Inventors with just one product--which is most inventors--have a hard time breaking into major distribution channels. Retailers and distributors incur costs for each of their suppliers and can lower those costs by dealing only with manufacturers who have 15 to 20 items for sale. Also, most inventors can't afford to wait the 12 to 18 months it usually takes to see profits from retail distribution. One option for inventors looking to jump-start their sales is to sell to TV shopping channels such as QVC and the Home Shopping Network.
There are many advantages to this route. You sell to the network, not consumers, and you receive payment 30 to 45 days after the air date. You can get orders with just prototypes, and you don't have to invest in trade shows, literature or sales training. Moreover, the momentum you get from the shopping channel can help you get catalog orders and even establish a retail sales network.
Tim Wilson started inventing consumer products about seven years ago. In the past five years, he has introduced three new products through TV shopping networks, building Jet Blast Corp.'s annual sales to approximately $4.5 million. Wilson's first product, the Drain Blaster, uses a high-speed, rotating nozzle to pressurize tap water into a high-velocity water stream. His second product, the Pro-Jet 2000, converts ordinary garden hose pressure into a high-velocity water flow. Wilson's third product, the Aqua Helix Shower Nozzle, saves water by accelerating water flow through a showerhead.
Wilson first tried to sell his products through warehouse clubs and hardware chains, but his sales didn't support the marketing costs required to maintain many accounts. Since he started selling through TV shopping networks, his sales have grown every year. The four key steps Wilson followed can help you sell to a TV shopping network--or to any distribution channel.
1. Know your market. Wilson learned several key facts about TV shopping networks that helped him sell, including these:
- Products should appeal to virtually every viewer and have many potential uses.
- Products that demonstrate well or can be shown on video sell best.
- Products with components or add-ons have more appeal than stand-alone products.
- The networks prefer products that aren't available in stores.
- TV shopping network buyers expect you to make the product changes they suggest.
- QVC airs products once every 40 days, expects a minimum of $2,500 in sales per minute, and requires a 45 percent to 55 percent discount off the proposed price for the network.
- Home Shopping Network airs products once a week as long as they sell and requires a 45 percent to 60 percent discount off the proposed price for the network.
2. Create the right product. One advantage of working with TV networks is that they place large orders and will give you an extended delivery date, if needed, to help you manufacture enough of your product. But to ensure a product sells well on television, shopping network buyers want to fine-tune it.
Wilson shows buyers prototypes and doesn't do an actual production run until he has an order. He has buyers evaluate the prototype, then incorporates their suggested changes into his final product. Waiting to produce the product until after his initial meeting saves money and ensures Wilson only manufactures products buyers will purchase.
3. Price the product correctly. Pricing is extremely important to TV shopping networks. They usually want a price between $15 and $40; the product should also include "extras" so the price looks like a good deal. Wilson, for example, packages three versions of his Drain Buster together for $19.95.
4. Generate a strong sales effort. TV shopping networks air a product for 10 to 15 minutes, during which they give it an all-out sales pitch. They often show a two- or three-minute video demonstrating how the product can be used. When Wilson meets with buyers, he may go in with just a prototype, but he also spends about $5,000 to produce a top-notch video that shows exactly how his product will appear on television. The video is an essential step in selling to TV shopping networks, Wilson says; without it, buyers won't fully understand your product's appeal.
Wilson invents products to meet the needs of the end user, but he also designs them to meet the needs of his selected distribution channel. Most inventors concentrate only on the end user; then they try to find a distribution channel to carry their product. Often, the product has the wrong price point or is not designed for that distribution channel.
Wilson also creates products knowing upfront the discounts he has to offer the shopping networks. This helps him determine a targeted manufacturing cost.
TV shopping networks do have drawbacks. They air products only once every one to six weeks. If sales don't meet expectations, they drop the product. And even though they give you ample time to get your initial order in place, if the demand is greater than expected, you could end up scrambling to fill orders.
Inventors frequently ask "If TV shopping networks work well, why shouldn't I try direct-response TV ads?" Wilson tried this once, with mixed results. The shopping networks offer two important assets that individual inventors can't match: a proven sales process and an audience that likes to buy products from television. Their 10- to 20-minute segments are full of details inventors often overlook when creating direct-response ads.
Shopping channels have strict requirements for the products they sell, but they represent an excellent sales channel for many inventors. If your product has multiple uses and widespread appeal, consider selling through a TV shopping channel.
License To Sell
Question: I have a product that's perfectly suited for a certain manufacturer. I would like to present my idea to the manufacturer and negotiate a licensing agreement. I sent a letter to the company's president, but it went unanswered. How should I proceed?
Answer: The best way to present a product to a company is to first get support from a regional sales manager. Regional managers don't have many people pitching products to them, so they're more likely to agree to see you. They're also more effective than you are in convincing management to let you make a presentation. An extra bonus: Regional managers often make suggestions on improving your product. If you follow their advice, many will push extra hard to make a connection for you.
To contact regional sales managers, attend trade shows where the company you want to contact exhibits. Regional sales managers will typically be there; the best time to talk to them is either before the show has started or when the show is winding down.
A second option is to request product information from the company you want to pitch. The literature will come with a cover letter with a contact name. That person can usually tell you the regional sales manager's name and how to contact him or her.
Don Debelak, author of Bringing Your Product to Market (John Wiley & Sons, $19.95, 800-225-5945), is a marketing consultant specializing in taking new products to market.
Contact Source
Jet Blast Corp., fax: (410) 636-0819, BLASTJet@aol.com
This story appears in the September 1998 issue of Startups. Subscribe »
