Anthony Testa asked: Where Vision become Real(Part 4)More retail Jungle fever…Retailer’s vision …Here is some information we need to know about retailers. Be prepared to have everything covered, before you make your pitch…
Retailer Mark-upMany retailers want 50% mark-up. Some mark-up their products anywhere form 30% to 50%, this is based on quantities, suggested retail price and cost, Risk + value to business. Electronics are less. You need to factor this into you final costs and your wholesale price to your retailers.
PrototypesRetailers do not want to see work in progress/concepts or drawings with detailed explanations involving extensive imagination applied concepts. They do want to see working product with packaging developed, clear and defined to the final size. This will enable them to determine product placement on their plan-o-grams. They also want to know how fast you can deliver the product. You need to be ready for production or already have produced.
Trademarked and copyrightedRetailers prefer to deal with products that are trademarked, copyrighted, or patented. This shows real commitment and belief in the product on the part of the supplier, as well eliminates problems with them carrying a product that may have some liability attached to it. Retailers don’t want someone walking in the store and claiming that this was their idea 6 months ago!
Plan-o-GramsRetailers review portions of their business on pre-determined schedules. They begin in mid-summer with their suppliers, August and September, and then cut a PO with stock in Stores in February. Retailers use Plan-o-Grams to determine product placement, shelf space or peg area. These Plan-o-Grams are extensive and involve their suppliers for each product on that particular Plan-o-Gram, and are planned six months in advance.
They are detailed to how many per peg or shelf, and what product is on what shelf. Detailed sketches are produced to effectively make the most of the space used. The key here is to be ready 6 months in advance; you have to be aware of their buying cycles. Always talk to your intended retailer.
QuantitiesQuantities will be determined once a retailer sees your New Opportunity presentation. In estimating what the potential quantities could be, you need to explore how big the potential market is. Potential market will be a reflection of the existing market of X product buyers. This is research information that you need to have prepare.
Questions will be asked about the market potential.
Expect to have succinct answers. If they get the feeling that you don’t know your market well they will not feel positive about carrying the product. The better you know your market the more confidence instilled in the retailer. You need to have market knowledge and drop that knowledge in front of the target retailer.
…Be prepared to answer the following questions Retail and other competitors: USA or Canada; has this product already been on the market? How well has it done?
Market Knowledge: Units annually, sales. What are your forecast figures? Who is your market? How big is your market? Is this a mass market appeal item or is it a niche market item? Market size will influence wholesale cost. (what the they are willing to pay for it )
Risk + value to business: What is the risk and value to their business? Here we are looking at costs vs. profits. Is your market sufficiently large to sustain your product?
Features and benefits: What are your products features and benefits? This needs to be presented to them clear and focused. What does your product have that the competitors don’t? Cost, packaging, advertising, unique feature, what’s the product differentiation.
Price point: Cost and suggested retail price
. You need to have established your manufacturing price.
Manufacturing: Timelines 8 to 16 weeks to production. Has your product already seen the market place in very low quantities? What was the response, are you now ready for a larger distribution network.
Master pack/inner pack: what are master packs and inner packs?
When retailers purchase goods from suppliers they arrive to the store in master packs on skids. With inner packs which contain the actual product. This facilitates selling and makes inventory easy to manage.
Example; you’re selling your product in inner packs of 10 (which means that there are 10 actual products inside a box) Then 5 of these boxes are packaged inside a larger box which is now your master case. So your master contains 5 x 10 or 50 pieces.
So you’ve set up your selling parameters to sell at least a minimum of 5 pieces with each order. (One inner case)
You need to communicate with your retail outlet because master packs will be determined by the retailers that you speak with. Many have restrictions on size and weight. Another important factor is cost of the units in the master pack for the retailer. You may have to develop one size for the large outlets and another for the smaller ones. Again this depends on which markets you want to attack.
…Some additional things to considerAs a supplier how are you supporting your product? Trade Shows: What trade shows have you attended or plan to attend. These can be given to the retailer as part of the marketing presentation. How will you educate consumers about product and where to find it
Marketing plan: what is your marketing strategy?
Provide as much information about the target market as possible Competitor information you need to know …..Competitor Corp: X product (example)Local company called competitor X corp., produces similar product this is a $9.99 item located in the camping section with a simple packaging sleeve, sits on a lower shelf and moves extremely well.
A plastic injection molded item this item was introduced in the past through the local stores as a consignment item and has since become a regular store item. Product has been in the store for 19 years.
Quantities: Retailer has in the past sold 50 000 units @$9.99 as a start up quantity, that’s gross profits over $499,000.
X product advertises on the Weather Channel.
More Visions become real!
