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3 Times You Should Say "NO!" To A Retail Distribution Deal

I wish more vendors/brands were willing to say “no” to retail buyers because the deal didn’t benefit them.

For the ones who did say no to me and stated their reasons, I respected and admired it. One reason I would hear would be because the brand was afraid of deteriorating their brand and angering their more premium retailers. Obviously I’d try to work with them to come up with a solution that would preserve their brand equity and my plans for them in my assortment, but if we couldn’t reach a win-win agreement, I understood the reasons why and never faulted them for it.

I WISH more small vendors said “no” to me. Here are some occasions when vendors SHOULD have said no, but didn’t.

1) Vendors who were in no financial position to be doing business with a major retailer. For example, those who agreed to sell to Target but had to stretch themselves to fund production. Or those who could not handle the cash hold we placed on new vendors. Yes, retailers hold back some of your invoice payment (amount varies, but it can be as low as $5,000 or as high as in the tens of thousands) to cover chargebacks or other fees.

2) Vendors who would have to take a substantial hit on their margins and/or lower their wholesale costs much lower than they had planned. Desperation does strange things to people, include making concessions that would hurt their profitability and long-term sustainability. Stick with the margins you budgeted for yourself at the onset of your business. Rarely does it make sense to lower your wholesale costs too much. Because that margin will already be eroded by the unexpected costs of doing business with that retailer. So to start off with a deflated margin only hurts you long term.

3) Vendors who have an untested supply chain and/or little manufacturing experience at high volumes. Many vendors said “yes” to me and hoped for the best when production time rolled around. Hope is not a strategy. I’ve seen many vendors flop because they couldn’t get inventory to DCs in time because they failed to foresee certain hiccups, resulting in penalty fees for late delivery. Or other vendors would learn that their factories couldn’t produce consistent quality product at high volume levels and when those vendors failed quality testing, I’d kick them out of the assortment, leaving them with unsalable inventory. Nothing incurs more wrath from a buyer than poor execution.

So don’t be afraid to say no to retail buyers. It is not closing a door, but rather, a step towards building a long term relationship.

They’ll respect your sound business judgment and think more favorably of you as a future business partner. Credibility is in short supply in the vendor community. Saying “no” can build more credibility than you realize.

Build Your Dun & Bradstreet Credit Score

Dun & Bradstreet (also known as DNB or D&B) provides many services, but the one that is relevant to retail vendors is their service which provides commercial data to businesses on credit history. They provide credit ratings for companies.

And just like with personal credit scores, DNB scores can go up and down based on your history. Plus it takes time to build. So yes, they are basically the "Equifax for companies". 

Misinformation exists about whether you need to pay to manage your D&B credit history and score. The answer is NO.

There are two DNB websites and it is really confusing to know which website to go to when you are looking to manage and build your credit score. One of their websites will try to sell you this service. Aggressively. They position it as a concierge service. But whatever you do - do not pay. You should never have to pay DNB a dime to work with any retailer. 

Instead, work to establish and build your credit history YOURSELF.

Here is how:  

1. Go to https://iupdate.dnb.com (a Dunn & Bradstreet website) and find out if your business is already listed. This will also be where you find your DUNS number. Register to use IUpdate. This will allow you to confirm the information they already have on your business (crazy what they have!).

You will also be able to create a user account. Do this. This enables to you continue checking your profile and monitoring your credit score. They recommend checking your score monthly.

2. On iupdate.dnb.com, upload financial statements and submit company information. A peer advised me, "Give them everything they ask for. Sing like a canary". She's right. The more you enter, the more information to boost your credit score. 

3. Click on the "Investigate Payment Experience" option on your dashboard. That is DNB speak for seeing if anyone filed a complaint about late payments or unsettled invoices. If you see any "payment experiences" that you disagree with, go ahead and dispute them. They will usually come right off. Most of these claims are without merit or maybe even be misclassified. No one knows exactly. Just dispute them all. They get taken care of quickly and your score improves as a result. 

4. Use "View Company Report" on the dashboard to make sure everything looks "healthy". Do this monthly. In addition, update your financial information at least 1 to 2 times per year.

