My background is actually retail, so I naturally started out with retail before moving onto Amazon. When a friend told me about FBA I didn’t even know that Amazon let’s third parties sell on Amazon.
I thought they only sell their own product. I am glad that friend pointed me to FBA, otherwise it would have been a lot more difficult to get my brand off the ground.
It has been nearly 3 years since I started my own business and as I said I started in retail. I had collected many contacts in retail and that was the natural way to go for me.
Looking back I am happy I started out in retail as it helped my brand immensely to get exposure while creating a second income trough Amazon.
The ultimate goal of any brand or company is to get their products in front of as many customers as possible. The only way to do this is by listing your products through all the sales channels that are available to brands.
The most powerful or “rewarding” sales channel is retail and wholesaling. Retail has the power to move your product quickly, thus getting huge exposure for your brand and products.
Retail is notoriously one of the hardest sales channels to get into. Your products must not only be appealing to consumers, but also packaging and marketing materials have to be of a higher standard than E-commerce.
However, one of the hardest challenges is finding retailers who are willing to take on a new brand and its products. Retailers often don’t take huge risks with their capital and prefer to invest in brands that are already established or brands that carry really unique products. So the key is to have unique products rather than generic.
Selling a Garlic Press that has some accessory doesn’t make you unique. The retailer will buy this product from his trusted source.
Larger items also have the issue of shelf space; which in retail is limited. On top of that you can’t just knock on a retailers door and expect a smooth and fast process.
Retailers have decision maker hierarchies and it is often difficult to get to the right decision maker. Often times retailers already have their suppliers or connections and they aren’t open to a new supplier. Reasons being that they already may have great buying conditions and relationships with their existing suppliers.
In some cases I worked on a potential retailer for over 2 years before getting an order (in my previous job) and in those 2 years there were 3 changes on decision makers and I had to start from the beginning again.
The new guy might not be open to you as the previous guy was and maybe he is already bringing sources/suppliers to the job and you need to start all over again convincing the new guy.
On top of that most larger retailers get emails and phone calls every day from new suppliers wanting to sell them their product. So it is a long and windy road to get into retail, sometimes as much as 2 – 3 years. But once you have your foot inside the door you are in a great position.
Solution and how to get into retail
One word – relationship. If you have a good relationship the price or your product doesn’t really matter.
Someone is likely to buy from you if you have a relationship with him right? The more credentials you have and the more history you have with a person the more likely that person is to buy from you right?
An example. Let’s say you need a new health insurance. You already have an insurance from your trusted childhood friend (let’s call him Steve). Steve is quite expensive and maybe his insurance package doesn’t even have a lot of benefits.
But you still buy from him because he’s your friend and you’ve known him for years & on top of that you trust him. You even have him over at your house for BBQ’s, you meet up for beers etc.
You get a phone call from an insurance company trying to sell you a new health insurance with much better benefits. You don’t know this company but the offer sounds appealing.
You take the offer and go to Steve and tell him he needs to make the same offer or you buy from this new insurance company. Steve probably can’t make the same offer but he’ll adjust his old package and give you more benefits, maybe even at a better price. On top of that he throws in a coupon or voucher for shopping at Amazon.
You close the deal with Steve. That’s the power of relationships. And that’s how retailers work – they have their trusted sources and relationships. “You need to become Steve”.
Many of those relationships especially in the “old days” included some sort of bribery. For example if you switch to a new supplier that supplier would buy out your entire old stock from the old supplier. Back in the 90’s it wasn’t unheard of that a new supplier would invite you over on his yacht and take a trip down to the South of France.
Thankfully these “unfair” tactics aren’t accepted anymore – at least not with multinational retailers. There are strict enforcements in terms of bribery in big retailers. However, the relationship factor still plays a key role in doing business.
Today its just called “wining and dining” a customer. You take the customer out for a steak dinner and a nice bottle of wine and you probably don’t even end up talking business but a few days later you’ll get an order.
Now the key is to build a relationship with the buyer. You probably won’t be able to close a deal for months or even years because every offer you send to a new prospect ends up in the “trash” inbox.
1) Start out by visiting local stores that have maybe 20-30 stores in the area/country or state. Try to get an appointment with the Manager or Purchasing Department. Once you have an appointment prepare yourself with:
- Company presentation (Powerpoint / PDF)
- Product Catalogue (Can be PDF but prepare something nicely and don’t just show a link to your Amazon listing)
- Bring samples and business cards
- Bring your wholesale price list
A store can probably take up 5 pieces per item/per store. So 30 stores makes 150 pieces, not bad for a first order.
2) Once you are listed in a smaller or local store look into larger retailers that have 100-200 stores.
Same principle applies in terms of preparation but you are probably not the only one knocking on their doors. So you need a bit of track record with a smaller retailer or your online portfolio.
Retailers with more than 100 or 200 stores probably have their own purchasing department, maybe even a buying office in Asia. So you need to get to the decision maker.
There are several ways to get to decision makers but the most effective yet also most frowned upon are cold calls.
Email the decision makers or better cold call first. There are cold call guidelines for free on the internet. Key is to let the buyer speak and you only listen.
Most buyers just want to talk about how great they are, let them. You need to make them feel that they have the upper hand.
After your first cold call, follow up on the topics and email a proposal as discussed in the call.
Give it a few days and then either email or call again.
3) Exhibiting your products at a local or international exhibition is the best way to find retailers and wholesalers.
This time the buyers come to you and all you really have to do is follow up with the topics of the discussion.
The key takeaway here is that getting into retail really is a marathon not a sprint but it can be very rewarding:
The best thing about retail are re-orders. You might not make much money on the first order but if the item sells well re-orders will come and often times in much larger quantities than the 1st order. The good thing then is that the entire process is already set up and all you have to do is to place an order with your factory, knowing the entire process with the retailer. Or if you have stock back home you can just send in the new order to the retailer from your warehouse.
From some retailers I get re-orders every 1-2 months for the same product and all I have to do is place an order to the factory and ship the item to the customer.
These orders can be 2-5,000 pieces each time. Sometimes I make 1$ on a product, sometimes 5$. So in 1 day I can make 25,000$ in profits not really doing anything (a bit exaggerated – there’s still work to do ).
Imagine how many months you’ll have to sell on Amazon for an order and profit that large.
Getting into retail is very hard but as I said it can be very rewarding. It’s not a sprint so some deals can take 2 or more years but if the client is worth it don’t give up. Obviously the above is just a short visit into the topic, there’s much more to it such as contracts, advertisement material, sampling, pricing structures etc.
If you need more help on the subject or are interested in growing your business into retail don’t look any further. I am working on material that is coming out in the coming weeks that should help immensely
All the best and happy selling,