Every entrepreneur has envisioned their product to be on the shelves of big box stores like Best Buy, Walmart, Costco, Target etc. It is the most traditional model for selling a physical product, and can be split into big box and boutique stores. Big box stores will cost the most in profits, and require the most work; but at the same time, they will maximize your potential sales and increase awareness for your products, as a sea of customers will have access to them in-store. If you are looking towards partnering with retail giants like these, there are a few things you need to keep in mind, so as to ascertain a pragmatic business approach towards these stores.
Not all big box retailers will be appropriate; some products will be more appropriate for the Walmart customer, and other more appropriate for a Nordstrom customer. At this point it must be apparent who your target audience is and where your going to reach them. You may not want to sell in Target if your selling a high end product and are trying to reach an affluent demographic, but rather choose a store like Nordstrom. Overall, it is important to Make sure that your retail strategy aligns with your overall brand.
One way of getting into big box retailers is by selling through their e-commerce sites first; this is easier to get into (because they only have to pay for warehouse space, and not shelf space in the store)
For tech products, the most obvious big box choice in the USA is Best Buy. Best Buy has a ‘vendor qualification program’ which streamlines the application process. You can find that here. Lots of factors will be taken into account here, including things like your company’s financial well-being, and how well your product complements what’s already in the store. The retailer wants to know that there is reliable stock, your product will move off the shelf, and that your company isn’t a one-hit wonder. It takes time, money and effort to develop these relationships and they want to know you will be around for years to come. If your company is more mature and has a number different SKUs with stable manufacturing, it is much easier to enter big box retail. Also, if your products are already in certain stores, like Apple Retail, that also gives your company added credibility, maybe more than if you are in Joe Schmo’s Retail.
The process of reaching out to brick and mortar retailers is made easier with sites like www.ChainStoreGuide.com and www.TheSalesmansGuide.com, which list contact information for a huge selection of buyers. Better yet, try and pitch to buyers directly. You can use LinkedIn to make this possible, as well as attending conferences where you may be able to meet executives and buyers.
Listed below, are a few pros and cons of selling through brick and mortar stores:
- High Visibility: Good for Brand Recognition / Credibility – Brick and mortar stores offer consumers a better hands-on shopping experience. According to a study mentioned on Forbes, 90% of the shoppers surveyed across all demographic and age groups prefer to buy products in a brick and mortar store, as opposed to online sites.
- High Traffic – More often than not, brick and mortar stores are well established and buyers tend to visit more due to the better service offered by store employees.
- Higher Sell-Through – Brick and mortar stores can provide retailers with in-depth customer insight and analytics, allowing them to create more targeted marketing, resulting in higher sell-through percentages.
- Possibility of Impulse Purchasing – A well-executed store atmosphere, and the ability to touch and hold products before purchase ultimately leads to higher in-store purchases. According to Business News Daily, around 90 percent of shoppers buy things that aren’t on their shopping lists.
- Aesthetic Packaging Driven Sales – Whether you’re established, or launching a new brand into the market, appealing packaging design is a critical element for effective brand standout, which will influence the consumer’s buying habits.
- A More Expensive Option – Brick & Mortar stores may require expensive storefronts and other overheads which ultimately reduces your profit margin by a considerable amount.
- Consignment Problems – Retailers may request a discounted price for bulk quantities, which they may wish to return back in case they don’t get sold.
- Large production orders – Brick and Mortar stores often order in large quantities, and meeting their requirements may prove to be a challenging prospect.
- Difficult to Enter Into – Approaching established retailers and getting them to sell your products is easier said than done. Every retailer may have their different perspectives about dealing with a different vendor, and won’t be as welcoming as you’d think.
- Shelf Space – As a vendor to big box stores, you will have to compete for coveted shelf spaces. Big brand stores will be extremely selective with shelf products, as they are committed to maximizing their return on investment from their shelf space. Even after this, an article reveals 45.9 percent of US shoppers researched products in store, only to ultimately buy them online.