I Turned Down A Major Retailer Who Wanted to Carry My Product. Here’s Why Other CPG Founders Should Too

Founders usually dream of being bought in Costco — however final 12 months, when Costco supplied to hold my beverage model, O2 Hydration, I mentioned no.

It was a gut-wrenching determination. I like Costco and would like to be carried in Costco, but additionally I knew a horrible fact: My model simply wasn’t prepared but. And in the event you go large earlier than you are prepared, retail can kill you.

You probably have a product that you just wish to promote on cabinets, listed here are three belongings you completely want in place earlier than saying sure to a retailer.

1. Perceive Your Market and Show Demand

Earlier than scaling as a CPG founder, you want a deep understanding of your market and should show demand in your product.

For my model O2, we began our retail efforts in a single area with a single retailer, Complete Meals. We expanded to 10 Complete Meals inside a 12 months, after which we expanded to a full area. This strategy allowed us to know what labored, after which double down on that.

For instance, we discovered that product samples drew clients in, and so they have been hooked as soon as they heard our story. That is superior perception, nevertheless it means we needed to scale accordingly. By operating a gradual floor sport, we constructed a loyal buyer base and secured extra shelf area — and we did it retailer by retailer, and area by area.

2. Safe the Vital Assets to Replicate

O2 was flying off cabinets at Complete Meals, so we thought we have been prepared for prime time and agreed to launch nationally with Kroger, Publix, and Sprouts the next 12 months.

That is once we realized our first arduous lesson about retail.

After we expanded throughout the nation, the dearth of geographic focus diluted our efforts. We initially had success by specializing in the Midwest, the place our workforce might actively help and promote our merchandise. However once we went nationwide, we could not rent and prepare folks quick sufficient to duplicate what we have been doing on a nationwide stage, and we have been promptly discontinued.

Professional tip: Having a concentrated geographic focus lets you handle and help your retail companions extra successfully. It additionally helps in constructing model recognition and buyer loyalty in particular areas earlier than increasing additional. With out the best assets, you may’t help the elevated demand and logistics that include bigger retail placements. This may result in out-of-stocks, poor buyer expertise, and finally, being dropped by retailers.

3. Have the Conviction to Say “Not But”

When a retailer gives to hold your model, it could possibly really feel like profitable the lottery — and founders are sometimes afraid to say no. They fear that it means closing a door.

That is not the case. It is completely acceptable to say, “Not but.”

Retailers need manufacturers which are arrange for fulfillment, and so they’re relying upon the manufacturers to know in the event that they’re prepared. Manufacturers should be sure that they’ve the required assets in place, in the best areas, earlier than agreeing to retail enlargement — and so they additionally have to know what instruments can get your product off the shelf.

For instance: How usually do you promote your product, and at what worth? What off-shelf merchandising do you have to achieve success, and the way will you get hold of it?

Retailers is not going to do that for you. You are Odysseus and so they’re the sirens. They see one thing working, and so they wish to push it out as quick and as vast as potential, and so they’ll dangle a seductive six-to-seven determine PO in entrance of you to get what they need. They assume what’s working, have discovered how one can scale it, and have secured the assets wanted to take action. So in the event you say sure, you higher know all of that!

Should you do not, then say “not but.” The retailer will respect you for it. You simply saved everybody numerous heartache.

Retail enlargement will be extremely seductive, nevertheless it’s important to make sure that you are genuinely prepared earlier than taking the leap. By understanding your market, securing obligatory assets, and constructing geographic focus, you may set your model up for sustainable success. Keep in mind, saying no once you’re not prepared can save your corporation and switch future alternatives into even greater wins when you’re.

Now you perceive why I turned down Costco. I do know my market nicely; my product sells nice in lots of areas, and in specialty retailers nationwide. I am constructing towards that nationwide, mass-market floor sport — and once I lastly say sure to Costco, it’s going to be as a result of I am assured I could make it a win for us each.