The question of selling into Big Box accounts for the first time is one of the most frequent questions which comes up. It’s a pretty simple answer yet has several components to it. Many, many reps and rep agencies have great connections with category buyers at Big Box accounts. To find reps who can get access is not difficult at all. That is the easy part. Gaining access to Big Box has as much to do with your company and potential margins as your product. Let me rephrase—the actual product, almost doesn’t matter! Here are just a few things that will come up in this often grueling process.
- Can your company gain “vendor status”?
- Each retail chain is different as to its requirements to the sort of company they will do business with. You could have the best widget in the word, yet if you can’t gain vendor status, it is irrelevant.
- Do you have pre-produced inventory?
- So many companies figure they will produce the product after they get that first major PO. Can that sometimes work—maybe single digit times. Be prepared to answer this question with buyers and procurement.
- Do you have EDI capabilities?
- Everything is done via electronic inventory. Do you have an internal EDI system? Good thing is that there are many fulfillment centers who can help with this issue.
- Do you have multiple SKUs?
- It is very expensive for a major retailer to add a new company and product line to their inventory systems. If you only have 1 or 2 SKUs you are trying to sell in. You would have to sell a huge number of units at retail profit for them to justify the expense.
- Are you prepared to offer Ad Allowances?
- Ad allowances are pretty much expected. A certain percentage of every sale is going to be allocated for the retailer’s ad allowance.
- What’s your feeling on returns?
- Many major retailers have an automatic return policy. Meaning if they get a customer return, you will be charged back for that return sometimes with a handling fee to do so. Oh, and you never get the product back. This is actually a revenue stream for some major retailers.
- What is your expected time frame to get sell in?
- Most major retailers are doing their planning at least a year in advance. Sometimes longer. If you start the process at the time of the retailer’s line review, it will likely be a year from that point. Sometimes hot market or holiday exceptions can be made so never a bad idea to investigate that option to start.
These are just a few of the hurdles you will face when dealing with Big Box Retail. Then of course they still have to like and approve your product. It usually takes deep pockets, a lot of patience and a strong stomach. Any questions let me know.
Tom Metsa
tom@rephunter.net