Finding the Right Retail Partner for Your Product Startup
The decision and timing of bringing on a retail partner is different for everyone. Your funding, internal team, manufacturing readiness, sales goals, and a myriad of other factors contribute to this very important point of your business’s life.
Here’s a quick breakdown on how to get started:
- Education — You don’t need to be an expert, but you should have a general understanding of the process needed to successfully penetrate and maintain a position in retail/distribution (online or offline).
- Internal Resources — What experiences or resources do you or your team possess? Are you comfortable with retail preparation? Do you have sales/buyer connections? Do you have retail marketing experience? Find the gaps that need to be filled.
- Fill the Gaps — Now that you know the requirements and where your company’s strengths and weaknesses are it’s time to fill those gaps. This article is to address this step to find the right retail partner or resource.
Separating Potentail Retail Partners
We can filter potential retail partners most easily by separating retail into the four main areas of retail activities (if you’ve read my other articles then you’re familiar with them). You may need one or all of these. It’s something specific to your company. When one or more of these areas is weak or missing you run the risk of losing opportunities and incurring unnecessary costs.
Which of these are you in need of?
- Strategy Development — pricing, logistics strategies, sales materials, insurance, warranties, post-sales training, marketing strategies, sales rep agreement structures, which sales channels make the most sense to target, and much more.
- Sales & Sales Support — building a high-quality sales force network, geographic/channel territories allocation, ongoing support, product samples, managing communications, contests & motivation.
- Channel Marketing — online vs offline promotions, in-store POP, educational collateral, product bundling, in-store sales training and spiffs, and other creative-driven tactics to drive channel sales.
- Channel Management — timely communications between all parties, product management, sales forecasting, close collaboration on marketing programs and ways to drive revenue, find ways to make the retailer or distributor’s job easier.
Useful Questions to Ask Potential Partners
In today’s fast-paced world you can outsource or have remote contractors for any of the above areas of retail. The prices and performance vary greatly; however, because of the breadth of service, experience, and track record available to you.
Below are some questions to help you during initial phone calls/conversations with potential retail partners:
1) What’s your approach and experience working with similar companies or products?
Asking this question can help you understand what working with them might look like while getting a glimpse of their track record. Sometimes it can be helpful to also ask about particular challenges they see when working with companies like yours and how they solve those challenges. Working with a product startup has unique challenges on all fronts of retail. Just because someone was a retail expert at Apple does not always equate to the right fit for a CE hardware startup (as an example).
On top of this, it’s always a good idea to ask for references and case studies if you’re truly interested in hiring a company as your retail partner.
2) What areas of retail do you cover?
This is where becoming educated on the retail process is important. Does this retail partner cover the areas mentioned above that you need? Often times the focus is on retail connections and experience; however, if you need a partner who gets involved at the strategy level or channel marketing level then you should probe more into those aspects of retail rather than assume it’s an area they cover.
3) There are a lot of retail firms and “experts” out there… what makes you different?
If you like “cutting to the chase” then this question can be very useful. It essentially allows you to get a boiled down, refined version of the potential partner’s value prop. After discussing with several potential retail partners, you can compare notes and see how various differentiating factors match up. Many retail firms and consultants have worked with a large variety of retailers (including big box). Having strong connections is an important factor, but everyone claims to have these connections so be careful.
4) How is the retail-world changing, and how have you adapted?
The retail world is always changing. This question might seem too open-ended, but questions like these are a good way to gauge a partners knowledge of the industry. Most importantly, it’s a good opportunity for you to learn from (hopefully) an industry expert. Again it’s a good idea to talk to multiple potential partners and compare their answers. If some answers don’t agree with each other then perhaps it’s worth your attention on future calls or research.
5) What’s your business model?
Obviously an important question, the price. The perfect retail partner doesn’t mean anything if you can’t afford their services (or salary for an employee). Commission rates, monthly rates, and general terms of an agreement — for example — contract termination penalties.
One Dangerously Useless Question
1) Are there any guarantees of success?
In retail, there are no guarantees. Hiring commission-only assistance does not guarantee results, and can actually lead to a lot of lost time. No professional in the retail industry can guarantee sales or revenue — if they do — they’re lying. The best thing you can do to ensure a safer investment (in both time and money) is to ask the right questions. Predictions or forecasts for new POs or increases in revenue are never particularly accurate and can lead to misinformation.
End Notes
I hope you found this post useful. If there’s anything you’d like to add or talk about please use the comment section — or connect with me. If you found this post useful, there’s a good chance that someone else out there will too.
