If your business manufactures consumer goods, you might think that winning a place on the shelves of a big box retailer is a golden ticket to success. After all, Wal-Mart alone operates over 11,500 retail locations around the world, and getting the nod to sell through these locations guarantees high-volume sales for your whole product line. Unfortunately, other product sellers have already had the same thought, which is why the business is crowded and competitive. Of the 10,000 or so suppliers who apply to Wal-Mart each year, it’s typical for only around 200 of them to get supplier agreements. To maximize your chances of beating those 50:1 odds, it helps to take some time and prepare your business before filing the first application.
Step One: Determine Whether Your Product Is in Demand
Not every product is appropriate for big box sales. Handcrafted jewelry, for instance, may be hard to produce on the scale Wal-Mart or Costco would need. Adult or other nonfamily-friendly products face special obstacles to winning shelf space at stores like these, as do perishable items and groceries. It’s also possible your product just isn’t what the retailer is looking for at the moment; most large retailers already sell towels, tools, and T-shirts, and trying to break into these crowded areas might be more difficult than if you offered something unique, like a lava lamp alarm clock. If your product is fundamentally ill-suited to big box sales, you don’t have to despair. Online retailers such as Amazon and eBay tend to be more flexible with their inventory. Because their sites are, in effect, single-store locations, most don’t require you to keep large stocks of merchandise on hand or ship 20,000 units across the Pacific Ocean on 24 hours’ notice. This makes it far easier to sell on a small scale, to sell age- or otherwise-restricted products, or to try your hand at selling the world’s 1 millionth coffee cup design.
Step Two: Prepare Your Company
If you feel your product is a good match for the kind of market presence big box stores represent, it’s time to honestly evaluate your company. Stores like these have standards for their suppliers, and the jostle of applicants ensures they almost never feel the need to compromise. Each store has its own rules for suppliers, but in general, these stores want you to be:
- Ethical: Almost every big retailer has rules for labour and workplace safety standards. Labour practices that may be perfectly legal in some countries, such as underage employment or long unpaid overtime hours, can bring heat on the retailer when the public hears about them. Expect the store to ask for an independent inspection of your facilities.
- Reliable: No store will sign a contract with a supplier who may not be able to deliver on its terms. If your factory is too small to meet the demand, or if you have a reputation for being late with deliveries and sloppy with inventory tracking, expect a rejection out of hand.
- Independent: Big though they are, large retailers aren’t totally unfeeling. Stores such as Wal-Mart don’t usually want to be more than 30% of your total sales. Remember, the store might cancel its order at any time, and nobody wants to be the bad guy who sank a supplier’s company. Try to work your way up through local and small-scale retailers to the really big guys so your initial order doesn’t represent more than 35%, or at most 40%, of your total output.
Step Three: Diversify Your Offerings
If you sell a single item, there’s no rule saying Wal-Mart can’t buy it from you, but it is less likely than if you have a lot of products to offer. One-off orders and single-item purchases take about as much work, from processing the application to inspecting facilities and confirming liability coverage, as much bigger orders. At the end of that process, the retailer can have either a single spot on one shelf occupied, or it can fill a section with your branded products. Big stores make their money from economies of scale, and the bigger your catalogue, the more you have to offer them.
Step Four: Apply and Wait
With all the fuss it takes to get ready to sell, most retailers grant a small mercy by making the application process relatively easy. Suppliers can usually get the ball rolling by visiting the store’s website and clicking through to an online application. Fill this out, along with any supplemental questionnaire, and wait to be contacted. Be prepared to wait for a while. Remember those 9,999 other applications, and it makes sense you might be waiting for months before you get either a form-letter rejection or an invitation to continue the process. You may find yourself exchanging emails with a buyer for the store, or you might even get a phone interview to pitch your product. If you’re selling perishable items, or if you’ve applied for Wal-Mart’s Local Suppliers program, you’ll probably be talking to the regional or location manager. These managers, or their superiors, make the final decision, eventually.
Step Five: Move Fast, Stay in Touch
When you finally get the go-ahead and sign your agreement, you need to be ready to move. Behemoths like Costco don’t operate on your schedule; they have their own, and they expect you to be ready with the goods when they need them. Some retailers have been known to go from approval to first-order-arrives-at-warehouse in 24 hours, so it’s a good idea to have some stock on hand in anticipation. Beyond that, your responsibility to the retailer is mostly to stay in touch and respond to its needs as they come up. If all goes well, your product line can find itself on shelves all over the world and be the envy of the other 9,800 other suppliers for as long as you’re in business.