Your retailers have DIFFERENT worries than you - they have a job to perform that includes hitting sales targets, generating profit for their company, and keeping their customers interested in coming back day after day for new good products.
Your retailer MAY not say exactly what they are thinking when you’re talking during your pitch but it’s helpful if you know their objections would be WITHOUT THEM NEEDING TO SAY IT.
Address their fears… and find a better retail relationship:
1) You won’t be reliable -
You might make a great sales pitch… but if you can’t deliver what you promise… on time and in good condition… their shelves will sit empty and miss sales. Or worse they will get returns from customers.
Your reliability is CRUCIAL to their bottom line.
How do you address this - show them you’re ready to be professional and deliver on time. Ask them questions about the timeline of getting set-up with them and the lead time from a PO to desired delivery? Get clarity on how many units they would order to start? And how many units would they expect to ideally sell in their category for them to be happy?
Make sure you plan to have inventory and a production timeline that will work with their plans to order. Usually, they want a fast turn-around so the larger the retailer, the more inventory you want to have ready so you can react quickly to an order.
Re-assure them that you will send a product with a good long shelf life (so it’s new product). Ask them how many days of shelf life they require? Then expect their contract to require you to reimburse them for returns and spoilage. Ask your retailer what their fees are for returns or spoilage because you want to keep this in mind as you calculate your pricing for them.
In the beginning especially - before you’re in many stores - retailers might ask for guaranteed buybacks. This means the retailer doesn’t risk anything carrying your product and you will ship it in and take it back at your expense if it doesn’t sell. This can be painful if your products don’t sell. Guaranteed backs aren’t essential for brands that have a safe track record. But if you can concede this in the very beginning for your first retailer, for example, it will ensure you are seriously considered in your first store as a real candidate.
Do what you can, especially in the beginning as you build credibility, to show you will support sales. Negotiate as you grow for new terms and change what terms you will allow in larger retailers as you keep growing and have proven track records of success.
2) People won’t know what your product is -
You are a fan of your product and know your sales numbers and rave reviews… but they won’t. They will be worried that your product will go on the shelf and people won’t know what it is and therefore won’t buy it.
You will need to show proof that people know, like, buy and repeatedly buy your product with this type of proof:
Existing sales numbers - this can include total annual revenue for all sales, total number of units sold, or total sales in one point of purchase (like on Amazon.com or Walmart.com). If you have low sales compared to that retailer, be sure to demonstrate growth over time (in a chart or % of growth) to highlight movement in an upward trend.
Rave reviews - Showing customer feedback and reviews are great social proof that once someone tries it they will like it. You can copy this from Amazon, an email from customers, or even a comment on Instagram.
Followers on social media - If you have an active and growing community online - this is proof that people want to hear from you, even beyond the store.
Customer photos - Photos posted by customers or influencers are great ways to also demonstrate beyond just the number of followers - that people like and have strong feelings towards your brand.
List of other stores that carry your product - If other retailers sell your products and find success it’s a good indication they can too. Be sensitive though because retailers are competing with one another and sometimes will NOT want to carry the same products or will NOT want products to be the same price. They are looking for a point of difference with their customers… specifically a point to be better! If you can identify a retailer you REALLY want to be carried by and give them a great offer - like something you can offer to them that others won’t have they will often find that appealing if they wanted your product to begin with. Allow this to happen naturally in the negotiation.
If you don’t have CRAZY sales yet, you need to show your retailer you will help people in their store notice your product so it will sell.
All retailers expect you to help them sell product to customers. This can include:
1) Free fill- meaning a free case of product that you give at no charge to compensate for the expense of your first round of products being shelved by employees.
2) Slotting fees- which is a charge the retailer could require just to have your products in prime locations on the shelf (that can be around $1,000-$5,000 per SKU). That’s right… you are paying to be on the shelf but sometimes that is what it takes.
3) Promo money- which could be a discount they pass on to the customer that they will bill back to you at check-out. It could look like a coupon or a discount on the price tag.
4) Demos- this is when you pay for someone to stand in the aisle near your product and give out samples or show people how it works. This helps grab attention and explain it to customers.
5) Marketing money- like participating in their newsletter or magazine. All of these things you need to ask about during your meeting so you can both address these fears of your retailer AND correctly estimate your pricing and margins so you don’t go broke.
