How to Break Into the Big-Box Big Leagues
One of the most common ways to start a business is to begin selling a product that you've either made or designed. Maybe you started selling your widget locally, at markets and fairs, and maybe even moved onto the shelves of some mom-and-pop retailers around town. You may have even expanded by selling online. But at some point, you've also thought about how to take your product line to the big-box big leagues. That's a tough leap to make for many retailers. Not only is it tough to attract the attention of the Targets, Walmarts, and Costcos of the world, supplying the big-boxes comes with additional costs and time pressures that can crimp your bottom line. That said, getting your product onto the shelves of a big-box retailer can help catapult your company's growth onto the fast track.
What follows are five case studies about privately-held retailers who have evolved from start-ups into successful small businesses by breaking into the big-box big leagues.
Six years ago, Darlene Tenes decided she'd like to decorate her Christmas tree with glass ornaments that had Latino flair. The problem was that she couldn't find any online or in the stores around her home in San Jose, Calif. On a lark, she designed a couple and, by using the website Alibaba, an online forum for offshore outsourcing, found a manufacturer in China who could make them for her.
Tenes, who had been an event planner for 13 years, originally planned to keep the ornaments and give them as gifts. But she soon recognized that there could be demand for her line of ornaments she called CasaQ, that included designs like Pancho Claus and a star piñata. So Tenes started reaching out to local retailers and museums, who began selling her ornaments, which cost upwards of $25.
Tenes' big break came two years ago when she attended a Latina business conference that was sponsored by Macy's. The keynote speaker at lunch was a Macy's executive and before the applause had ended, Tenes had high-tailed it over to the executive to give her a 15-second pitch about her ornaments, which she described as similar to ornaments made by Christopher Radko, a well-known product line Macy's already carried. Intrigued, the executive asked Tenes to send her samples – which she did as soon as she got home.
When Tenes followed up a week later, the Macy's exec told her she loved the ornaments. But it wasn't for another 10 months, in which Tenes made phone call after phone call to other execs in charge of purchasing, that she was finally invited to headquarters in New York City to make her final pitch. Arriving early, Tenes went shopping in the store and talked to a floor manager to get prepped for her meeting with the purchasing execs. The extra homework paid off, as Macy's agreed to place an order and carry CasaQ ornaments in 25 stores over the 2010 holiday season. "Getting into Macy's has added great visibility and credibility for my product line," says Tenes, who is already ramping up her orders for this year's holiday season.
TIP: Make the most of your face-to-face opportunities with buyers.
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Rhonda Sparks used the tragedy of losing her 32-year-old husband to skin cancer as motivation to start her company, UV SKINZ, which sells ultra-violet protective swim shirts and clothing. Initially, Sparks outfitted her three young boys in the shirts after seeing surfers in Hawaii wearing similar ones. But when parents started coming up to her and asking where she got them, she recognized an opportunity to help prevent skin cancer.
After conducting research on and off for a few years, she imported her first order of 2,400 shirts from China and intended to give them away as part of the Darren Lee Farwell Foundation, the foundation she started in her husband's memory. But Sparks was blown away by the demand for the shirts, which got her thinking that there was potential to build a business, which she did by initially selling her shirts to local boutiques in Sonora, Calif. and online through her website uvskinz.com.
A few years later, as Sparks built up a reputation for her brand, she got a phone call from a buyer at Brookstone, who told her she was interested in carrying her shirts. "I was blown away because I didn't have the confidence to reach out to the big stores at that time," she says. "But the buyer asked me if we could fulfill the order and I said, yes."
That order allowed Sparks to scale up her orders and gave her the confidence, and the track record, to pitch her wares into other big-box retailers. Now, three years later, UV SKINZ wear, which now includes shirts and suits for children and adults, counts Costco, Bass Pro Shops and Nordstoms as well as Brookstone as its retail partners.
"I am certain that the story and passion behind my company played a huge role in getting the attention of the big retailers," says Sparks. "But it took me three years of e-mails and phone calls to get into Nordstrom. To make this happen, you have to be relentless."
TIP: Your passion for your product can be a selling point.
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Mike Bucci's great idea – pyramid-shaped pieces of plastic that can be used to help freshly-painted items dry quickly – was born out of frustration. Specifically, he was having trouble painting a bookshelf for his wife. "I wanted to paint both sides without having to wait for one to dry first," he says. After coming up empty after hunting around home improvement stores like Lowes and Home Depot in and around Richmond, Virginia, he decided to come up with his own solution, the Painter's Pyramid, which he decided to file a patent for.