Also within the "View Company Report" option is the menu item "Payment". Clicking on that will give you your Paydex score, which is your credit score. Check this monthly.

Updated 12/2 8pm: I've heard from one person that they couldn't view their Paydex score and were asked to call a phone number for it...upon which they got a hard sell to pay a fee. Again, do not pay the fee! I'm looking into this so check back again for another update. For now, I share the screen I got when trying to check my own Paydex score. What did you get?


All of the above can be done in one sitting and all on IUpdate.dnb.com. It is important to do this before applying to become a Walmart vendor. I haven't heard of other retailers requiring an "acceptable" DNB score, but it's a good idea to work on this proactively, as there is little downside in doing so. 

I'm told the above actions can improve your score immediately. And within a month or two, everything will be in good standing. 

Lastly, ask your company's vendors (anyone you have invoiced) to call Dun and Bradstreet to report that you have paid all of your bills on time and with Net 30 payment terms. I haven't been able to confirm that this helps to improve your score. It's currently hearsay. But all indications is that the information DNB collects on you does come from vendors. So be proactive and ask your vendors to report your good payment history - in case it helps! 

And remember, you should NEVER EVER HAVE TO PAY DNB for any of their services. Do the above and you'll be able to build your credit history quickly. 

How To Solve Vendor Problems In The Retail World

Did anyone ever say to you, "and now the real work begins" after telling them you were just awarded business by a retailer? 

Pop! That's the sound your bubble just made when it burst. 

But that adage, while a big bummer, is grounded in truth and experience. 

The retail path is full of landmines. Do you know which is the most heart-wrenching of all the landmines I have ever experienced? Almost losing a retailer because we did not know what we did not know

Getting set up with a new retailer is like the black hole.  EDI, new item setup forms, replenishment audit forms, factory audits, insurance, Dun and Bradstreet, EFT, just to name a few. 

No one tells you what steps are needed to complete set up. No one can quote accurately how long it will take. No one can guide you on the intermediary steps required to complete each milestone. No one can tell you where to find that information. It's the blind leading the blind! 

Last month, a client was sailing smoothly towards their next deadline with Walmart. With just 5 days left, they were expecting to hit the deadline on time. All of a sudden, they were notified their Dun and Bradstreet (DNB) credit score had changed. For the worse.

Uh oh. 

A flurry of phone calls ensued. While the merchandising team can typically override DNB scores, the Divisional Merchandise Manager dug in his heels. He would not overturn it. 

More phone calls. Dun and Bradstreet (DNB) quoted a $12,000 fee to "revise" their credit score. But even with the payment of said fee, it would take 7-10 business days before their revised credit score would take effect. 

So with 5 days to hit the deadline, they pleaded with their retail buyer to extend their deadline. He said no. Even in the best case scenario, there would not be enough time left in his timeline to wait for my client. He apologized. His responses, brief. His tone, pessimistic. 

My client was crushed. They just lost the Walmart business after fighting so hard to earn it. It was heartbreaking, especially to have lost the business for a reason as silly as DNB. Note: See my post on Dun and Bradstreet for context.  

But kudos to my client. They did not give up. They sprung to action and pulled off the biggest miracle I have ever seen in retail:

They changed the mind of the retailer. 

They did several things that enabled them to "negotiate" with the retailer and hit the original deadline. And I'm honored to have been part of their solution. 

What did they do?

AKA "How To Solve Problems In Retail"

1. Lean on your peer network. 

Your peers are a wealth of experience and wisdom. I'd venture a guess that my peer network amounts to 200+ years of experience selling to this retailer. Can you guesstimate the # of years experience your peer network possesses? Probably tons! 

It's important to build relationships with your peers as you go through the product startup journey. Join Facebook groups with similar entrepreneurs, meet your booth neighbors when exhibiting at trade shows, get to know other brands selling to retailers you hope to work with. Not only can these relationships turn into future co-marketing partners or provide referrals, but they can also fill your information gaps

One of the first things my client did was tap their network of peer companies to ask for advice.

