Originally posted: November 10, 2011
Updated: Sept 15, 2015
Before you are ready to pitch to a buyer, there are “must-haves” you should first have in place. These “must-haves” are all components of a larger business case you are building to convince buyers they need your product in their assortment. And these components take time to build, which is why it is important to address them in our blog now!
In short, the big question a retail buyer is looking for you to answer for them is – how does your product benefit my retailer store?
Here are the 5 “must-have” items needed to build your business case and prove why your product meets the needs of retailers.
- Demonstrate your product or brand will drive the retailers’ financial performance. Buyers representing large retailers are goaled on the financial performance of their assortment. This means they make buying decisions based on how it will earn them more revenues and profits. So your pitch to a buyer must explain how your brand and SKUs will directly benefit their financial goals. For you, this means knowing the margin requirements of each specific retailer you want to work with, as well as an understanding of their pricing strategy and how your product fits in to this strategy. Also, having proven sales history in other reputable retailers demonstrates your potential selling power and will enable you to build volume projections that demonstrate the market opportunity of your product. Your pitch presentation should include a slide that shows your sales history at other retailers and the sales forecast you have projected for this retailer. Show your sales history using the measure of Units Per Store Per Week. Also show the retailer margin you are offering the retailer. Don't just provide wholesale costs and the retail price. Do the math for them and "show off" your retailer margin!
- Defining your consumer target. Knowing who your target audience is – from their demographics to their attitudes, shopping behavior and preferences (this is when doing consumer research pays off) – helps you show the type of shopper your products will bring into the retailers’ store. Align this with the retailers’ shopper strategy and you’ve checked another box in building a compelling business case. In your pitch presentation, include a section that profiles your target consumer. But don't just stop at their demographics. Go deeper and describe their psychographic profile. It's OK to have a niche consumer target as long as it is believable that your brand can own the lion share of that niche market.
- Build your brand’s awareness. Having a good product is not enough. It needs to be backed by strong branding and effective marketing. Good branding lends itself to future line extensions which give buyers’ confidence that this buyer-vendor relationship has longevity and can drive future business. Strong branding creates shelf presence and makes it easier to shop the shelves. And this fuels category growth, which translates to more shoppers and revenue for retailers. Also, any marketing tactics like advertising or promotional deals you can offer will help drive traffic to stores – either through new shoppers or more frequent or bigger store trips. And that helps minimize sales risk. More on risk below.
You can demonstrate your marketing capabilities in your pitch presentation with slides showing the success metrics of past marketing and promotional programs and recommendations for the programs you will create to drive customers to their stores. Also include a slide that shows all the media outlets that have featured your brand to demonstrate your broad reach.
- Mitigate risk. Buyers are risk averse, especially anything that may erode sales or damage their stores’ reputation. Above, we discuss how marketing programs mitigates risk. Sales history also helps quell concerns of sales risk. But did you know that showing your current retail distribution can also dispel concerns of execution risk? The thinking goes, "if your company can execute at another retailer similar in size and scale to my stores, you are less likely to make mistakes executing at my stores." A simple slide that showing the logos of the various retailers you currently ship to will quickly demonstrate to a buyer that you are ready for their stores.
- Spend money. Getting into major retail is expensive. You need to have the infrastructure built, money to invest in marketing, and diversified cash flow to hold you over during those Net 60 terms. But be prepared to order hundreds of product samples before your first order. You will need samples on hand to send to buyers, testing labs, vendor reps, retail consultants, magazine editors, PR reps, for product sampling programs, and more. Often times these samples are expensive to produce in low production quantities. Don’t skimp here; this is a necessary cost of doing business with retailers. Also spend the money to get your branding and packaging right the first time around. Going out the gate strong with branding and packaging helps you build traction quickly. Changing these things mid-stream will not make your consumers (or buyers) happy. Make sure to bring samples of products to your pitch presentation and have enough to leave behind for everyone in attendance. Also include a slide that highlights your product differentiation and how that point of difference is a competitive advantage (not easily imitated by competitors).