Below is a short piece that I wrote for an online column earlier this week. Just a few tips and thoughts for growing companies on doing business with a mass market retailer.
Getting your product on the shelves of a large, mass market retailer,
such as Wal-Mart, Target, or any other large retailer is no small task.
It is certainly possible, but business owners can expect large
retailers to turn the screws on any standard product distribution model
and stretch product distributors, manufacturers and brand owners to new
extremes.
One thing I have learned in dealing with companies like Wal-Mart is
that having a product on Wal-Mart shelves is not for everyone. Doing
business with a large retailer could change your entire business model
and your approach to product development and product and brand
integrity. Depending on what your objectives are, it could be a change for the better or for the worse. You'll have to decide if that's the type of change you're
willing to go through. You will also have to be much more in tune with
your production model, as you will need to squeeze every tenth of a cent
out of your production costs while maintaining a mandated level of
quality in order for any transaction to be profitable.
If you haven't already, you will also have to design a new segment
of your business that addresses the all-new problem of a substantial
increases of returned products. In order to build goodwill with
shoppers, mass market retailers have especially liberal return
policies, which distribution, manufacturing or product development
companies need to foot the bill for.
Finally, macroeconomics will be especially important to your
efforts in working with a mass market retailer. Here, unless you're
working with a well-known brand, your company will be operating an
margins that are thinner than a razor, so you'll have to audit every
cost imaginable in doing business with a mass market retailer to insure
that you can turn a profit, including costs like customer service,
returns, production, packaging, logistics, etc.
These are just a few of many general issues your company will have
to face in a deal with a mass market retailer like Wal-Mart. Working
with mass market retailers can be especially rewarding, but that reward
doesn't come without a cost. Do a lot of research. When your done with
the research, do more research. Then start with a simple cost/benefit
analysis and make an informed decision on whether working with a mass
market retailer is the right choice for your company.