I stepped in to help. I contacted other Walmart suppliers I knew to ask them how they got around the DNB obstacle. I was also able to learn from them what hiccups to anticipate in the future.

No more flying blind for my client. 

After pooling our collective peer network, we were able to get money-saving advice and establish a clear plan of action. 

Your network is priceless...and it is FREE! So spend the time to contribute to your community of entrepreneurs. One day when you are in a bind, their help can be the difference between keeping a retailer account or a heartbreaking disappointment! 

Through this experience, my client realized they "don't know what you don't know" and needed an insider at Walmart who has "been there, done that" to help them avoid future mishaps. They turned to me and my peer network to identify a broker. 

2. Round out your team with people that fill you knowledge gaps. 

In this situation, a Walmart expert is whom we needed. We couldn't do this alone. 

Soon after the DNB issue popped up, I called my friend Matt Fifer of Selling To the Masses. I asked him to introduce me to someone who knows Walmart inside and out. He quickly reminded me of someone I had met a couple months ago who could help. That person worked at a local sales rep/broker firm. I called him up, walked him through our situation, and he prescribed an action plan. 

This local broker was 90% of the reason my client was subsequently able to hit their deadline. I won't share all their secrets, but having someone who knows their systems, process, terminology, how paperwork should be completed, who to call, and has long-term relationships proved PRICELESS. 

After they were able to salvage the business with Walmart, my client retained them as their Walmart broker. My client vowed never again to swim upstream without a guide.

Some things are best left to the experts who do this everyday and for a living. 

3. Build strong relationships on the inside - especially with the merchandising team. 

In the 5 months since this client was awarded business by Walmart, they had opportunities to get to know many people within Walmart, from Retail Link support to Order Specialists to the Vendor Master team. And over that time, they built relationships with these insiders. These people proved very helpful during times of trouble and helped point my client in the right direction.  Sometimes that extra few minutes or extra explanation means the world of a difference (and time saved!) in resolving a problem. 

My client had also established a great relationship with the buyer, and had impressed his merchandising team, all the way up to the Executive Vice President. Because the EVP believed in this brand, and with the buyer's help, we were able to get an override on the DNB issue. As a result, we hit our deadline and remained on track for my client's launch date in Walmart stores.

Despite all this stress, my client was able to maintain their relationship with their buyer. And because their broker had a good relationship with the Divisional Merchandise Manager, he quickly soothed any hard feelings after we went over his head. After explaining the circumstances (i.e., the $12,000 DNB fee), he understood. He was actually surprised and disappointed to learn such a fee existed. 

So while trite, it's true. Relationships are everything. And the value of relationships is most valuable during those times you are stuck in a bad situation. 

Entrepreneurship is a wild ride. The resourcefulness of whom you know - whether it is your peer network, the experts you hire, or your clients - will get you through those uncertain times. 

 

 

What is the Deal With In-Store Marketing?

Should I participate in the marketing programs offered by retailers?

Must I agree to retailer marketing BEFORE they will consider our products? 

What about the marketing we are doing outside of any retailer? Does that matter to retailers?

All good questions and common ones, too. Often times, it seems the first hoop retailers will make you jump through is to sign up for their marketing programs. Even without having been awarded business first!

In the past 2 months, I have prepared retailer marketing proposals (also known as shopper marketing) as the price of entry, or danced around conversations about this with ShopRite, Kings Market, Balducci's, Gelson's, Sam's Club and probably others that I can't think of. The irony is that the big guys, Walmart and Target, wait until after they award business before hitting up vendors for retailer marketing!  

Here are some answers to help you prepare for these conversations. 

How This Little Brand Made A BIG Impression With Target Senior Executives (Plus, 3 Actions That Earned Us A Future Commitment)

Last week, I attended meetings at Target for an organic skin care brand (different client from my Walmart trip).

This brand began selling to Target in April 2015. And they first brought me on with the request:

“Can you work with our sales rep to make sure we perform well at Target? And help us grow our shelf space?”

Their request stemmed from concerns that sales were too slow and they were afraid they would not be renewed for 2016. We immediately began digging into sales and coming up with a plan of action.

