From the July 1999 issue of Startups

Like most people these days, 32-year-old Jerilyn Winstead of St. Louis is very busy. In her case, it's because she has three small children. Whether it's because of your job, family or school, you, too, probably think you're too busy to do anything with your ideas.

Big mistake. True, you might not have time to manufacture and market a product on your own, but almost everyone can spare enough time to sell a product on a private-label basis, which means you supply a product to another company that then sells it under its own name. For instance, many Sears products are made by independent manufacturers who sell the product to Sears on a private-label basis.

Winstead's invention, the BlanketStrap, is a strap with clips that attaches to a nursing blanket. It wraps around a mother's neck so she can nurse a baby more easily in public. Winstead got the idea when she was nursing her first child. When she was expecting her second child, she made a prototype, spoke to a patent attorney and started to sell her product.

From the start, Winstead was afraid she wouldn't have time to sell her product properly. She didn't want to pay $5,000 to patent it, because she was worried she wouldn't sell enough to cover the cost. She placed the product in one store and contacted several catalogs, but found she just didn't want to spare the time necessary to sell the BlanketStrap effectively.

Winstead is frustrated that she's missing out on a golden opportunity. "I know the product can sell because nursing moms love it," she says. "I just don't have time to pound the pavement." Winstead hasn't given up on the BlanketStrap, and continues to sell it on a direct basis and via mail order to people who've heard about it from a friend or seen it in a parenting magazine.


Don Debelak (dondebelak@uswest.net) is a new-business marketing consultant who has introduced new products for more than 20 years. He is the author of Bringing Your Product to Market (John Wiley & Sons, $19.95, 800-225-5945).

An Easier Way

Teaming up with a small to midsized company that makes related products is the most effective way to market a product when you don't have time to do it yourself. You can set up a private-label sale to the company, or sign a marketing agreement with the other firm to sell your product for you under your own name.

This tactic is relatively easy to execute if your product is truly novel and innovative. Striking a bargain with an established company benefits you in two ways. First, it frees you of the sales and marketing workload; second, a company with an established sales force and distribution channels will probably sell many more products than you could on your own.

There are several reasons manufacturers like private-label deals. One is that having a larger product line makes it easier for manufacturers to sell to retailers. Retailers prefer to buy from manufacturers with larger product lines because it's less work and because a complete line of products from one company, with uniform packaging, looks better on the store shelves than a hodgepodge of products from different companies. Manufacturers also find that private-label arrangements help them attract distributors and independent sales agents.

A private-label sales agreement typically won't interest larger manufacturers because an additional product adds only a small percentage to their sales volume. But small and midsized companies will be interested if you've got an innovative product that can increase their sales by 10 to 30 percent.

Finding Private-Label Partners

You can find small to midsized companies in your target market by searching trade publications and consumer magazines. Companies selling to your target market will run ads and press releases, or may be listed in directories of suppliers that the magazines occasionally publish. You can find magazines appropriate to your business in Gale's Directory of Publications and Broadcast Media (Gale Research), available in larger libraries.

For Winstead, a good trade magazine to get is Baby Shop Magazine, from Spindle Publications in Pittsburgh; it targets retailers that sell juvenile and maternity products. Good consumer magazines include Child First Year Planner, Child Birth Planner, and Child Pregnancy Planner, all published by Gruer + Jahr USA Publishing in New York City.

Once you get the magazines appropriate to your product, request literature from every company that provides products that target your customers. In Winstead's case, the target customers are mothers who are or will soon be nursing.

When you get the literature, call to find out how big each company is and get the names of its president and/or marketing director. Keep a file on companies with sales between $500,000 and $10 million. Avoid companies with sales of less than $500,000 because they may not have the money or salespeople to effectively market your product.

Making Your Pitch

Before approaching a prospective private-label customer, prepare a prototype package similar to the packaging that company uses. Take a high-quality picture of the package and of your product in use, and prepare a one-page sales flier highlighting your product's key benefits. Next, call the president or marketing director at the company and ask if they would like to take a look at a product they could purchase under a private-label agreement.

Contact only one company at a time. Companies want exclusive arrangements and don't like taking on products that have been "shopped around" to a lot of manufacturers. Tell the manufacturer you've chosen to approach only them because you feel your product is a perfect fit for their business. If they show interest in purchasing your product, send a cover letter and your sales flier. A week or so later, call back to see if they would like a sample.

Price Pointers

Pricing is a major issue in private-label sales arrangements. In order to make money after paying all the marketing and sales costs, a manufacturer has to be able to buy a private-label product at about 30 percent of the final retail price. That means your profit margin on private-label sales will be slim--but you'll still earn more than you would selling your product part-time.

Don't stop trying to come up with new inventions just because you're short of time. If you set up a private-label agreement, you can sell your product with a minimum of effort. You'll generate part-time income and begin building a track record of success that will make it easier to sell future inventions.

How Low Should You Go?

Jerilyn Winstead wanted to price the BlanketStrap very low so every nursing mother could afford one. Probably the biggest misconception I've run into in my 20 years of marketing new products is that low-priced products are easier to sell. In fact, just the opposite is true. The problem with inexpensive products is that the sales costs for distributors, retailers and manufacturers' reps are too high for them to make any money.

Winstead tried to sell the BlanketStrap to several baby products catalogs. Only one was interested in her low-priced product. Why? First, a catalog's shipping and handling charges are typically about $5--almost the same amount as Winstead's suggested retail price of $4.99. Consumers don't like it when a product's shipping and handling cost more than the product itself.

Second, catalogs typically make more money on expensive products. The only time catalogs might accept a low-priced product is if it appeals to every buyer. The BlanketStrap appeals only to mothers who are or will soon be nursing--a small segment of most catalogs' customer base.

At Your Service

Large distributors often won't take on new products. That's because the cost of stocking a new product, putting it in a catalog and training a sales force to sell it is too high if the product is unknown. The distributors who are willing to take on new products are called jobbers (or service merchandisers).

Jobbers sign contracts with retailers who assign them some shelf space. The jobber places merchandise and charges the store only after an item sells. This gives jobbers flexibility in taking on new products. They can watch a new product and see if it sells.

Several jobbers specialize in baby products and might give Jerilyn Winstead's product a chance. Phelon's Discount Jobbing Trade Directory (Phelon, Sheldon & Marsar), available at most large libraries, lists jobbers for each state.

Resident Advisors

If you don't have time to market your invention, you can sell it through a resident buying group. These companies, which buy products for anywhere from 50 to 5,000 different stores, provide a valuable service because small and midsized retailers don't have time to search for new products. Department stores, smaller discount stores, children's stores, hardware stores and sporting goods stores all typically use resident buying groups for at least some of the products they buy.

Several resident buying groups specialize in infant accessories and maternity products. Jerilyn Winstead would have far greater sales potential if she targeted a few buying groups. A good directory, available at larger libraries, is Phelon's Major Stores & Chains & Resident Buying Offices (Phelon, Sheldon & Marsar).

Contact Source

Jerilyn Winstead, c/o Baby Bunting Co., 1055 N. Rock Hill Rd., St. Louis, MO 63119, 74401.176@compuserve.com