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Going “big” is not for the weak at heart. And I don’t mean supersizing it at McDs. When I say “big”, I mean landing that big dream account of yours – maybe its Nordstrom or Babies R Us or CVS. Whoever it is, are you ready to do business with the big retailers?
Large retailers are demanding. Here’s some food for thought (one might think I am hungry with all these food analogies).
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They want large amounts of inventory. Are you prepared to deliver it? Can you handle the cash flow between the time you manufacture and ship product to payment receipt?
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Speaking of inventory, are you prepared to handle fulfillment? If you deliver late or mislabel a box, ding. They will impose fees that will make your stomach turn. Can you handle the follow up inventory when they place the re-order (you want the re-order!)?
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What if they don’t pay Net 30 but rather pay you “on scan” (meaning you don’t get paid until the item gets purchased)…can you handle the cash flow?
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Some retailers impose “holds” on the initial order to account for possible returns. Cash flow issue again.
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Do you have EDI? Electronic Data Interchange might be a requirement. http://en.wikipedia.org/wiki/Electronic_Data_Interchange
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They might require a large promotional funding agreement of let’s say $10K for all first time vendors. They want you to support sales.
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No final sales here. It’s a guaranteed sale (i.e. they can ship it back if they so choose).
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Do you have product liability insurance? Depending on product category, you may need a $2M policy (or more). More cash outlay.
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Do you have a solid advertising or PR plan in place? You not only have to get on the shelf, but you have to stay there. How will you drive sales?
Be prepared. Know what is expected of you. Ask lots of questions. It's a huge learning curve so go it slowly, one retailer at a time. The pie is yours for the taking, but take one bite, one piece at a time.
Note: online retailers are much easier to deal with – less overall demands. So, if your dream account is Nordstrom, for example, consider Nordstorm.com at first and see how it goes.
Read Romy's other blog entries >
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Ready to super size it with the “Big Box” stores?
