Karla and Jack

Many inventors set their initial goal on getting their product on the shelves at one of the big retailers, but are you and your product really ready for Giant-Mart? The big retailers are known for selling at rock bottom prices. They do this by buying products at rock bottom prices from the manufacturer. This means that, you–the manufacturer, has optimized the production methods used to make the product, to wring out every possible penny in the manufacturing process. For the small inventor who is ramping their production up, you are most likely at the opposite end of the production cost scale. For example we mentor inventors that the right way to enter the market and control production costs, is to start with a manufacturing process that initially will cost more for each product produced, but will require less cash outlay in the beginning for steel molds or automated machining.

Another issue that you, the manufacturer, must consider when signing on as vendor with Giant-Mart are their terms and conditions. They often like you to share some of the risk of your product selling and part of the loot if you sell alot. Giant-Mart’s terms and conditions can include an allowance for returns of your product, special sales pricing, kick-backs on a certain percent of the revenue they helped you make the end of the year and many other possible revenue impacting terms. Many times inventors try to work out the best price possible for Giant-Mart, before they have considered all the other “hidden costs”. You then  find about the terms and conditions in the contract after you have agreed on a price with the big retailer.  These costs are only hidden in the sense that you may not have been aware of them when you initially made the agreement. It is important to understand the terms and conditions BEFORE setting your price.

You probably have shopped in many big retailers stores before, partially because of their wide selection and almost certainly because of their low prices. Seeing the store from the customer’s point of view is entirely different that seeing the store from a manufacturer’s point of view who supplies those products at low prices.  Big retailers have  very sophisticated systems for keeping their inventory stocked and marketing it. This usually involves a third party in the selling chain, called a distributor. Distributors warehouse inventory for the big retailer, they check the retailer’s shelves sometimes daily,  and often even place reorders for the products that the store needs. If you get your product into the big retailer they will expect that their distributors will take care of your product in their stores. What this means for you is another person who needs to be paid out of your profits and must be accounted for when setting your price.

One last question to consider before you approach Giant-Mart is do you have enough cash  available?  If your product sells well you may receive a reorder before you have been paid for the last order.  Your product can die an early death, if it starts selling well, flying off the shelve,  and you can’t afford to front the cash to produce more product.

These are some of the points to consider and plan for before you decide that Giant-Mart is your target retailer. There are many options to make this all work and be very successful.  Or after reviewing the requirements, you may consider a smaller retailer or catalog to get started.  Once your aware of how your target retailers does business, you are in a much better position of choosing the right retailer for you and your product so you are prepared to meet their needs. Giant-Mart maybe the right place for your product.  Do your homework to decide if it makes sense for your product before you set your sights on pursuing them.