January 26, 2012
Happy New Year!
Once you have secured a meeting with a buyer, the first thing you should do is jump up and down in excitement! What an accomplishment! Not many make it to this stage. All the more reason to over-prepare. Here are a few things to add to your checklist:
1. Evaluate whether you want to hire a vendor rep experienced with that retailer. They will have the inside scoop like margin requirements, know the process and protocol, have pre-existing relationships, and access to Point of Sales (POS) data.
But do you have to hire one? Not really. But I do advise it. Most retailers prefer to work through a vendor rep when dealing with new vendors as it takes the pain out of managing new vendors. And having a rep located just minutes away from their planogram (POG) room makes it easy to have samples brought over at a whim or to have a quick in-person discussion. Great customer service is important to a lasting vendor relationship.
But I think the most valuable asset reputable vendor reps bring to the table is access to Point of Sales data. For example, Retail Link if you are working with Walmart, Information Retriever if you are working with Target, or syndicated POS data such as IRI or Nielsen. POS data enables you to access category sales information at that retailer, as well as track your own brand’s performance. This is helpful in building volume forecasts, measuring the ROI of your marketing initiatives, estimating buyers’ performance expectations, and developing sell-in strategies. Access to this information is cost prohibitive to get if you are a small or medium size manufacturer, as licenses can run in the several-thousands on up. So this, in combination with the other benefits, makes a compelling reason for hiring a vendor rep, in my humble opinion. UPDATE: I have formed a business relationship with IRI to give you access to Point of Sales data. It’s still expensive, but you can now access this coveted information on an ad-hoc basis! Email me for more info.
How do you find a vendor rep? We will cover that in a future blog. In the meantime, contact me and I can recommend ones I have enjoyed working with as a buyer – and ones that come highly recommended by other retailers.
2. Scrub your numbers. And by this, I mean 1) your costs and 2) your volume forecast. Both will make or break whether you’ll get that coveted purchase order.
Costs – Make sure your costs account for any ‘unexpected costs’ such as retailer safety and quality testing fees, new vendor fees, marketing programs specific to that retailer, etc. Ask other entrepreneurs, vendor reps or retail consultants to help you figure out what those fees are.
Volume forecast – Gather your SKU sales history from other retailers, access category sales trends from secondary sources, understand the size of your market opportunity, consider consumer behavior trends, account for marketing initiatives that might drive a lift in your sales, account for competitive activity that might eat away at your sales volume… these are some of the things to think about when building an accurate volume forecast. Give retail buyers your best estimate for what the Sales Per Store Per Week will be. Don’t be too conservative or too aggressive. Accuracy and stating your assumptions will be critical when delivering those volume forecasts to buyers as this will be their key decision criterion.
3. Do your homework on that retailer. Don’t show up without having read up on current news and annual report or failing to walk down that buyers’ aisles and make observations.
4. Practice your pitch and presentation. Don’t have this meeting be the first or second time you have run through your pitch and presentation. Practice in front of friends and family. Run it by a colleague or business associate. Rehearse with someone in the retail industry. Practice in the shower or while driving. You want to sound confident, assured and at ease when presenting. Buyers get their confidence in your products from you. The more you practice, the less deodorant you’ll need. So practice until you are perfect!
Have a great year!