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Who Needs 'Em?

Traditional retailers are no longer the only game in town.
July 1, 2000
URL: http://www.entrepreneur.com/article/29558

When Craig Winchell attended the 1998 American International Toy Fair in New York, he was sure he'd have no problem lining up sales for Conscience, his interactive board game for parents to teach their children the difference between right and wrong with real-world examples. But disappointment soon set in, as Winchell realized not even one of the major retailers in attendance had any interest in the game. Ten years ago, that might have been the end of Winchell's entrepreneurial pursuit. But not today, in the age of the Internet.

As Winchell discovered, a whole slew of e-tailers were willing to take a risk on new yet unproven products. EToys was just one of the dotcoms on the prowl for products like Conscience, hoping to set their sites apart from traditional retailers. Thanks to those e-tailers willing to take the chance on him, in 1998, Winchell's company, GoRu (Golden Rule) Products, sold close to 5,000 games. And in 1999, sales for his Dallas, Texas, company approached 10,000 units. Although Winchell, 39, currently generates 20 percent of his sales through specialty retailers, the majority of his sales continue to rush in through major Internet retailers Amazon.com, eToys.com, and toysmart.com.

Benefits Of E-Tailing

"EToys' first order was for only six games," says Winchell. "When I talked to retailers, they were looking at stocking dozens of stores and were afraid of the risk. They wanted to stay with proven sellers-games with licensed TV characters or games that were heavily promoted." Internet retailers, on the other hand, work to set themselves apart from the big boxes by carrying specialty toys not generally available elsewhere.

That's not the only reason why e-tailers make good sales channels for inventors. For one thing, they offer unlimited sales space. A traditional retailer, on the other hand, has a limited amount of shelf space and has to drop one product if it decides to carry another. The big stores end up comparing products and choosing the ones they believe will sell more units. Virtual retailers, in contrast, can add as many products as they like.

Another big difference between the two is inventory. E-tailers can carry limited inventory, and in some cases, even have orders shipped directly from the vendors. Regular retailers, however, may be required to buy $10,000 or more of a single product in order to stock their inventories. Because the risk is less, Internet retailers are more willing to take the chance on new products.

"I won several awards and endorsements for Conscience, including 'Dr. Toy's Best Children's Vacation Product for 1998' [from a newspaper column that rates new toys] and the National Parenting Center's 'Seal of Approval.' " Winchell knows getting this information to consumers is crucial-and e-tailers can immediately post these kinds of honors on their sites. But when dealing with retail stores, Winchell has to put stickers on each box noting the awards he wins and then wait for retailers to reorder. Getting the word out to catalog buyers is even worse. Catalog publishers decide on new products in March or April for catalogs that are mailed in October or November. News about awards can take quite a while to reach customers.

"At one time, eToys listed Conscience first in its family-toy category," Winchell says. "That was because the product was selling." Internet sites respond immediately to hot-selling products. Retailers, on the other hand, sometimes fail to observe that products have sold out, and catalog companies can't really do much to highlight the hot products until the next catalog comes out. Winchell feels that because the Internet sites that sold his product responded so quickly, "Conscience [had] an opportunity to build on its success."

Introducing Your Product To E-Tailers

Although most Internet storefronts contain information about how to submit ideas, Winchell didn't find that route very effective. "You would send the product in and not know what happened to it," he says. Instead, Winchell tapped the same sales strategy he uses with catalogs: He called up the site, found the name of the correct buyer and then sent the information directly to that buyer. Winchell then followed up with the buyer by phone.

In each package, Winchell also included a short, sales-oriented paragraph for the Internet site's summary section, and then gave more detailed information for customers who clicked through to his product. The Internet stores didn't end up using Winchell's descriptions, but those short paragraphs did help the buyers get a better handle on how the game would appeal to customers on the Internet.

Winchell's difficulties didn't end there. He failed in his initial attempt to penetrate Amazon.com when it first branched out into toys. Says Winchell, "I just couldn't make the connection." And he couldn't get that initial order. So he turned to a representative in the Pacific Northwest who was able to call Amazon.com, find the right buyer and present the product. The result? A sale.

How can you find the right representative? Winchell went to the American International Toy Fair in New York City and asked other inventors who they used to represent their products.

Overcoming Obstacles

Inventors have always had a tough time selling retailers products that have uncertain market potential, but e-tailers want products that aren't sold everywhere else. They don't worry about the product appealing to a small market segment-after all, they attract customers from around the world. Internet retailers also like products that tie in to Internet search terms, as Conscience does with "ethics" or "moral standards." Such tie-ins not only promote products, but also bring people to e-tailers' sites. And if the product doesn't sell, there may be only five or six units in inventory rather than thousands' worth.

If you want to sell your product to an e-tailer, you might want to try Winchell's four-step approach:

1. Get the name of the buyer who purchases your type of product.

2. Prepare a sample Web page, or Web page copy, to illustrate how your product will attract customers. Include search terms people might use on the Internet.

3. Send your information package to the appropriate buyer.

4. Follow up at least five times with the buyer to try and close the sale.

You're not alone if you're having trouble selling your products off your Web site. That's why the better approach is to take advantage of a big Internet store and sell your products there. Winchell still hopes to land his product on the shelves of the big toy retailers, but in the meantime, he's satisfied with the sales from Internet retailers. It's a good place to start-and it just might work for your own product


Don Debelak is a new-business marketing consultant and the author of Bringing Your Product to Market (John Wiley & Sons). Send him your invention questions at dondebelak@uswest.net.

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