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How can I get my product into a big retail store?

How to get a product into a retail store.

Entrepreneur

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Getting into the retail major leagues is something many entrepreneurs dream about. According to experts – and some entrepreneurs who’ve already made the leap as vendors or suppliers – there are some basic principles that can help guide you through the process.

Begin with questions. Before you try to make the leap to multiunit retail, ask yourself these basic questions: Does your product fit a demand just waiting to be tapped? Have you already found a multiunit retailer that’s a good fit for your product?

What is it about your product that would make a buyer see fit to take a chance on your product? If you land the deal, can your production handle the volume? Do you want to sell your product directly to the retailer, or do you want to license your product to a manufacturer who’ll then distribute it for you?

Plan ahead for profit. Before you even think about becoming a multiunit chain’s vendor, you need to make sure you can build a reasonable profit margin into your product’s wholesale price. Plan for a manufacture cost that’s one-fifth the retail price – or less.

Then build the cost of packaging, commissions, marketing and distribution into the wholesale cost of your product. Check the retailer’s guidelines for other fees as well that you’ll have to build into the cost of your product.

A discount retailer will trim profit margins to the bone to squeeze those famed low prices out of products – but there are some advantages for vendors willing to go lean, such as the sheer power of numbers that goes along with exposure to a bigger market.

Look for the right store. A search for the best retailer for your product starts with you browsing stores for similar or related products. Spend some time in local retail stores to see what’s on the shelves. Picture where in the store your product would sit on the shelf, and keep that in mind when it comes time to approach the store’s buyer and make your presentation.

Check to see if the retailer offers any special programmes that could give you a leg up, such as local vendor programmes that serve as an entrée to regional markets or programmes that offer breaks to women-owned or minority-owned businesses.

Determine who should pitch your product to retailers. Your decision to either offer the product to retailers yourself or hire a representative to do it for you depends a lot on your product as well as on your strengths as a businessperson.

If your product line is one that involves frequent changes – say, clothing, for example – you may want to hire a manufacturer’s representative who’ll present your line among the others he or she pitches in return for a percentage of the sales. In the grocery industry, for instance, it’s common to pay a commission to a broker who’ll try to pitch your product to a grocery retailer’s category manager.

Just how do you find a rep to pitch your product? One way is to get referrals from buyers. Another is to search the directory of trade associations within your product’s category or track down a list of the sales reps attending regional or national trade shows. If you have a one-time pitch that needs to be done, you may choose to do it yourself.

Fill out the vendor application. If there’s an application process, be sure to read the guidelines thoroughly before submitting the paperwork necessary to apply to become a vendor for that company. Once your material’s been submitted, give the buyer at least a few weeks before you follow up with a phone call or email to ask for an appointment for a presentation.

Make contact with a buyer or category manager. Call the buyer or category manager who handles your type of product and determine when and how frequently they look at new products. Be sure to ask about their policies and procedures for carrying new products. If the buyer expresses an interest in meeting you, set a time for a presentation, which will be on their turf (meaning there may be some traveling in your future).

Be ready for the presentation. Make sure your paperwork ducks are all in a row before you meet with the buyer. Familiarise yourself with the industry standard for the terms that will be bandied about, such as conditions of sale, discounts, credit, shipping and allowances. In addition to mentally preparing for the meeting, here’s a list of some of the things a retail buyer may expect to see at your presentation:

A sample of both your product and its packaging, including a barcode and pricing. Packaging is of huge importance to buyers – your product’s packaging should take its cue from things already on the store’s shelves and racks.

  • A product brochure that provides thorough information on the product
  • A price list or catalogue that includes wholesale and retail prices, discounts, credit, shipping, allowances and conditions of sale
  • A list of retailers currently selling your product
  • Your marketing and promotion plans, including such things as in-store demos, point-of-sale displays, advertising and publicity
  • Proof of the potential for a large sales volume
  • Manufacturing information that includes proof of your capability for handling large production runs
  • Your business history
  • Your business card

Prepare for increased production volume. A whole new retail market for your product will mean a whole new volume of production for you; both you and the retail buyer need to know – and believe – that you’re prepared to ramp up the numbers. And you need to know that your manufacturer can handle that volume while maintaining quality.

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

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Starting a Business

What are the do’s and don’ts of securing an online domain name?

We asked Domains.co.za founder, Wayne Diamond, what the do’s and don’ts are when it comes to entrepreneurs registering domain names for their start-ups…

Wayne Diamond

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There’s that L-word again:

“Location, location, location”. It’s the make or break decision. Every estate agent and business owner cannot overemphasise the importance of this Critical Business Decision Number 2 (Number 1, of course, has to do with what you’re going to sell!).

Related: As a start-up, what are the most important areas I should be looking at?

