How LLCs Can Work with Retailers

How LLCs Can Work with Retailers

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If you’re an entrepreneur with hopes of getting your product in stores, there are a few key strategies to keep in mind. Selling your products to retailers, also known as opening a “wholesale channel” for your business, can help you sell to a wider variety of customers, expand your business’s reach and market share and boost your profits.

There are big opportunities to be found in selling to retailers. According to data from the National Retail Federation (NRF), the U.S. is home to more than 1 million retail establishments, and retail sales have grown by almost 4 percent per year since 2010. Even though there has been massive growth in online sales in recent years, brick-and-mortar retail still matters: according to the NRF, prior to 2020, online sales represented only 10 percent of total retail sales.

But just as any other marketing effort, becoming a successful wholesale seller requires certain skills, such as how to pitch to brands, how to get your product in local stores, how to build relationships with purchasing managers and more.

Here are a few key tips for how to sell wholesale to retailers as a small business owner.

Develop a Retail Pitch Strategy

Selling wholesale to retailers requires a different strategy than selling directly to consumers. The same things that consumers want from your product might also be relevant to retailers, but retailers also have some additional concerns that they will want you to address before they decide to buy from you.

Start by writing up a retail pitch strategy. This can be like a mini-business plan for how to get products in stores. Your retail pitch strategy should include:

  • A list of stores you would like to approach. Why is your product a good fit for each store? What kinds of customers tend to buy your product?
  • Relevant research/market insights for how your product aligns with each store’s merchandising plans. Where would your product fit into the store’s floor layouts, displays and product categories? Is the store already selling a competitor product or a similar category? If so, why is your product better than what they’re already selling?
  • What’s in it for the retailer. Keep in mind that the retailer wants to make money, too. If you can show them how your product can resonate with customers and help them make more sales, you’ll be more likely to get your product stocked on their shelves.

Once you have your pitch strategy in place, it’s time to take the next step toward getting your product in stores.

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Create a Pitch Package for Stores

When retailers are deciding which new products to purchase and stock on their shelves, they will want to see a “pitch package” to introduce your product. Think of the pitch package as a resume to help get your foot in the door. The pitch package should be visually oriented with photos, sizes and samples of the product. You also will need to include certain key details to help the retailer understand how they can do business with you and what volume of products you are ready to ship.

These are a few of the most common items and details to include in your pitch package:

  1. Minimum opening order and reorder: Pre-determine your minimum volume of product that you are willing and able to sell and ship, based on the amount of product ordered or the dollar amounts. When you’re selling at wholesale cost, be sure to establish a minimum that covers the cost with volume.
  2. Turnaround time: If a retailer decides to order from you, how soon can they expect you to deliver the products? Establish a timeframe from order placed to delivery, and make sure your business can meet your deadlines.
  3. Payment terms: Will you invoice the store after the order arrives or when the order is ready to ship? Will you ask for an upfront deposit? Does the store have standard payment terms, or are they willing to pay you more quickly in exchange for a discount on the price? Make sure the payment terms you agree to will help cover production costs and help you manage your cash flow.
  4. Shipping and insurance: Decide how you want to charge for shipping and which carrier you want to use. Establish an agreement with the store on how to handle damage/loss after a package has been shipped. You could offer insurance as an add-on for an additional fee, for example.
  5. Exchanges and returns policy: Determine how you will handle instances where a customer may be unsatisfied with the product or a product breaks. For example, you could set a window of time that an exchange and return can happen.

On top of including these terms, you also want to include information about your product and product and packaging samples.

Spruce Up Your Packaging

Maybe your products have only been sold online where you can include multiple images and descriptions that make it easier for the customer to know everything there is to know about the product. However, in a retail setting, your product has to stand out from the competition. One of the best ways to get attention on the retail shelf is with creative, visually impactful packaging design.

According to a recent survey, 72 percent of Americans say that the design of a product's packaging affects their purchase decision, and 67 percent say that the packaging materials make a difference too; this is especially important if you are selling gift items — 81 percent of Americans say that a product's packaging influences their purchase choice when they are buying gifts for others.

