Many small businesses have visions of having their products put in front of millions of potential customers through major retailers. But this will stay at a dream stage unless the business owner initiates business and explores opportunities to sell to a major company.
When we started out our business we had the dream but no idea how to make it happen either. Unlike others, we did nothing the way you are "supposed" to and ended up with products sold internationally and eventually being acquired.
Here are 5 realistic lessons learned for selling to large retail:
Don't Take the Same Approach as Everyone Else
Taking the same approach as others who have retail contracts is a starting consideration for you; after all, if it worked for others, it should work for you. If it does, great. But if you think you have a cool product, but nobody is buying it, revisit your approach.
I walked into one retail head office I was driving past and told them I had an appointment (which I didn't). I walked out with a contract. They knew I had no appointment but thought the bold act stood out.
You have nothing to lose as a small business. Don't be afraid to look silly or hear "no." You have to want to win.
Many small businesses dream of being in with a major retailer but may not be able to meet the challenges that come with it. Small businesses may not be prepared for the volume, timing, payment and compliance terms or the logistics when dealing with a major retailer. Before asking for meetings, request vendor guides from retailers you're interested in having sell your product and see if you can meet their standards. They have zero tolerance for error.
When you get interest or a meeting with a retailer, be prepared with your sales records, credit ratings, bank statements and possibly proof that your products are made ethically. Some retailers will also want to know exactly where your shipment has traveled. They also won't pay you for 30 to 60 days after receiving products, so you'll need to be able to cover the upfront costs. And they want products packaged and labeled in certain ways.
Some small businesses are simply not prepared to handle all of this.
Sometimes your personality goes a long way and standing out can do wonders for your business. I remember one buyer in particular saying "I have met with ten of the same person with different products today. You guys are a refreshing change."
One thing I found to work in our favor when selling to big retail was our genuine mind frame of not being intimidated going into meetings. We were ourselves, and conveyed our genuine belief that if they didn't buy our product, someone else would.
Learn to Negotiate
As a small business entrepreneur you will need strong negotiation skills to not be overtaken by the glamor and hope of selling to a major retailer. And your negotiation needs to be based on an understanding that you really don't matter to them. Their interest is to increase their advantage and profits and that often means low-balling any small business coming to them. Given that this creates a power imbalance right from the start, negotiation is your way of making sure you have what you need to get enough money to justify your effort.
You need to know your bottom line. Then demonstrate confidence in what you are asking for, providing the retailer with sound reasons and proof of why they should pay.
Your negotiation has to get you to the point that it is worth doing business with the retailer. If they squeeze you to the point of nearly no profit margin, you have made your business vulnerable.
If you can't negotiate to make enough money to justify your effort, don't bother. Finding a distributor who will then sell to retail may be another option to explore.
Have Some Kind of Track Record
If you get a meeting to share your idea but have no track record to demonstrate, the chances are that you won't be successful. Though some companies may be flexible on no track record if you have a hot selling product, it is better to expect you will be asked.
A solid marketing plan, accompanied by having strong sales on your own, will boost your credibility and can serve as leverage when negotiating.
Other critical components of a track record include a professional website and having an engaged social media network.