GROWING A COMPANY? IS THIS YOU?
- Don't want to rely on investors, resellers, lots of employees, and high risk operations that take a long time to realize returns?
- Want to be highly profitable and sustainable with defensible competitive advantages?
- Cannot land investment because you lack experience or traction, so you need an effective plan for bootstrapping?
- In the idea stage or early startup stage and need a plan so you are not wasting time and capital?
This is a Quora question I was asked and here is my answer.
Yes, that is normal. Most major retailers charge up front fees, called slotting fees, some which can easily be high in the 5 figures.
You cannot look at slotting fees without considering the whole range of retailer tradespend requirements and terms, because most things can be negotiated and what you pay in tradespend is highly dependent on many factors.
You might be able to negotiate slotting fees down by shipping more units of free product to stores on opening order, higher marketing coop commitments, or offering other tradespend items.
But, you might not. In the end, you do not have much negotiating power as a new vendor. You often have to take what you can get, prove sell through over time and negotiate tradespend requirements down as time goes on.