Five Things Self-Funded Business Owners Should Know About Retail Partnerships by Forbes – Entrepreneurs

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An important part of self-funding your own business is understanding when it’s the right time to take your company to the next level. That’s part of the reason why I’m sharing what I’ve learned as the self-funded founder of a skincare line . (You can explore my previous articles about product design, social media, email marketing and more here .) Today, we’re diving into the five things you should know before you launch your product with retailers.

1. Research Your Retailer

Before you even approach retailers, you need to do your research to understand what each target retail partner requires from its brands and what costs are associated. If a retailer places an order and you can’t deliver, they are less likely to give you the opportunity again in the future.

Larger retailers have more complicated operations requirements, typically take a larger cut of the MSRP and often aren’t willing to negotiate terms. But larger retailers also place larger orders, which means more money for you. Being successful at a larger retailer requires a larger marketing investment, so be prepared for that. Smaller retailers will order significantly less inventory, but they typically order more often. They are generally more open to negotiating margins and don’t require a large marketing investment. But while smaller retailers may be easy to work with, they can also be less reliable when it comes to paying invoices on time.

2. Make Sure You Have Operations Infrastructure In Place

Operations can make or break your success with a retailer, so make sure you have a strong system and some free cash to devote to upgrading it if necessary. Larger retailers may require you to set up an EDI system so they can submit purchase orders electronically. It isn’t cheap, but it streamlines the whole process and, in my experience, is worth the cost.  

Make sure to have some inventory on hand and hire a sales forecaster if you have inventory management concerns. Depending on your industry, you may need to supply testers, cover damages and pay for shipping. Once you get a new retailer on board, you can renegotiate rates with your shipping provider to keep your costs as low as possible. Large retailers have strict shipping windows and requirements that must be followed or you will be subject to chargebacks, so stay vigilant.

3. Have A Promotion Strategy Ready To Support The Partnership

Retail is a cutthroat world, and your sales numbers in the first months after launch can determine your future with a retailer. That’s why it’s so important to have a promotion plan in place before you launch. For larger retailers, plan to spend money driving traffic to their site, even if you have your own direct-to-consumer site to feed. Larger retailers want to see strong sales numbers from the start and won’t hesitate to cut your brand if it’s not showing traction. You should also set aside some money to participate in marketing programs through your retailer, like sampling and email placement. Leave some room in your budget so that when opportunities arise, you can jump on them.  

4. Be Prepared To Compete With Your Own Advertising

Like I mentioned above, you will need to invest in advertising to promote your new retail partnership, which means you might have to sacrifice dollars you would ordinarily put towards directing traffic to your own e-commerce store. Plus, your retail partners will be implementing their own ad strategy and bidding on searches and keywords associated with your products. That competition means your ad costs might go up. For example, your CPAs on Google Shopping might surge since you’re now competing for the same keywords as your new retailer. It might not sound great, but it’s worth the potential success of your retail partnership.

To balance out the change and support your e-commerce business, create reasons for customers to return to you and to your retail partners. Offer a rewards program, run exclusive promotions, try retargeting campaigns and send automated emails. (You can learn more about this in my articles about email marketing and social media marketing.)

5. Make Things Easy For Your Buyer

Buyers manage a lot of brands and products, so the easier you can make things for them, the better your relationship will be. When you’re pitching, show your buyer that you will support the launch with a media plan or PR strategy. Do some research about emerging trends and consumer preferences and show them how your products fit in. Offer them exclusivity deals if you really want to get their attention. When you make things easy for your buyer, they’ll repay the favor later.

I waited years before I partnered with retailers because I wanted to make sure I could set my brand up for success. Instead of diving into retail partnerships right away, I built my business through my own e-commerce site. I recommend waiting: Take the time to plan for your partnerships so that you can watch them flourish in some of the country’s most beauty retailers.

April 25, 2019 at 07:32AM
Forbes – Entrepreneurs