IF YOU HAVE A CONSUMER PRODUCT STARTUP, DON'T WASTE YOUR TIME AND MONEY. LEARN WHAT HAS WORKED SO YOU CAN APPLY IT TO YOUR COMPANY.
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This is a Quora question I was asked and here is my answer.
Actual number of products sold is not how these large retailers decide on bringing in new products. It is more about asking:
- Where else is the product selling and is it successful;
- Is the product ready for mass-scale selling through these retailers;
- Is there marketing to support the awareness of the product and is it consistent;
- Can the vendor reliably supply the retailer?
Previous Sales Channels and History of Success
Traditionally, consumer product companies grow slowly in retail channels. They will start in smaller channels and smaller retailers and prove that the product can sell and fine-tune their in-store and external marketing tactics. Then, when they move into these mass-scale channels, they have proven their sales and marketing, so it is more a question about if they can execute on a consistent basis.
This traditional approach takes time and in my opinion, is more risky, as it opens up consumer product companies, particularly startups, to being copied/replicated by other more established companies or ones with more money.
A non-traditional approach that I like to follow is proving my sales through digital/online direct marketing, building a marketing model that pays for itself (so I can run a lot of marketing at $0 net cost), and then because I consistently run marketing, that makes me much more attractive to all retailers at an early stage, not just small ones, but the large ones listed in your question. I have a webinar replay I posted about this non-traditional approach and how to implement it: http://ConsumerProductGrowthSecrets.com.
The above retailers occupy the mass (Wal Mart and Target) and club (Costco) channels. To sell in these channels, products usually should appeal to mainstream buyers. So even if you are selling well in other smaller, earlier stage channels, does not mean these retailers will bring you in unless you appeal to a large audience.
In my experience, you need consistent spend in your marketing to support sales in these channels, which in general, equals at least $30K per week or more. This is a very generalized rule of thumb for selling in these mass-scale channels.
Selling to the above named retailers takes cash to be able to fund the inventory and operational support. These retailers will phase you in slowly, but still, selling to just a few hundred Wal Marts can amount to significant volume. As a rule of thumb, I assume unit sales per store per week to be the following: Grocery is baseline; Natural/specialty channels are 25 X grocery; Mass channel is 10 x Grocery; and club channel is 20 x grocery. So use those numbers to help arrive at inventory requirements.
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