Simultaneously, Target invited this brand to submit for their big 2016 merchandising and marketing initiative, Made to Matter. This lengthy process included multiple rounds of consideration. Approximately 100 brands would be whittled down to just over 30 brands over several months.

Flash forward to mid-July. This brand scheduled two meetings at Target HQ:

  1. A line review with the category buyer and,
  2. Made to Matter final round pitch presentation to a cross-functional committee of 15+ executives.

How I Got An Order From Walmart in 20 Minutes (True Story!)

Last week, I was in Bentonville, Arkansas.

Have you ever been there? I haven't. And I was excited to go. Walmart and Sam's Club are headquartered in Bentonville and give the town its storied history.

I was there to lead the pitch to Walmart and Sam's Club for a client. It was such an interesting and positive experience that I knew I had to share it with you! Whether or not you intend to sell to Walmart or Sam's Club, this experience is still worth reading about. 

I'll start with the meetings. We had 3 Walmart meetings and 2 Sam's Club meetings. We met with both the Senior Buyers and Buyers for our categories. Within 20 minutes of our first meeting with a Walmart Sr. Buyer, we received a commitment for Feb 2016. My client laughs when she tells this story, but the commitment came so fast I didn't believe it. I actually asked the Sr. Buyer to clarify, "So when did you say you will be making decisions for the February assortment?". His response, "I just did. Your brand is in our assortment." OH! 

Retailers' Love Affair With Wellness & Sustainability

It is official. Wellness and sustainability are key areas of focus for major retailers. The masses have spoken. Natural, organics and sustainability are no longer niche preferences. It's gone mainstream.

Walmart has stated these as their top priorities. And Target has announced a very similar focus to Wall Street. If you visit the websites of these two retailers, this focus is prominent. 

Grocery retailers and national drug stores have also claimed a stake in this growing market. Everywhere you turn now, you can't miss this growing trend. 

And brands are responding. Nestle, General Mills and major CPGs are pivoting to align with the shifting trends in "better for you" foods. And the Fancy Foods Show in June was dominated by natural, healthy foods.

This blog post focuses on Target's journey into wellness and sustainability. 

Click to read more and watch Target's presentation on Sustainability. 

5 Lessons From Store Execution Nightmares (How To Ensure In-Store Execution Is Flawless)

You have a vision for how your products will be merchandised and displayed in stores. And it’s magnificent one.

Your SKUs are lined up neatly, shelves are fully stocked, and the packaging is gleaming with crisp edges as if it just came off the production line. You imagine yourself turning down the aisle and being blinded but the beautiful merchandise display. You marvel over how your brand will jump off shelf and are pretty sure the assortment will catch the attention of any shopper walking by.

And then reality hits. And it’s far from what you imagined.

The truth of brick and mortar retail is that your product will have made a long journey before it reaches shelf. And that journey will have jostled product in its master carton, collected dents from drops and bumps, and misshapen the contents from the crushing weight of other cartons.

 

FIVE LESSONS FROM STORE EXECUTION NIGHTMARES 

Lesson #1: You have some (not full) control over how your product and packaging will arrive and look at shelf.

Make sure you think through this journey before finalizing packaging colors (white gets dirty) and durability (corners crush easily, plastic and dolomite shatter easily, tin dents). Do drop testing. Wrap individual items with plastic or bubble wrap. Use inner cartons.

Trending Retail News: E-Commerce Brands Are Opening Physical Stores

This is a trend all readers need to know about and follow.
"We believe that ‘pure play’ retail is going away, that e-commerce companies are either going to open stores or go out of business. And retailers need to be either excellent at retail, or they will go out of business. I also believe that Amazon cannot survive as a pure play retailer." Scott Galloway, NYU Professor.

The business takeaway is this: a brand cannot survive on e-commerce sales alone. While e-commerce continues to grow rapidly, multiple data points indicate that it will never overtake the market share of in-store sales. Physical store sales will always represent the lion-share of total retail sales. And brands who stick to solely e-commerce sales will see their sales growth plateau.