Who wants to be the first retailer to buy a new product from an inventor--the first to have the next Pokémon or Beanie Baby on his or her shelves? Most inventors will tell you the answer: nobody.
Not surprisingly, retailers are reluctant to buy from new companies. For starters, they don't like to take on small, one-product businesses because of the work involved in setting up and maintaining new vendors. But the main reason is that retailers don't want to get stuck with left-over inventory. Though retailers typically send products back to their suppliers when they don't sell them, they worry about not receiving rebates from smaller inventors.
It's a Catch-22 inventors often find themselves in: Once they've showed a few years' stability, retailers will open their doors--but inventors need retailers to let them in so they can build that credibility. How do you get around the problem? By clawing out a small initial sales base and hanging tough until the big retailers are ready to buy.
Don Debelak 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). Questions may be sent to him at email@example.com.
Wired For Sound
Forty-one-year-old Brad Young of Boulder, Colorado, is a diehard outdoor enthusiast who counts snowboarding, downhill skiing and telemark skiing on Colorado's biggest mountains as his hobbies. In 1990, he came up with the idea of putting earphones in a headband to allow skiers, bikers and other athletes to listen to their portable cassette players while pursuing their favorite activities. But he didn't do anything with the idea until 1996. "I just couldn't believe that no one had come up with the idea before," Young says. Waiting year after year for the product that never came, Young finally launched Outdoor Dynamics Inc. (dba HeadBANdZ).
Young and his company president, Russ Landau, 28, have struggled for the past three years to build their company and their efforts have been rewarded with sales doubling every year. They expect to sell 15,000 units this year. Not financially successful yet, they now have a large order pending with a major apparel manufacturer; have signed a lucrative deal with Walking Co., a chain of 80 stores selling products for mallwalkers; and have landed a regional distributor whose salespeople help get HeadBANdZ into ski shops in the mountain states.
Though Young's invention appeals to his target audience--outdoor sports enthusiasts--it doesn't particularly appeal to ski shops or other retailers. Why? Retailers worry first about their major sales items--skis, ski boots and ski jackets. An accessory like Young's HeadBANdZ sells at a fraction of the cost of these major items, and retailers don't see HeadBANdZ as a big money-making opportunity.
So how do you find those brave souls who will buy first? You could try following Young's route, which, though fairly traditional, provided the exposure he needed to get his product on the shelf:
1. Attend industry trade shows. Inventors need buyers with two characteristics: They must be willing to take a chance, and they must really like the inventor's products. Trade shows are the perfect places to find these types of people. Hundreds, sometimes thousands, of buyers will walk by a booth every day. Those who are interested in a product will stop and talk, initiating the contact inventors need to make their sales pitch.
The cost of attending a trade show is its major drawback. Inventors often spend $4,000 to $20,000 on a trade show, including space rental, the booth itself, travel and shipping costs. Still, I've found trade shows are usually the most cost-effective way for an inventor to reach a large number of buyers.
Young got his product into the Snowsports Industry of America Show and the Outdoor Retailer Show. Through these shows, he landed deals with Walking Co., Herrington Catalog and Early Winters.
2. Arrange for your products to be given away at community events. Young took his product to ski and snowboard expos, "demo days" run by ski resorts, and ran in cross-country events, hoping to get his product used as a giveaway. At a ski event in Keystone Mountain, Colorado, his tactic worked. "There was a lull in the action, so I went over to the announcer and asked if he wanted prizes to give away. Of course, he said yes," says Young. "I suggested he tie in the HeadBANdZ with the music coming out over the PA system. He called people up to the stand, and the first one to name the artist performing the song won a HeadBANdZ. The announcer explained the product and said its name more than 50 times in a half-hour period."
That's the type of great exposure that builds demand for a product. As Young says, "It's easy to sell to a store after people have been requesting your product."
3. Pound the pavement. Young also called on shops, catalogs and other retailers. He found two catalog retailers willing to give his product a chance: Herrington, which handles a large number of sporting goods products, and Early Winters, a supplier of outdoor clothing.
Some stores, swayed by the inventor's enthusiasm, purchased the product. Young's average account was $200 to $500--not exactly the fast-track to becoming a million-dollar success. But presence in stores is essential because it attracts distributors, who buy in quantity. Young's new distributor, Mountain States Specialties, has nine salespeople calling on ski shops, advertising specialty businesses and markets Young hadn't even considered. Without proving his product would sell first, however, Young would have had a tough time lining up a quality distributor. By the time he signed with Mountain States Specialties, Young was already in about 50 stores and catalogs.
Slow And Steady
Young spent $60,000 to launch his product line--and that covered production, sales, marketing, and patent costs. Though he believes he's been held back due to limited funds, more money wouldn't have solved his problem. He needed a track record before buyers had confidence in his staying power.
Don't get discouraged if sales start out slow. That doesn't mean buyers don't like your product; it may mean that you just haven't proven you're going to be around for awhile. Show them longevity, and you'll see buyers start looking at you with a whole new attitude.
Inventors' products need visual impact to succeed on retailers' shelves. Brad Young spent a lot of time working on colors and fabrics for his HeadBANdZ to give them what he calls a "not nerdy" look. No matter how practical your customers might be, there's no doubt visual appeal is a major selling point to retailers, who want a dynamic-looking product, and to customers, who want to look cool.
One of the hottest product categories on the market today is portable MP3 players that download and play music from the Internet. Noting their explosive growth, major companies, including RCA, Samsung and Creative Labs, jumped into the market. Sensory Science, a smaller manufacturer, recently introduced its own version. One step the company took to compete against larger corporations was to create an innovative look. Rather than the rectangular or square box most of its competitors employed, the raveMP 2100 from Sensory Science comes in a unique hourglass shape. Its visual styling gave retailers, customers and even industry experts an extra incentive to pick up the product--and it's helped the company keep up in a fiercely competitive category.
One way inventors get around the problem of being the new kid on the block is to hire independent sales agents, also called manufacturers' representatives. Rep companies and individual representatives typically work with a plethora of buyers in an industry. Retailers are often more willing to buy from sales agents because reps typically check out the companies they sell for and won't handle a business with a shaky financial background. If the buyer trusts the representative, he or she will transfer that trust to the products the representative sells.
How do you find agents to sell your product? Brad Young posts a sign in his booth at trade shows saying he's looking for representatives. Other methods you can use to find representatives:
1. Visit stores and look for products similar to yours that appear to be from smaller manufacturers. Young, for example, looked for clothing accessories. Then ask the store manager who the representative is that sells the product.
2. Look in industry trade magazines for representatives advertising for new lines. Trade magazines often operate booths at major trade shows, or you can find them at the library in either the Gale Directory of Publications and Broadcast Media or the Standard Periodical Directory.
3. Look in the library for the MANA Directory of Manufacturers' Sales Agencies, which lists the names of representatives around the country, or contact the association directly at Manufacturers' Agents National Association, P.O. Box 3467, Laguna Hills, CA 92654 or by calling (877) MANA-PRO.
headBANdZ, (303) 494-0495, http://www.headbandz.com.