Retailers will also want to know you will do things on your own to promote sales. It could include social media ad spend or an email blast to your fans to announce you’re in their store. Any special ways you can drive customers to their stores to buy your product - will be welcome.
3) Your product won’t be profitable for them -
Their clients won’t know what your product or brand is - If people walk past your brand and don’t buy it, they will lose money and a chance to sell here too.
You will want to address:
Are you priced competitively?
What is your MSRP? This is your suggested price for retail but they can choose to sell it at any price they wish. It’s helpful for them to hear this price because it is what average stores will charge and they will want to know how their pricing will compare.
What are your competitor’s prices? How do you compare? If you are a VALUE brand - explain how price matters to your customer. If you are a PREMIUM product - explain why your customers are willing to pay these higher prices.
Many retailers PROMOTE themselves to their customers based on pricing… for example “Everyday Low Price” means they will not want to find out that you are selling for less somewhere else. Ask about their target customer and why they shop there. For example, save your best prices for Walmart and Costco who will drop you if you let your prices be lower somewhere else.
Will you help them hit their margin targets?
Ask them how much margin they require for products they sell.
Explain to them that anyone carrying your product makes X % when carrying your product depending on if they use a distributor or not. Expect KEYSTONING to be an industry-standard… where your product cost is going to be marked up by your retailer by approximately 2x. And then your retailer will sell it for 2x that cost to the public. People want to make at least 50% so you need to plan for that. Reward retailers for ordering larger volumes with more room for margin.
The way YOU can deliver on the margin is by setting a MINIMUM ORDER QUANTITY (MOQ), which should be the quantity you would need to sell to be able to break even selling to the retailer.
4) You won’t have an easy way of getting your products to their store -
If they like your product and want to place an order, they will wonder how they can get access to it. Most stores are regional and even bigger stores start products out in a certain portion of their stores to test out working with you and their customer’s response. This means you need a solution that works with their location.
Some retailers will work with you DIRECTLY - this means they will coordinate freight pick-up from your warehouse OR some will ask you to deliver directly. If they want you to deliver you will need to know where their warehouse is so you can reply to them after the meeting with a quoted price. Their orders in this case will be in the size of a full TRUCKLOAD or LESS THAN CONTAINER LOAD (LTL) and you will want to have a good freight forwarder to help you get a quote before you send them final pricing if this is their request.
But a lot of retailers require you to work through a distributor that helps them organize products from all over and get them trucked to their stores and on shelves. They will ask you where your warehouses are and if you currently work with distributors?
Most retailers will be interested in pricing based on both so they can pick. Your best outcome is to have a good answer for them that will include:
Direct/Warehouses - Be prepared to share the address of your current warehouses. If you want to get into bigger US retailers seek to have an East and West coast location.
Distributors - List who distributors your products. Ideally, retailers want you to have an existing distributor they like working with who are carrying your products - which is where you will want to focus on growing if you're not already carried with those distributors. It makes it easy for them to start buying from you immediately. Work your way into these distributors with smaller chains first. Your presence as a distributor speaks volumes to your professionalism, reliability, and maturity of your company.
Ask the retailer who they like to work with and in which regions? Tell them you are willing to be set-up there if they want to place an order and request that process. Larger retailers have the power to ask distributors to carry your products - which can be very helpful. But they will only do that if they really want your product. If they say they will wait until you’re already in there, go find smaller chains that use that distribution center and break into that distributor this way. Then go back to the larger retailer and tell them you have the good news that you are now being carried by their preferred distributor.
The key to a great retail meeting is to be honest and upfront - and seek to understand and support your retail buyer. Retailers are people just like you - they want to succeed in their job, which means they want to work with vendors that will do well with their customers and help them do a good job. Retailers value partners who deliver, making their customers happy with products, profitability, and ease of distribution. Address these fears in your meeting and you will have a powerful sales pitch AND start building a beautiful long-term relationship with the retailer of your dreams!
Want more where this came from? Sign up for our RETAIL SALES PITCH live webinar next month! https://www.emilyannepage.com/post/event-crafting-your-perfect-retail-sales-pitch-live-webinar
Want a branded retail sales pitch? Hire Pearl Resourcing to design your branded Powerpoint of Keynote template so you walk in looking like a professional:
Want tailored help? Hire Emily Anne Page for business growth consulting: http://emilyannepage/com/consulting
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