June 4, 2012
You are ready to pitch to your first retailer when you can say “I’ve done it!” to the following:
- You have conducted market research with potential users and retailers to qualify the concept, price, product and packaging. Potential users should consist of more than just your friends and family. You want objectivity!
- Your product meets an unmet consumer need and delivers product benefits in a unique way.
- You have ensured your retail price is within range of your competitors, but also occupies a distinct price point to create differentiation.
- Your retailer markup is in line with retailer’s expectations.
- You have a product margin (your company’s margin) that is healthy and sustainable. Get those cost of goods down (COGS) – even if it means producing overseas.
- You have tested your product with a “guinea pig” (also known as “Test and Learn”) retailer to make sure EVERYTHING has been road tested – including your sales pitch, retail promotions, and shipping/fulfillment logistics.
- You have created a brand that is ownable and memorable. And have built a multi-prong marketing plan to help build awareness and drive purchases at shelf.
- You understand the basics of inventory management.
- You have a retailer pitch deck. This includes sales history or a sales volume projection, and an explanation for how you will drive sales for your intended retailer.
Generally you know whether you are ready to advance to your next tier of retailers when you’ve been selling in your current tier for 6 to 12 months and have collected sales data that demonstrate steady sales growth over time. If your sales are not growing in 80% of your stores, then it’s time to pause and diagnose the problem. Until you figure out why sales are not growing, you are not ready to advance to the next tier.
Take our quiz to find out how ready you are to pitch to a buyer or move to the next level?
A note about tiers: A good retail distribution strategy paces your retail growth into stages or tiers. These tiers are specific to your business and designed to help you reach your ultimate dream retailer.