Mass retailers can help grow your business, but going slowly is the key.
Once your product hits the shelves of Target or Walmart, you can sit back and watch the profits roll in, right? Not exactly, says Michal Chesal, president and co-founder of Baby K’tan in Davie, Florida.
Baby K’tan’s carriers were originally distributed primarily in small specialty boutiques. Now their product is available through many major retailers including Babies “R” Us, buybuy Baby and Target. Chesal shares what she’s learned about transitioning from boutique to big box, and offers advice for small business owners hoping to distribute their products nationally.
Build your brand first.
It may seem practical for owners to start targeting big-box stores early on in the business, but Chesal cautions them to first focus on building a strong brand that can sustain the challenges associated with wide distribution. “We pounded the pavement for years and built our brand organically,” she says.
Chesal and her co-founder, Isaac Wernick, traveled to specialty shops throughout the country establishing relationships with small retailers. They attended tradeshows with their competitors in the baby products market, but they also attended conferences for birth support specialists, lactation consultants and other professionals who could recommend their products to new parents. They also sent baby carriers to bloggers in exchange for reviews.
Word-of-mouth advertising allowed them to build a grassroots following with parents on a very tight marketing budget. Eventually, Babies R Us approached them after discovering that “Baby K’tan” was one of the top 50 “failed searches” on their site. Babies R Us customers were searching for Baby K’tan products even though the retailer didn’t carry them yet. “Customers were looking for us,” Chesal says.
Start small, and go slowly.
Chesal recommends easing into big-box distribution slowly. “It’s like a marathon. Don’t start sprinting from the beginning. You’ll get exhausted, or you’ll injure yourself. Pace yourself, and build up speed,” she says.
Learning to navigate large volume retail takes time, Chesal says. Small business owners need adequate brand recognition to support sales of their products in large retailers, and they must have the capital, infrastructure and staff prepared to meet high demand.
Mass retailers frequently change orders, cancel shipments or reduce payments. If your small business is depending on a single large account, these sudden changes can be disastrous. “The biggest thing a small business should ask is, ‘If I lose this account, will I go out of business?’ If the answer is yes, you’re not ready. You have to know that if you lose this account tomorrow, you can still continue on,” Chesal says.
Chesal recommends starting with smaller chain stores. Baby K’tan’s first big account was Buy Buy Baby, which has fewer than 100 stores nationwide compared with Target’s nearly 2,000 stores. If a smaller chain isn’t available in your market, distributing your product online only through a large retailer’s website will allow you to start slowly. “You can test the waters, and learn to work with them. You’re on their website with a lot of visibility, but you don’t have to fulfill orders for every location right away,” she says.
She also recommends focusing on one retailer at a time. “Once you’re in one and you’re working well with them and sales are strong, it’s a lot easier to go with the others,” Chesal says. But she says it’s important to build your company’s infrastructure before taking on more orders than you can fulfill to avoid overwhelming your resources. She has seen many small businesses jump into wide distribution too quickly, take on more than they can handle and end up going out of business.
Don’t burn bridges with boutiques.
Mom-and-pop shops are struggling to compete with big-box and online stores, and Chesal has seen many of her original distributors close. However, she still views small retailers as essential partners.
To maintain a strong relationship with small businesses, she works hard to keep prices consistent throughout all distributors: The price point for Baby K’tan is the same at big-box stores like Target, online retailers like Amazon and small local boutiques. She sees this as a way of leveling the playing field for fellow small business owners who often struggle to compete with the ultra-low prices of larger competitors.
She also offers unique lines for boutique stores as a way to give them an edge, for example special prints you can’t find in big-box stores. “You need to respect your boutiques, because they’re the ones that help build your brand and sell your products,” she says.
Author: Karen Sams Date: September 08, 2015