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8 Reasons Why It’s Tough to Get Your Small-Brand Product Into Big-Box Stores

Chain stores favour big-brand products over new no-name inventions. Here are some things to keep in mind when pitching to Walmart or Home Depot.

Stephen Key

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What inventor hasn’t dreamed of having a big-box retailer sell their product? When Walmart purchasers decided to order one of my inventions years ago, I learned just how hard fulfilling the needs of a chain business can be. I wouldn’t say we were prepared, but we managed to get it done.

The truth is, there are so many things I wish I had known in advance. So I recently sat down with Tom Gray, an entrepreneur who has been finding, designing, manufacturing and selling consumer products for nearly two decades now, to pick his brain.

Tom began working with the world’s largest retailers in Australia. Now based in the U.S., the founder and CEO of The Handy Camel communicates regularly with inventors and major buyers including Home Depot as alike.

We-recommend-tickWe recommend: For Cupmasters A Cup Is More Than Just A Simple Product

These are his thoughts on the roadblocks that most often plague fledgling businesses and independent inventors en route to the big boys.

1. Proven history

Many buyers won’t agree to test a product in their stores before it takes off elsewhere. They’re risk-averse. They want to sell popular products at the best price, not debut new products.

At a trade show you might hear a buyer say, “We love it, but you’re not big enough yet.” It’s just a reality.

A distributor might be interested, but you need to be careful: Now you, the independent stores that carry your product and your distributor are all trying to turn a profit. But if your product ends up costing too much on the shelf, it won’t sell.

2. Pricing

Inventors need to know: If your product costs a dollar to manufacture, and you get a retailer to purchase it from you for R15, you’ve done well.

What do I mean by that? Big-box retailers have a keen grasp of manufacturing costs. Inventors tell me, “Well, it costs a dollar to manufacture, so I’m going to offer it to them for R40 or R50, and then they’ll turn around and sell it for at least R100.” No. Companies are never going to pay you that much. Margins are low and competition is high.

Amazon-product-wrappedAnother note on pricing: At first, you’ll be tempted to allow anyone who offers to sell your product for you. But don’t forget to set a minimum! Say a price war breaks out on Amazon, and someone ends up selling your invention for R49. Home Depot is not going to want to sell it for R99 after that.

3. Marketing costs

You invent a product people love – after you demo it, that is. Your product might be the coolest in the world, but it’s not going to sell itself simply by sitting on a shelf, unfortunately.

If people don’t have a clue what it does, you’ll need to educate them. Effectively getting the word out can be costly.

4. Capital

Overseas imports can result in huge cash flow problems. You’ll need to account for the fact that you’ll have to pay your manufacturer six to nine months before a retailer pays you.

5. Reaction time

If you receive an order and are unable to fulfill it within a certain time frame, you’ll be penalised.

6. Buyer rotation

Establishing a relationship with a buyer can take time, but you don’t have much, because they’re frequently moved between departments in an effort to reduce favoritism. So, be aware that there’s a good chance you’ll have to go back to square one with a new buyer at some point.

7. Branding

Woolworths-brand-logoThink about it. It’s not as if buyers like these are committing only to retailing a new product. These stores are already stocked wall-to-wall!

To make room for your invention, they’ll need to dispose of another product. And that’s why you see rows of more or less the same brand in some aisles.

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These brands have major marketing power. How can you compete? Eliminating a big brand product favour of a no-name brand is difficult to justify.

8. Time

Getting set up will feel like it is taking forever. As a new vendor, you’ll have to tackle everything from insurance to training to mastering their computer software system – all of which will take time. Budget for it. Your monthly overhead won’t stop.

Don’t be dissuaded. (If you’re anything like Tom and I, like we even could dissuade you.) Our intent is to open your eyes to the reality at hand.

Tom says to be prepared to spend at least two years gaining the momentum needed to work with a big box retailer to get your invention on its shelves, and I fully agree.

“This is not for the faint of heart!” Tom says. He, and I, wouldn’t have it any other way.

This article was originally posted here on Entrepreneur.com.

