Today's post is all about the process of building up your brand to one day get into retail, specifically with big box or national chain retailers. There are many out there who believe that brick & mortar is slowly dying out; however, there’s a reason why Amazon is starting to open up physical storefronts of its own.
While every business has specific needs, there are general principles that you need to be aware of when developing your products offline distribution strategy. Many product-based businesses start online. It's less expensive, easier to measure results, easier in most aspects. Note an emphasis on “easier” not “easy”. All of this takes hard work and time but there’s a distinction between online and offline sales. I can’t emphasize that enough.
So let's get to it.
Building an online presence & sales history
We could talk all day about ways to promote your business online; however, we're going to be narrow focused on why your online image is imperative for acquiring the retail channels you want.
It's really a simply concept. Retailers are taking risk whenever they take on new products (such as yours). Just like picking a stock to invest in, retailers are doing research on your company before even considering to purchase – understanding how retail buyers filter out good vs bad candidates is very important.
Can you guess where retail buyers first do research 99% of the time? Yep, Amazon.
But retailers aren't just looking for the number of products you've sold. They need to see some good margins, good reviews, uniqueness, and all in all need to know that you're prepared for retail (i.e. back-end programs, sales materials, retail packaging, etc) which is done upon presenting the products.
Don't let Amazon or other online channels seem like the only place you have to first sell your products. I've seen new businesses, with what would otherwise be a "slam-dunk" get crushed on Amazon because of some initial bad reviews due to shipping, rushed quality, etc. Don't make Amazon your initial testing ground for your minimum viable product.
Just like with retail, Amazon and selling online requires a certain level of preparation. More than you might think. Which is why speaking with someone who has gone through this to review your strategy is important. While strategy is important, competition and the market can change quickly as can internal company issues. You can’t be ready for everything, but realizing potential dangers ahead of time can go a long way.
I'm Successful on Amazon, Should I Try Retail?
Don't let the title of this post fool you. Products rarely go directly from Amazon to big box stores. Most larger retailers will still be very hesitant, even with large volumes of online sales. And you should be hesitant too on the risks of retail.
Typically large-chain retailers will want to test you on their online platforms (i.e. Bestbuy.com, Target.com, Brookstone.com, etc) And it's not just a way for them to test out if your products will sell. They're also testing you out as a manufacturer. Are you reliable, easy to communicate with, hands-on with driving sales to their channel?
When you're moving from Amazon to retail channels, there are new systems and infrastructures that need to be built to handle added strain on your business.
Typically it's a good idea to start with distributors when you're first trying to get into offline sales. They might require more of your margin; however, they essentially act as your sales team with existing relationships with the stores you're looking to get into for the future (provided you pick a good distributor). We could also spend days talking about best practices for finding and negotiating with distributors.
Distributors hold more advantages for companies looking to leverage existing systems and infrastructure for retail, but this doesn't mean that you can simply ship your products to a distributor and let them do all the dirty work. But just like Amazon’s FBA program, you can’t rely on it to ensure sales. You still need to promote and market your products. Plus with distributors efforts should be made to actively manage and support the salespeople.
Where Should I Start?
Targeting some selective channels is a great way to get started. Just like A/B testing your online activities, you need to start small and figure out where your time and resources are best spent in pursuit of other retail channels.
Just like starting a side-business while maintaining a full-time job, pursuing other retail channels (online or offline) is a lot easier knowing that you have some cash-flow coming in from Amazon, your website, or other sources. A common misconception is that all online channels are free to set-up-shop. Many online retailers (such as Brookstone) can cost an upfront fee of around $2,000 to place your products on their platforms.
Select a few appropriate channels to start out with paying attention to things like payment terms, products they’re currently holding, their typical customer base, level of commitment needed on your end, contracts, etc. It can be daunting, which is another reason to seek out someone who has done this before. You can always try “learning by doing” but the consequences get more substantial when you start moving towards the offline world.
Is your sales history, reviews, uniqueness, attractive enough?
Figure out which channels are most appropriate for you specifically.
Are you retail-ready? Packaging, pricing structure, logistics, marketing materials, etc
Do you have a plan to drive sales in the retailer’s channel?
Can your company bounce-back from potential risks?
Do you have a plan to scale your business with new-found growth?
I hope this article has helped provide some structure for your plans to transition into retail. It can tough, but when done right it’s a great way to truly scale your company’s future.
Benjamin is the Director of Business Development at Retailbound - a retail marketing company that develops and executes retail strategies for consumer goods manufacturers. Not a big fan of retail? Then have Retailbound do it instead.