Can selling to Wal-Mart and other bog box stores really make the kind of fortune that fuels the dreams of inventors and entrepreneurs? The answer is a resounding “Yes!” says Robert Smith, owner of Champion Media Worldwide public relations firm in Cary, North Carolina. Smith should know since his agency ranks among the top 100 in the country, and his client list literally looks like a “Who’s Who in Business.” Moreover, one of his clients is John Abdo, inventor of the Ab-Doer exercise machine now sold by Wal-Mart.
“Abdo’s product has sold nearly $1 billion to date,” says Smith, additionally noting that the road to such success is never smooth nor easy.
Tomorrows’ Trends asked Smith about the pros and cons of selling a product to a big box store like Wal-Mart. In addition to defining the arguments both for and against, Smith provided us with some excellent “how to do it” advice as a bonus. Here are his personal “pros” and “cons”.
Pro:
Massive Exposure
“The major pro of selling through Wal-Mart is obvious,” says Smith. Wal-Mart is the biggest sales outlets around.” The 2012 Fortune 500 Global list ranks Wal-Mart as the third largest public corporation in the world, as well as the largest retailer and biggest employer on the planet.
Cons:
The Commitment of Time and Energy
The first key to getting big box exposure is a willingness to spend as much time and energy as it takes to develop a hot product and acquire a proven sales track record. Don’t expect this to happen overnight. You must already have established a good market position or a perceived market advantage in order for Wal-Mart reps to even want to meet with you.
“Ab-Doer was launched through infomercial selling,” Smith says. “After a few years and tens of millions of dollars it became a retail sensation.” Without that, Wal-Mart probably wouldn’t have given the Smith the time of day.
Smith notes that another major obstacle to selling your product through Wal-Mart is the length of time it takes to get such a big box store to even look at it, let alone be willing to stock it even after it’s become commercially successful.
“It can take up to 2 years for your product to reach the shelves, unless you use forced distribution by finding a way to send customers into Walmart asking for your product by name,” Smith says. Forced distribution, he explains, occurs when you place ads or articles telling people to come into Wal-mart to buy your product. However, Smith adds that managers of individual big box stores usually have authority to buy small amounts of your product as a test run. If you’re willing to spend the shoe leather and time, you can build the distribution yourself- store-by-store, city-by-city.
Ongoing Market Research is a Must
Nothing could be more embarrassing than approaching a retail outlet with a product someone else has already designed and gotten into the market. If your design is better with low production costs and a great bottom line, it may have a future. If you try to sell a product that’s no better than any other on the market, however, then it will not likely find its way into a Wal-Mart.
Keep a weather eye out for products similar to yours at all times—and if you find a product that’s distressingly similar, see if you can make beneficial changes to one up the competition.
You Must Protect your Rights of Ownership
Knock-offs and private labeling are facts of business life today, Smith points out, so take precautions to protect yourself and your product from being copied by insisting on a non-disclosure agreement (NDA) with every retail outlet you approach. Not doing so leaves you unprotected from product design pirates.
A non-disclosure agreement is a legal contract designed to protect confidential material, knowledge, or information by not sharing any information covered by the contract. It creates a confidential relationship between the parties to protect any type of proprietary information or trade secrets so it’s a true asset for your invention.
By the way, you don’t necessarily have to hire an attorney to draft a non-disclosure agreement. A quick online search will reveal several sites that offer customizable non-disclosure forms. It is always a good idea, however, to have your attorney review it before your first meeting a retail outlet.
A “One-Hit Wonder” is a Harder Sell
Though Wal-Mart will consent to buy a “one and only” product, smart sellers should aim for having several items to offer, according to Smith. At the very least, you should have some clear ideas about what you’ll do for a second and third act.
“Wal-Mart just wants something that sells,” Smith says. “However, you are leaving money on the table with a “one hit wonder” because it’s both easier and cheaper to sell something else to an existing customer than to try to sell to a new customer.”
As you’ve probably noticed by now, it is definitely a challenge getting into big box stores like Wal-Mart and the results are not always guaranteed…even with a great product. With that in mind, is approaching big box stores really worth the effort? We’d love to hear your opinion below.
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