Stephen Key is an inventor, author, speaker and co-founder of InventRight, LLC., a Glenbrook, Nev.-based company that educates entrepreneurs in how to bring ideas to market. In the last 25 years, he has liscenced more than 20 new products. He is author of the One Simple Idea series of books including One Simple Idea for Startups and Entrepreneurs, (McGraw-Hill, 2012).

Business Landscape

Hooked On Ethics

The business that puts ethics at the forefront of its culture is the one that will shine in a landscape littered with dishonest behaviour.

Howard Feldman

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There is significant research into how the work environment influences ethical behaviour. Study after study has shown how the ethical values upheld by management filter down to all employees, affecting behaviour and business practice. The biggest influence on a person’s ethics is their environment. In South Africa, the after effects of the recent political regime continue to shake both country and citizen. Corruption has seeped into almost every part of the government and in some of the country’s most prominent private organisations.

The old saying that the ‘fish rots from the head’ has never been truer, nor more obvious.

The ethical dilemma

The reality is that the government’s flagrant disregard for ethics saw corruption become a part of everyday life. This makes almost everyone ask themselves questions like – why should I pay X utility bill? Why should I pay my TV license? The money is being clearly used fraudulently. Sure, it is the law, but leadership has proven that ethical behaviour isn’t rewarded or recognised.

But it is. The value of building an ethical business and upholding a culture that promotes honesty and integrity cannot be understated.

Related: Developing Your Business’s Ethics Policy

Here are five reasons why…

  1. Those who skirt the edges of ethics almost always get caught.  There has been a steady shift in the country’s moral compass as leadership has taken a far stronger stance on rooting out corruption and already some of the country’s biggest names have been found guilty. KPMG, McKinsey, Bell Pottinger and SAP have all had their names tarnished by the scandals that have rocked the country.
  2. Employees are more engaged and better behaved. A weak ethical culture filters down from the top, influencing behaviour and attitudes. If employees feel that they can get away with bad behaviour that benefits them, or if they feel that their environment encourages this, then they will.
  3. A strong ethical influence will dictate how employees treat customers and one another. If your company enforces and rewards honesty and integrity, then these will be the qualities that clients will perceive. Their lack may also see you lose market share and your reputation.
  4. Like attracts like. If you create a culture that rewards employees that work all hours, deliver the goods and commit themselves then you will attract more people with these qualities. The same applies in reverse – reward bad behaviour and the results will rapidly speak for themselves.
  5. Your business reputation. Trust can’t be bought. It is hard won and easily lost. If you lose your reputation then it is very unlikely you will win it back and it will follow you for the rest of your life. The same applies to your staff. If their behaviour is questionable it could damage your company. Make sure you set the rules of what is or is not tolerated by your company culture and consider investing into ethics courses that allow your teams to stay ahead of the curve.

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Business Landscape

Solutions To Get Your Business Through Tough Times

We are happy to announce that times are changing and that Start-Ups and SME’s never have to leave legal unattended again!

Nicolene Schoeman-Louw

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It is no secret, things are really tough at the moment. South Africa is in a technical recession and consumer spending is at a low. To many small businesses this means that the pressure is very, very real. As a result, cost cutting will inevitably have to follow, and the reality is, that the legal side of things are often one of those aspects left unattended. Resulting in massive risk exposure that could threaten the business’ ultimate sustainability or success.

But everything is not just doom and gloom! We are happy to announce that times are changing and that Start-Ups and SME’s never have to leave legal unattended again!

We have put in a lot of money, time and effort creating a pioneering online platform that hosts standard legal documents, which are the crucial pillars of best practices for any business. By utilising technology, we aim to provide access to trusted legal products and services in order to empower Entrepreneurs.

The SchoemanLaw SME Self- Service Desk TM is the first solution of its kind in South Africa! In testimony hereof, SchoemanLaw was honoured earlier this year as a finalist in the Nedbank Business Accelerator Programme, for the platform’s unique ability to provide access to trusted legal resources that empowers Entrepreneurs, to create sustainable businesses that are scalable.

