It’s a long way from invention to retail, but knowing the process can help you turn this dream into a reality.
Many dream of ushering an idea to the shelves of major retailers and department stores. The process can seem daunting. Being successful not only requires a viable idea but a scalable business model and supply chain.
As an entrepreneur, I have created multiple products that made their way from concept to retail placement. I now serve clients and have launched products and brands that have appeared nationwide through major retailers including Giant Foods, Whole Foods, Walmart, Fresh Market, Dollar General and others.
For me, the process starts with planning. I always define the purpose and value proposition of the product I am creating. I define the market for two reasons: to determine if the market is large enough to support a scalable enterprise and to figure out how I will brand and position the product. From start to finish, these are the most important steps:
Determining a brand for your product is important. Building a brand is more than just a name or a logo and identity. An effective brand communicates the very meaning of your product as well your company’s ethos and values. You must be strategic in developing your brand, considering your market segment and determining how to position your product.
2. Prototyping Your Idea
If you can cost-effectively develop a prototype of your product, it is a great way to begin market-testing your idea to see if it has promise. You can also garner valuable feedback from consumers, making future and final iterations of your product better. Having a prototype allows you to leverage potential deals with distributors/retailers as well as investors who may be interested in supporting your idea.
When I developed my first beverage product, I was able to produce a small run of product. This first prototype allowed me to negotiate my first distribution deal and equipped us to secure seed money to fund production.
3. Supply Chain and Production
In order to bring your product to market, you must be able to scale production of the item. Retail is a volume driven enterprise; in order to price competitively within your respective market, you will likely have to achieve economies of scale. This will mandate sourcing material and manufacturing in large quantities. Try to limit production size without compromising margins.
To successfully manufacture, you must create a supply chain to source your raw materials and find a manufacturer for your product. While some companies may prefer to manufacture in house, it often makes sense for young companies to employ a contract manufacturer. Manufacturing yourself may require investment in expensive machinery as well as extensive operations. It is important to find a good manufacturer with a proven track record. You will need capital to support production. It is optimal to have sufficient capital to not only produce the product but to market the product post-production.
4. Finding Distributors or Retailers
Almost all goods are sold by distributors. An advantage of using a distributor is access to their established network of retailers. A distributor will warehouse your product and manage shipping logistics. In many distributor relationships, they own title of goods once they purchase the product. This means it’s their responsibility to sell the product at retail and ensure its success. That said, you should still provide distributors with marketing and other forms of support. Their success is your success. Some retailers may purchase directly from you, the manufacturer. Others will require that you use a distributor.
Negotiating shelf space can be challenging. In fact, one of the inherent challenges in pursuing retail placement is the dearth of shelf space. Incumbent brands often pay for the best placement. You are no different — many stores will require that you pay slotting fees to gain placement on their shelves. However, the best placement may be difficult to afford and may be contractually committed to established brands. If stores will allow it, building displays can be an effective way to distinguish your product/brand from competitors.
5. Marketing and Promotion
Once you have successfully launched a product, your work is only beginning. The retail environment is a crowded and hyper-competitive place. You will need to develop effective marketing and promotional efforts to ensure your product performs in stores. Many stores offer only a narrow window of opportunity; if your product does not succeed within that period, it will likely be removed from the shelves. Your marketing and promotional efforts will depend on the product and industry. In the food and beverage space, in-store marketing, including the use of demos to sample products, is very effective. Most goods will benefit from in-store promotions and discounts.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
Image CC by Kevin Cole.