Breaking Into Food Retail — The Questions You NEED to be Asking

While the questions above all deserve answers, I’m thinking that’s probably a much longer post. So, until then, let’s focus on what you should be asking food retailers, particularly as a new brand.

I was super excited to get started with my first retail partner. So excited, in fact, that I was afraid to ask any questions. I didn’t want to “wake the baby” and have them change their mind about taking on my company.

In hindsight, that was the wrong approach. To save everyone else the trouble, I’ve put together a list of questions you’ll want to ask.

What’s the usual timeline for payment? Is it direct deposit or check?

Cash is king. There’s a big difference between getting paid net 7 vs. 30 since you are fronting the production, storage, and distribution costs.

Direct deposit is ideal for a couple reasons:

1. It’s usually accompanied by an email. This makes reporting/tracking easier if you have any issues and need to reference a past payment.

2. It’s one less step to getting money in the bank. Less steps means faster payment.

Do you need a paper invoice or can we email it? Where should we (the producer) send invoices?

As mentioned above, email just lends itself to easier reporting/tracking.

Also, worth noting — your point of contact (i.e. buyer) is usually not the person making sure you get paid. Figure out who handles billing/invoicing so you’re directing questions/issues at the right people.

Am I responsible for spoilage?

This is REALLY important. Most of the time, you (the producer) will issue credits for things that don’t sell before their expiration date. However, that may not be the case so it’s worth knowing.

Quick side note here. When you are starting out, partnering with online retailers (e.g. Good Eggs, Farmigo, Grub Market etc.) can be helpful since they will enable you to manage your inventory risk. Online retailers often hold less in inventory (than traditional brick and mortar) and reach out to you when customers place an order. Said differently, the products are pre-purchased so you’ll be able to produce just the right amount .

Are there stocking fees?

These can be as much as $100/SKU/store. That may not sound like a lot but when you have five SKUs and are in 1,000 stores across the country, it adds up.

Do you have a sell through rate/goal for new products?

You wouldn’t agree to play a game without knowing the rules and this is no different. Make sure you know what’s expected so you can set yourself up for success.

If we (the producer) issue “manufacturers coupons”, how do we set those up?

When your product is new, your main goal is developing a customer base. Sampling and discounts are two levers to pull that work well. On the discount front, “manufacturer’s coupons” are a good option in the early days. This method means you (the producer) are absorbing the discount in your margins. I’m a fan of coupons like these for a few reasons:

1. They get products to move (i.e. you’re building a following).
2. They offer a tracking mechanism for sales since customers need to redeem the coupon.
3. They provide a way to experiment with your retail price so you can find the sweet spot.
4. Since you’re absorbing the discount, the retailer is keeping its margin which makes getting them approved/setup easier.

As always, I’d love to hear your thoughts, comments, feedback etc. Are there any questions that I missed?