better so that it saves you time and resources to determine if the product is one you even want to invest in and/or if the retailer is one you wish to do business with.

For example, when Psi Bands appeared on QVC a few years ago, they made us perform and pass a qualified “drop test”. The drop test was to ensure that if during shipping and/or fulfillment the package were to drop (be kicked, tossed, juggled by the shipping carrier), that the package could withstand some banging around without breakage. While you might not consider this a “safety” issue, the point is that you might encounter tests that you never even dreamed you might have to pass as a pre-qualifier to doing business.

Who to ask about product safety requirements:

  1. The association that governs your category, if there is one. For example, if you are selling/wish to sell into the juvenile channel, visit the JPMA website: http://jpma.org/
  2. Ask other entrepreneurs selling in the same category. Email them, connect on social media, or walk a tradeshow as a guest (you don’t have to be an exhibitor). At the tradeshow, go introduce yourself to fellow entrepreneurs, who for the most part love helping other entrepreneurs (but do it when their booth is empty of potential buyers. i.e. be respectful of their space/time. If they are constantly busy, then ask if you may have their business card and be in touch with them post tradeshow). Also, association members may have a booth so reach out to them there.
  3. Ask a rep in the same space as the one you are selling/wish to sell in for their input. If you don’t have a rep, ask other entrepreneurs for introductions to one of their reps so you have a better chance of receiving a reply.
  4. Ask the buyers themselves who you have a relationship with or meet at a tradeshow.

FROM THE BUYER’S PERSPECTIVE: DOES IT PAY TO GO GLOBAL?

Tuesday May 20thTips for Retail Success Category

By Vanessa Ting

Going global is great for younger companies because it helps grow your sales and creates cash flow. But one risk in going global is the inability to control your brand reputation. And brand is what creates value for your line and company financials, your retailers, investors and potential acquirers. Overseas, you may not have a say in which stores your distributor will sell your line to and that is a scary thing. It’s all the risks of managing your brand stateside, but without the advantage of being in that market to immediately know when things go sour. Plus, do you have the ability to market your brand in that foreign market? Often times, large companies have global brand managers to help them navigate the nuances of the local market. Consider the management time that international distribution could require.

As for US retailers, do they care about the sales numbers you are pulling in from your international distributors? For one, it is unlikely your distributor will be able to get you point of sales data. Secondly, even if you did have access to point of sales data, U.S. retailers will not give it much weight. Why? The markets are different: Different consumer, different purchase interests and habits, different set of competitors, and momentum in other countries rarely have any “halo effect” on the US market.

So pursue global cautiously. Wait for the right partner. Ask the right questions (provided in Romy’s blog) and then use the cash from international distributors’ better payment terms to hold you over during the longer payment terms imposed by US retailers. And make sure your company is staffed up to handle a global business.

FROM THE BUYER’S PERSPECTIVE: Q’S TO ASK WHEN INTERVIEWING A SALES REP

Monday May 19thTips for Retail Success Category

By Vanessa Ting

Without angering my clients who pay me for this valuable advice, I’ll offer this one valuable tip, plus a few example questions to get your juices flowing.

Valuable tip: Make sure the sales rep you are interviewing is grilling YOU. He/she should be asking you the tough questions a retail buyer will be asking them. Without doing so, they will not be prepared to sell your line. If they sound too eager without doing their due diligence, I suggest you end the conversation and move on.

Other questions to ask sales reps:
• What can you expect in terms of purchase orders and by when?
• What types of tools do their retailers expect you to provide? It varies and your sales reps will know best what works in their retail stores.
• Will their retailers provide POS data to you?

From the Entrepreneur’s Perspective: Questions to ask when interviewing a sales rep

Thursday May 15thTips for Retail Success Category

If you are going to hire a sales rep, following are some questions to ask:
1. Which companies and products do they currently represent? Why: because you want to make sure they are representing credible companies/product lines. Ask for references, and call those references and find out how long they have been working together. You want to work with reps who have been working with their clients for a long period of time because that shows you that they are a good partner/rep. If possible, meet with this rep in person to see if you like them!

2. Which retailers do they have existing relationships with? How long have they been working with this particular retailer(s)? One of the major benefits of working with a rep is that they are well versed and familiar with a particular retailer. They can effectively navigate their way through that retailer’s various departments to avoid problems and then problem solve when necessary. This is a HUGE advantage to you and why you are paying them the commission.

3. Do they have an existing relationship with YOUR buyer? If so, for how long have they been working with him/her? If you currently in communication with your buyer, ask that buyer if they like working with that rep. Just come out and ask the question! If the buyer stumbles in their answer, that means that they don’t care for this rep. Move on! If they love working with the rep, they will quickly communicate this with you and you will at least know that you are starting your relationship with this rep and buyer on a good foot!

4. What is their commission and how is that calculated? For example, will your rep need to travel and does it include their travel expenses? Is their commission gross sales less discounts, allowances, freight, returns for credit and bill backs? Make sure you are covering YOUR expenses.

Keep in mind that hiring a sales rep does NOT mean you are hands off. Just the opposite. You are hands on (providing your rep with sales tools, training and prompt answers to make them successful), but now you have additional support from someone who is familiar with the retailer, is feet on the ground (i.e. local to the retailer where you may not be thus saving you travel time/expense), and is a buffer asking the difficult or unpleasant questions that you don’t need to be asking – you remain the “good guy”. You will always be the best person to sell your product, but it takes more than just a salesperson to land – and keep a retailer happy.

For more information on sales reps, click here.

Mom 2.0 Summit in Atlanta. Are you going?

Tuesday April 15thUncategorized Category

Vanessa and Romy are both speaking at Mom 2.0 Summit in Atlanta on Saturday, May 3, 2014. The event is sold out so hopefully you already have a ticket. If you are attending, please let us know so we can meet up during breakfast or lunch.