Let’s say I invent something that revolutionizes a certain corner of the market. Let’s say I pay to have a marketing plan drawn up, and packaging etc…etc… Let’s say it’s a really worthwhile product…
How would I get it on the shelves of a large chain store? Are there buying departments? Regulations? Has anyone ever done this?
Well, there are whole squadrons of buyers for big chains. They tend to buy from recognized outlets, or from vendors who sell at major industry shows. Shelf space is at a premium and the “worthwhileness” of your product may run up against entrenched shelf-space holders, doubts about your supply chain and order fulfillment capabilities as a small entity, big barriers to entry (those trade show booths ain’t cheap).
I will Google in a minute to find some more specifics but suffice to say (as someone who has indirect/anecdotal evidence only of the market, mostly through business partners), there are a number of factors, some structural/incidental, some effectively based on collusive/cabal behavior amongst suppliers, buyers, middlemen, etc., that make this a (relatively) notorioius hurdle to overcome.
Other wild card: somehow your product becomes a grass roots success and a proven huge seller. Sure, Target will then be interested in selling such a product. But note that I said “such a,” not “your.” Once the revnue stream is established, they will (once again) not necessarily have much incentive to deal with you (as opposed to the Chinese behemoth factory who will supply them with knockoffs for half your asking price).
Not to be a wet blanket.
Also not to be a wet blanket.
I’m familiar with three such experiences. In one, the inventor had come up with an amazing new, non-phosphate dishwasher detergent. Having struck out with Proctor & Gamble, he tried to market it independently. No matter how good it was or what it could do, the only thing buyers were interested in was how he could guarantee delivery and what the price would be. To be more precise, they refused to talk to him unless he could get the price to a certain point.
In the second, the inventor had figured out how to retrofit a standard gasoline-powered car to run on compressed natural gas. CNG is incredibly cheap and much less polluting compared to petroleum. The car manufacturer he was in discussions with stipulated that the refitted vehicles had to get 200 miles per tank. That was non-negotiable.
Back in the 1960s my uncle invested his life savings in an amazing new grease-cutting household cleaner. Within two months after it had gone into production, both Formula 409 and Fantastic hit the market. Turns out the technology wasn’t as proprietary as the inventor had assured him.
“Slotting allowances” – nice euphemism for pay-to-play.
Walk in and place it on the shelf?
[sub]Someone had to say it[/sub]
I know BestBuy has a department that determines what products get stocked on their shelves. They have a stack of binders that specify requirements and processes with which their vendors must comply and they are very aggresive on how little they will pay for it. WalMart is even more infamous – supposedly driving the price down to the point that some vendors lose money on each unit.
As kunilou mentioned, I expect a large retailer would require solid evidence that once they start stocking your product, that you would be able to manufacture and deliver product that maintains quality and keeps up with demand. In fact, these would likely be terms of the contract.
I wouldn’t think a big retailer like Target, WalMart, or BestBuy would even deal with an individual. There would just be too many things that the individual could do wrong - like run out of money. I wonder if it is necessary to work your way up the chain: from direct sales (web or otherwise), to specialty stores, to small retailers, etc. before getting to the big guys.
Even if you didn’t sell your idea outright, does anyone know if there are middle-men or distributors that would front-end the deal? Provide the business contacts and bankroll to sell to a large retailer while taking a cut of each unit.
From what I’ve seen, direct mareting of a product might be the only other lucrative alternative. Buying TV time and supporting your own manufacturing and distrubtion may be a way around the usual venues. Think Ronco and Ginsu.
This is a major investment as well and the product must have instant convenience and marketability, it must be a unique product.
I would highly doubt it. For the most part, middle men want to take an assured profit off of a deal that offers them little to no risk. They are not in the business of fronting money themselves.
Concrete example: The (recently struck-down) laws against discriminatory inter-state wine shipment bans were enacted and enforced almost solely to keep a (somewhat redundant) layer of intra-state liquor wholesalers in a quasi-monopoly position. They were keeping the shelves stocked with something, but I’m pretty sure that as an out-of-state wine grower, you would not find the middleman wholesalers eager to help, finance, or place your product in their states. To the contrary, I’d imagine they’d request from you pricing and payment term concessions, discounts (in the limit, kickbacks or bribes) for the privilege of allowing you access to “their” end-user stores. Again, it’s pay to play, and the companies best positioned to pay large sums (before they’ve got a revenue stream for their product) are existing large consumer product companies.
Then again ‘somebody’ may take your product to China, let them reverse engineer it and then produce it at 1/3 your cost. (and quality)