The entrepreneur: Kim Babjak, 40, founder of KimCo LLC in
Phoenix
Product descriptions: The Zip-A-Ruffle is a bed skirt
that zips on and off for easy cleaning. Sold primarily on QVC, the
product sells for $29 to $44, depending on size and material. The
Animalid is a toilet-lid cover with 3-D animal graphics designed to
help toddlers feel more comfortable during the potty-training
process.
Startup: Babjak launched the business with $1,000 in
2000. In 2002, she got her first order from QVC for 2,000
Zip-A-Ruffles. That shipment cost $20,000 to produce; Babjak raised
the money from family and friends.
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Sales: $750,000 in 2004; $1.5 million projected for
2005
The challenge: Getting your product into major mass
merchandisers like Walgreens and Wal-Mart, despite being an
independent inventor
In the past, big merchants typically resisted products from
small inventor companies. But now, many large retailers, including
giants like Home Depot, Walgreens and Wal-Mart, have launched local
purchasing programs to find innovative products, giving individual
stores and regions the option to test-market local products. These
stores still have stiff criteria for performance, and inventors
won't succeed in local buying programs unless they can prove
they have the means to supply nationwide. That's what inventor
Kim Babjak has done--and thanks to a local buying program, she has
transformed an initial investment of $1,000 into sales of more than
$1 million.
Steps to Success
1. Prove you can supply a large number of products.
Getting into a local buying program isn't easy, but it does
help to establish a strong foundation first. Babjak did that by
selling her first product, the Zip-A-Ruffle, on QVC, first
nationally and then internationally, a process that challenges
inventors to have 5,000 units on hand before every airing. "My
first shipment for QVC was ready to ship [from China] when a
typhoon hit Japan," says Babjak. "When the product
arrived, it had mildew and was ruined. I had to fly back to China
and find a new supplier who could deliver in eight weeks. The new
manufacturer actually delivered in just six weeks."
These trials and tribulations paid off for Babjak when she
approached Wal-Mart about her second product. "To get into
Wal-Mart's local buying program, I had to be sponsored by the
local store manager and the regional manager. I'm sure my
experience selling to QVC [and] handling the logistics of bringing
in products from China helped me get the managers'
support."
2. Show your product can sell at retail. Babjak never
wanted to introduce the Zip-A-Ruffle in national retailers because
she felt "QVC wouldn't want to carry the product anymore,
especially if it was available at a lower price from a mass
merchandiser." But that wasn't the case with her second
product, the Animalid, which she felt had great retail potential.
"I approached the Walgreens stores, whose local buying program
only needed the local manager's approval," says Babjak.
The local manager decided to test the Animalid in six stores, and
they "sold approximately 350 Animalids in two weeks,"
says Babjak. "I was offered a chance at a regional test
program. I declined because I was hoping to get into Wal-Mart's
local buying program." The decision to pull her product from
Walgreens paid off, as Wal-Mart soon accepted the Animalid in its
local buying program. Babjak's test run with Walgreens made a
strong case that the product would sell at both Walgreens and
Wal-Mart for a retail price of $9.99. In April, Wal-Mart began
selling the product in some Phoenix stores.
3. Research your category. After talking to Wal-Mart
store and district managers and conducting internet research,
Babjak learned that Wal-Mart sold 1.5 million of a single brand of
toilet-lid covers for potty training per year. Says Babjak,
"If I could capture 5 [percent] to 10 percent of that, I would
be very happy." 4.approach your local store manager.
Wal-Mart's store managers have the power to initiate a local
buying program once they get approval from the regional manager.
Not all store managers will do it, but many will if you are
persistent.
"I phoned the manager for one whole year," says Babjak
of her attack plan. "Every time I would talk to him on the
phone, he was always telling me they were in the middle of
inventory, or that they were extremely busy, that I should call him
in a week or two. So that is exactly what I did. Finally, I made an
appointment, and he loved the product from the start." Getting
approval from the district manager wasn't a problem for Babjak:
"I didn't have to make a presentation to the district
manager; the store manager did it himself."
Lessons Learned
1. Kudos goes to managers who find successful products.
The local buying program is a way for big retailers to find
innovative products, and store managers like to introduce new
products if you can get them to listen to you. You must be
persistent, though.
2. Supply is never easy. For many inventors, supply is an
afterthought. Big retailers, however, never think that way. They
know supply can always present problems in terms of quality,
delivery and cash flow. Inventors rarely realize that it takes
$200,000 or more in operating cash to support $1 million in sales,
and they're rarely aware of how much inspection they (or their
hired agents) will have to do to ensure the quality of a product
manufactured overseas.
3. Exclusivity can help inventors land sales. Retailers
will give your product an extra edge if they know you're
selling the product exclusively to them. They appreciate having a
product other stores don't carry. Other venues, such as QVC and
smaller retail chains, are also reluctant to carry the same product
as a mass merchandiser because they feel the larger chain store
will undercut their price.
4. Ask for help. Store managers at the big retailers know
what helps a product sell. When you meet with a manager of a local
buying program, don't be afraid to ask what else you can do to
help the product sell better. You have a good chance of landing the
business on a second go-around if you're able to incorporate
the manager's suggestions.
Getting On QVC
Kim Babjak, inventor of the Zip-A-Ruffle, used an agent, Laura
Fox of Fox Marketing in Santa Monica, California, to land her deal
with QVC. While QVC is happy to work with agents, it is also
possible for inventors to land QVC contracts on their own.
According to QVC's Abby Schaefer, "QVC does everything
[it] can to find products, and although QVC certainly accepts
products brought in by third parties, it is absolutely not
necessary to hire an agent in order to have your product evaluated
by QVC. If you have a great product, [it] will sell
itself."
Inventors can submit their products to QVC by mail or at a
national QVC Product Search trade show. These are hosted in various
locations at least once a year. Vendors who attend the QVC Product
Search events have the opportunity to present their products in
person to a QVC buyer. Check out the QVC Product Search website at
www.qvcproductsearch.com for more details on
submitting your product.