The platform further addresses the need of effective management of individual needs, such as drafting your will, the management of crucial relationships in business, including employment relationships and contractors, as well as stakeholder relationships in the ecosystem, such as clients, debtors, shareholders, directors and joint ventures. It also allows the users access to personalised support in case of any unforeseen legal incident occurring. Supporting entrepreneurs to effectively establish legal foundations in their business for optimum growth and overall business success.

Related: When To Collaborate And When To Employ

The following documents are examples of those available on the platform:

  • NDA (Non-Disclosure Agreement)
  • Independent Contractor Agreement
  • JV Agreement
  • MOI (resolution included)
  • Shareholders Agreement
  • Various Company resolutions
  • Acknowledgement of Debt
  • Distribution Agreement
  • Agency Agreement
  • T&C’s
  • Supplier Agreement
  • Last Will and Testament
  • Residential and Commercial Lease Agreements
  • Loan Agreement
  • Letter Demanding Payment
  • Various HR Documents, such as:
    • Employment Contract (fixed and indefinite term)
    • Generic Human Resource Policies
    • Certificate of Service
    • Written Warning
    • Disciplinary Hearing Pack

Free samples:

  • Offer to purchase (freehold and sectional title)
  • BBBEE Affidavits (EME and generic QSE)

and many more!

Related: The Role Of Trust Now And In The Future

Prices range from R195 and R895 per document if downloaded on a pay as you need basis or R249 / R495 per month on a subscription basis, this is over 75% less than usual rates if traditionally drafted by an attorney. What is more, users have the support of a law firm not only having created, but who maintains the platform and supports each User.

The platform is also ever evolving and completely customer driven because documents are added constantly as customers request them. All the documents are also constantly updated to ensure that they align to the latest best practice. So, never leave the legal unattended ever again! For more information or to Empower your small business today, go to: https://www.schoemanlaw.co.za/online-legal-services/

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Business Landscape

Effective Business Insurance Supports The Economy

The insurance industry has an important role to play in assisting SMMEs to effectively manage risk and resist the temptation to save money by buying less insurance cover than their actual risks suggest.

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The success and growth of small, medium and micro-enterprises (SMMEs) are essential to the development of our economy. The insurance industry has an important role to play in assisting SMMEs to effectively manage risk and resist the temptation to save money by buying less insurance cover than their actual risks suggest.

Value of advice to create trust

This is where the value of advice can be clearly demonstrated. Henry Ford said: “If we asked our customers what they needed, they would have said faster horses.”

Therefore, as risks become more complex and costs grow, we need to, as an industry, enable SMMEs to trust us to advise them where to place their hard earned money to safeguard themselves against potentially devastating setbacks.

In every business, customers are unique and face their own challenges and risks. For a manufacturer, protecting valuable stock during storage or transportation will be essential. A motor fleet owner will need comprehensive cover for their specialist vehicles to protect them against accidents, theft or liability.

Insurance brokers have the knowledge, experience and skills to guide SMMEs in identifying the risks their businesses face and choosing the correct insurance products to meet their specific requirements.

Related: Government Funding And Grants For Small Businesses

Changing environment = changing needs and solutions

Property damage cover, such as fire insurance, compensates SMMEs for buildings or stock, while business interruption cover allows them valuable time to recover without feeling the strain of lost profits after an unfortunate event. Comprehensive motor insurance can cover vehicle repair costs and provide replacement vehicles allowing businesses to continue to render a service after a loss or damage occurred.

In addition, lawsuits can be costly and time-consuming, with exorbitant legal fees and resulting court awards. Liability insurance protects SMMEs from these and similar claims.

Other important insurance products provide security against financial losses, resulting from theft, fraud or dishonesty by the company’s own employees.

Partnering for success

Any business failure or loss can have far reaching effects on the rest of the economy. Therefore, it is necessary for brokers to partner with insurers who understand the risks inherent in a particular SMMEs field of business – a winning partnership to build the economy by supporting the sustainability of our small businesses.

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