Are you an inventor who is trying to figure out how to market your invention? In previous posts, we have covered the expense of taking a product to market: design, engineering, prototyping, testing, tooling, manufacturing, warehousing, branding, advertising, and marketing and distribution. If that doesn’t overwhelm us would-be inventors enough, let’s consider the fact that if we had duct-taped all of this together, our chance of selling to a major retailer would still be “extremely low”.
You see, the major retailers manage some of the most expensive real estate in the world. A 24 x 16 shelf could be worth upwards of 6 million dollars a year. If your product is going to occupy that space, the buyer at that retailer needs to be absolutely sure it will perform. To bring on a new vendor, that retailer will go through mountains of paperwork to ensure that your company has the structure, ethics, and history to make this a safe buy.
Now let’s get back to the real estate (shelf) issue. If you fail to deliver, if you are a week late, or if you fail to keep up with demand, not only are you likely to be axed, the buyer’s job is on the line, too. That buyer has a good job with sweet benefits and children that they are sending to private school perhaps. Are they likely to put all of that on the line for a roll of the dice with you? Probably not.
Another thing that will stop the sale dead in the tracks is your client base, and this is where the retailer is actually watching out for you. These retailers understand that they can make or break you overnight. Imagine you get that golden egg order of 500,000 products. Can you fulfill that order? Let’s say by hook and crook, you pull strings, beg borrow and steal the cash, and perhaps pawn a kidney. There is no guarantee of a second order. Worse still, there is no guarantee that your order won’t be cancelled or returned to you from the retailer with you getting an additional bill for handling. Could you survive? Even the big boys struggle at times.
We have a friend that had a product in stores, close to a million pieces out there on the shelves. One phone call by a “conscientious” customer with an unfounded and erroneous concern and the entire order was pulled from stores. That cost him hundreds of thousands of dollars and millions in sales. His company, which carries dozens of products in multiple retailers, will weather this storm, but it’s a very bitter pill to swallow. The larger retailers understand that these situations will happen, and they do not want to be too large of a slice of your pie, because they know it is a matter of time before they put you out of business.
Of course there is a softer option. There are brokers that vend for multiple companies, and your product could become one of their offerings. This solves the issue of a large retailer refusing to represent too much of one company’s business. But this is a small consolation, seeing that that rule is there for your protection.
So what is the solution? Digital marketing is helping to level the playing field by allowing start-ups to sell products on large e-com platforms like Amazon and many others. You can also target independent retailers and small chains that need unique innovations that will help differentiate them from the national chains. These smaller chains are often more approachable and do not pose as great of risk if something goes wrong. Just remember that an organic growth strategy can be very lucrative in the long run if you invest the time and effort, but it will take a lot of both – time and effort.
For most inventors, “licensing” your product to a large Consumer Product Company is probably the best option. It is almost always the least expensive and least risky approach. These companies have established relationships with both chain stores and independents and are accustomed to dealing with the complexities unique to each retailer.
Did I take the wind out of your “sales”? Did this fly in the face of the advice that you heard that if you just knock on the retailers’ corporate offices, they’ll roll out the red carpet? The last thing I want is to discourage anyone. My hope is to help you avoid the obstacles and to navigate the most cost-effective and realistic strategy for getting your product to market.
AON Invent is that realistic route. We have seasoned veterans who are ready to consult with you who not only have marketing experience but also have multiple years of experience in all of the necessary fields: patenting, product development, inventing, tooling, and the right business connections. Read more about our evaluation panel here.
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