 

Whatever business you’re in, being close to customers and convenient to business partners and suppliers is essential. That bricks-and-mortar wisdom is equally true in the world of online commerce. Having the right domain name and the right support for your online presence has emerged as a real driver of success.

Some figures put the scale of the opportunity into perspective: US e-commerce is predicted to reach $440 billion by 2017, showing a compound annual growth of 13.8%[1]. While the Internet economy is in its infancy in South Africa and Africa, it is growing strongly: research by World Wide Worx showed that consumers, small and medium businesses and government were already purchasing products and services worth R59 billion on the web three years ago.[2]

So how to secure the best and most profitable Internet real estate to make sure your business can ride the e-commerce wave?

It’s all in the name:

The first decision is what domain to use. One of the exciting developments is the launch of new Internet domain names, so it’s definitely no longer a choice of .com or .co.za. The proposed dotAfrica (.africa) geoTLD (geographic Top Level Domain) is one option that’s set to come online around the first quarter of next year, but what about the ZAdotCities domains of .joburg, .capetown or .durban? Domain names within these additional geoTLDs will be able to be snapped up by the public around November this year.

While .com remains a good choice for truly international businesses, choosing a domain name with some local flavour is probably going to work well for many companies.

The greater range of domain names also makes it more possible that you will be able to choose the right name for your business. When it comes to the more established domains, like .com or .co.za, chances are higher that the name you want has already been taken.

When it comes to that all-important name, received wisdom used to be that short was best, but the trend nowadays seems to have reversed—even phrases are now used. The key is to choose a name that is easily recognisable, that will stick in peoples’ minds and that describes the business well.

Perhaps a good example is the domain used by the writer of this article: www.domains.co.za is both a brand name and a name that perfectly describes the nature of the business. At just seven characters in length, “domains” is also an easy to spell, easy to remember word – keeping names under ten characters is guaranteed to help audience recall.

Something people will remember easily is absolutely vital.

Some companies use specific names for individual campaigns, but always make sure the business as a whole has its own web address.

Experience has shown that it’s probably worthwhile to register similar domain names to the one you choose, just to keep competitors from taking them in an effort to sow confusion.

My final advice: it’s always a good idea to use an ISPA (Internet Service Providers’ Association of SA) member to help you register the chosen address of your start-up. That way you’ll be sure that all the formalities are correct, and that the company you’re dealing with abides by ISPA’s code of conduct.

Finally, as there are already almost 950 000 .co.za domains registered, it’s a good idea to surf to www.domains.co.za and perform searches to see if the domain you would like is indeed available.

Related: Does the South African government award grants to franchisees?


[1] Chuck Jones, “Ecommerce is growing nicely while mcommerce is on a tear”, Forbes, 2 October 2013, available at http://mashable.com/2013/02/05/ecommerce-sales-top-1-trillion-worldwide/.

[2] “Internet 2% of SA economy”, 29 May 2012, available at http://www.worldwideworx.com/internet-2-of-sa-economy/.

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Starting a Business

How to protect your business idea when sending them to financial instituitons?

Signing an NDA, is it necessary?

Anton Ressel

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How can I protect my business idea before I submit my business plan to financial institutions and other agencies for help?

You have a few options:

Firstly, you can include a disclaimer as an introductory clause, saying that any and all information contained in the business plan and related documents remain the Intellectual Property of xxx (your name) and may not be reproduced, copied or used in any manner without express written consent. This is not legally binding, but usually enough.

Secondly, you could ask them to sign a non-disclosure agreement, which is more binding from a legal perspective. The downside of this is that it can come across as arrogant, especially from someone who is approaching us for help. Personally I refuse to sign any NDA from clients who approach me for help, it just smacks of mistrust and arrogance.

On a final note, good ideas always get copied. If you are that worried that your idea will be stolen, you may need to re-look at it and find ways to make it difficult to replicate, or better yet, make sure you are first to market.

Related: As a start-up, what are the most important areas I should be looking at?

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Starting a Business

Does the South African government award grants to franchisees?

In my experience, unless you as the entrepreneur have some ‘skin in the game’ and a reason to get up and make the business work every morning, it seldom will.

Anton Ressel

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I am considering purchasing a children’s education franchise and wanted to know if the government offers grants. The cost of the franchise is R 86 000. If so what are the criteria to qualify and how does one go about it?

Accessing grant funding for a franchise may prove challenging, unless that franchise is registered and accredited, in which case there is a fund that may consider it – see CNBC for more info.

Otherwise, you could look at www.investmentincentives.co.za and see if any of those sources of financing are of interest. It naturally depends on your own PDI (previously disadvantaged individual) status as many of these funds are focused on youth, women and PDI’s.

Finally, on an emotional level I would caution against going all out for grant funding and not loan finance. In my experience, unless you as the entrepreneur have some ‘skin in the game’ and a reason to get up and make the business work every morning, it seldom will.

 

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