Your packaging has to make an impact on shelves in order for a retailer to be interested. Does your product's packaging currently communicate its features and benefits? Is it even made to physically sit on shelves and be visible? Can you be more creative with the packaging design or the choice of materials to help tell more of a story about your product?

Think carefully about how the customer perceives your packaging as a "first introduction" to your product. This can help you look at your packaging a bit differently.

Optimize Your Website for Wholesale Purchases

Let buyers and stockists know that your products are available for wholesale purchase by including a specific page on your website to show that offering. The page should have a contact form for stores to complete with details about themselves. Consider including a line sheet (with a company overview, terms, order instructions and product catalog) if you think that would be a good fit.
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Attend Trade Shows

Trade shows and industry business conferences are still one of the best ways to connect with buyers and should be a part of your plan when you’re looking to integrate wholesale into your distribution strategy. It’s important to know what shows are the best fit for your brand and your product, so do your research upfront to determine which trade show(s) are worth your time and effort.

The “biggest name” trade shows might not always give you the best results if you’re just venturing into selling wholesale for the first time, because the big shows tend to be more expensive to exhibit at and more competitive to get attention. You might have better results by starting small with a local trade show or narrower niche-focused industry conference.

Sell Wholesale Online

Along with selling wholesale to brick-and-mortar retailers, there are several ways for small business owners to sell their products wholesale online. Online sales are becoming more important than ever.

According to recent U.S. Department of Commerce data, U.S. ecommerce sales grew by more than 30 percent between Q1 and Q2 of 2020, and ecommerce now represents 16.1 percent of all U.S. retail sales, up from 11.8 percent in the first quarter. You can help tap into these online retail sales opportunities for your business by selling directly to retailers online.

Consider signing up for these online wholesale marketplaces and B2B sales options:

  • Amazon Business: Along with selling products to consumers on Amazon, you can use Amazon to sell to businesses. Amazon Business offers access to more than 1 million business buyers worldwide, representing more than $10 billion in annual sales opportunities.
  • Tundra: Tundra is a no commission, no transaction fee wholesale marketplace where you can reach more than 25,000 retail buyers who want to find great products in categories like beauty, home goods, fashion, food and beverage, jewelry, kitchen wares, kids’ merchandise, toys and much more.
  • Wayfair: Wayfair helps small business owners sell millions of products at wholesale prices in categories such as bed and bath products, furniture, kitchen wares, lighting, outdoor, renovation and more. Wayfair sells your products at wholesale prices, then sends the customer order to your business for dropshipping.

Getting creative and adaptable in selling your products via new online channels can help your business diversify your revenues during a recession. Keep pushing for new opportunities to get your products into stores, even if those stores are ecommerce-only instead of brick-and-mortar retail stores.

Cultivate Your Own Customer Base

Retailers love to buy wholesale products from sellers that have already cultivated a following by selling directly to consumers. Don’t expect your retail buyers to build an audience or expand your brand for you; you need to do the hard work upfront of building buzz for your product and, hopefully, attracting a substantial audience on social media.

Showing retail buyers your pre-existing orders and revenue will prove that there is already a demand for your product. To raise awareness and interest in your product quickly, you could start a crowdfunding campaign.

As with anything, there are some advantages and disadvantages to going wholesale. In general, it offers quicker movement of your product, more cash flow through larger orders, larger consumer reach and greater brand exposure. However, selling wholesale also presents a few new changes in how you manage your business: wholesale pricing could cut your per-unit margins in half, so make sure you get a big enough sales volume to stay profitable and maintain predictable, healthy cash flow.

Also, as a seller to wholesalers, you will need to shift your business operations a bit, compared to selling direct to consumer. Be prepared to spend more time managing relationships with retail buyers and communicating with stores, and make sure you are willing to relinquish some control over your branding. You might not always agree with some of the decisions that retailers make with how they merchandise your products in their stores. Be prepared to advocate for your product even after making the sale.

If you're ready to get your business up and running, Incfile can help. Reach out to our experts today to learn about how we can help with all the ins and outs of forming, filing and managing your company.

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