At the time, Bucci was employed at a financial services firm. But two weeks after submitting his patent, Bucci was informed that his company was dissolving his department. In other words, he was now unemployed. That's when he decided to dive headfirst into making his invention into a cash cow. After spending several weeks perfecting his product design, he contracted with a manufacturer in China and signed up for a spot at the upcoming National Hardware Show, which was being held in Orlando. He also submitted his product to Home Depot, which holds a biannual product review where retailers such as Bucci can pitch their product to the company's buyers.
By the time the show rolled around a month later, Bucci figures he spent $30,000 in total, on everything from the patent work to putting up a website, in order to pitch his invention to the industry's largest retailers. And he was excited by the attention he received from the crowd, especially reps from Lowes and Home Depot. But when Bucci went down to Atlanta the following month to meet with Home Depot, he left without a deal because he felt they were trying to sell the product too cheaply.
Undeterred, Bucci began selling his product online and to smaller retailers to establish a solid sales track record. His key turning point, though, came about a year later when he struck a partnership deal with Hyde Tools, a major supplier of paint sundries. Since Home Depot already carried Hyde products, Bucci was able to get his product onto store shelves easily. "Large retailers don't like to add new vendors because it involves a lot paperwork," he says. "All they had to do was a new SKU." The good news got better when Lowes, also a partner with Hyde, picked up the Painter's Pyramid as well.
TIP: Partner with other companies to make your company more attractive to big retailers.
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Patrick Mish blames his wife for why he started his Odenton, Md.-based company, M-Edge, which sells accessories like covers for e-readers like the Kindle and the iPad. Six years ago, Mish, an engineer working for Northrup Grumman, was tired of carrying around all the books his wife – who happens to be a prolific reader – brought on trips. So he started looking into the then nascent market for e-reading devices that consisted of a single product made by Sony.
While the device itself wasn't great, Mish noticed that there weren't a lot of accessories available for it. Given that and the potential he saw for growth in the market, he decided to take a gamble and launch a company of his own. At first, he sold his covers on Amazon's third-party marketplace. Then, when Amazon released the Kindle in October 2007, he was already positioned in a great channel to begin selling accessories for that device.
At the same time, he began reaching out to other brick-and-mortar retailers like Best Buy and Staples. More often than not, though, the buyers would hang up on him since there wasn't a big market for e-readers yet. Eventually, however, as M-Edge's sales continued to grow and the Kindle and similar devices began to take off, Mish's phone calls got more interesting and culminated in Best Buy placing an order.
"Our track record gave us the credibility to know what features are important to customers and what sells well," says Mish. That first order soon led to others and the company's accessories are now sold in Walmart, Target and Staples here in the U.S., as well as in other retailers like John Lewis and Dixons in the U.K.
TIP: Establish a track record of sales to gain credibility with larger retailers.
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Steve Greenspon started Berkeley, Ill.-based Honey-Can-Do, a provider of home storage, organization and laundry care products, back in 2007. When he founded the company, though, Greenspon had already learned many lessons about selling products in his years working, first for a wholesaler of heating and air-conditioning equipment, followed by a stint working for a manufacturer of bath products. It was after selling his ownership stake in the bath product company that Greenspon began thinking about starting a venture of his own.
"I knew I wanted to be in consumer products," he says. "I wanted to sell something I could understand and I understood laundry and organization." Greenspon then spent weeks wandering the aisles of big-box retailers, analyzing what was out there and how much it cost as a way to research what he could do differently. He wasn't looking to invent something new – only improve the quality and design of what was already out there.
By chance, Greenspon also got a call from a former colleague, Debbie Gerfy, who had headed up the Asian operations at his former company for 15 years. Gerfy, who lives in China, came on board Greenspon's new company and immediately helped him establish manufacturing and distribution relationships in China that could make and ship their new product line, which now consists of some 400 products, with 100 new additions coming on each year.
Greenspon, who provided all the capital for the company, also invested heavily in the software and technology that would allow him to accept and process large orders as well as manage the company's inventory. Greenspon made these investments because he knew that when he talked to the retailers – Target was his first big-box customer – they would feel confident in working with his company if he built the infrastructure necessary to scale his operations to meet demand. "You need to build the confidence with them that you've done this before and that you'll make them look good for choosing to work with you," he says, noting that retailers such as Target, Bed Bath & Beyond, Kmart and others now carry the Honey-Can-Do line.
TIP: Make the necessary investments to give big retailers confidence that you can scale up and deliver.
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Darren Dahl is a contributing editor at Inc. magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, North Carolina.