111: Selling & Growing Your Product at Retail Stores

The Product Startup Podcast
111: Selling & Growing Your Product at Retail Stores
With Yohan Jacob, CEO of RetailBound

00:00 | Kevin Mako (KM): Hello product innovators. Today, we learn from one of the top names in the retail sales space on how to scale up a product once landed in a retail chain.

00:11 | Voice-over: You’re listening to the Product Startup podcast. The show that helps bring your product idea to life, by chatting with successful inventors, product developers, manufacturers, and hardware industry professionals. Our goal here is to get to the bottom of what makes a product successful, from initial idea to getting your product on store shelves. We’re taking you step by step to build a functional product and scale your product business. Hosted by Kevin Mako, one of North America’s leading experts on hardware development for small product businesses. Now, on to the show.

00:47 | KM: Welcome back everyone. Today I’m very excited to welcome back Yohan Jacob to the show. Yohan is the founder and president of Retailbound. An agency that helps emerging hardware brands get into major retail stores and sales channels. Retailbound has been around for 14 years and has worked with over four thousand product companies. Yohan himself has spent 30 years in the industry including being a major buyer for Sears and Office Max. 

01:08 | KM: Last episode, we talked about how to get into retail store chains. Today Yohan’s going to give best practices on how inventors startups and small manufacturers can scale up their product sales once they land a retailer by building buyer relationship, enhancing products exposure, reviewing your placements and more. Now onto the episode. 

01:26 | KM: Hey, Yohan, welcome back to the show. 

01:29 | Yohan Jacob (YJ): Good to be back here, Kevin. 

01:29 | KM: Really excited to have you on again. You are the man when it comes to retail and getting new products into retail stores. Last time we talked and you gave all kinds of tips and tricks to a new product, or even an existing company that’s developing something new or a new startup themselves. What’s the best way to actually get into retail? And we had a great conversation about that. 

01:49 | KM: If you haven’t listened to that episode yet, as listeners out there I’d highly recommend you look up our other show with Yohan and take a look at that. But now on this episode, we want to talk about what happens when you actually get into the retailers. So you cut that big deal with Walmart or Costco or Best Buy, and you’re in the store. You’re now on the shelves. How do you actually scale and grow and build a multimillion-dollar product business through that channel? That’s what we’re here to talk about today. Yohan anything new since we talked last?

02:17 | YJ: There are a few more wrinkles, a few more gray hairs. Not too much, but yeah, I think we last spoke on a call in 2021. Retail is solid, the pandemic still come along strong. A lot of retailers were concerned how fourth quarter would be? Yes, there were some shortages. However it forced people to go to the store and buy things for their loved ones. And retailers in 2021 saw an increase around 6% over 2020 in sales. So retail was solid.

02:47 | KM: Very interesting. Yeah, it kind of came back around and now it’s a hot topic. So the big question is once you’re into the stores and you’ve got your product, what are some of the main things that a company or a person or an inventor needs to do to actually scale that within that store channel?

03:05 | YJ: That’s a great question. And that’s why Retailbound was created over 14 years ago. A lot of young brands or brands in general, when they get to a Best Buy or a Walmart or in our major retailer, there’s a lot of excitement. It’s almost like they get married. There’s a lot of love on both sides of the desk. But what happens when the honeymoon phase is over, right? 

03:29 | YJ: We’ve all been there. What happens when you’re not getting the same loving from the buyer, same opportunities. I think for a lot of young brands, the key is like a marriage or a relationship, is to keep that love going strong. So it’s about finding things to make the buyer look good. It’s promotions, it’s exclusives things that drive traffic. 

03:50 | YJ:  At the end of the day, most large retailers for a 1 skew, 2 skew brand that’s unknown like a Sony or Samsung, they’re not going to spend an effort generally speaking of driving traffic for you. All Best Buy or Costco or Walmart can do it on a platform for you as a manufacturer to succeed, whereas in-store, online, on-air, or in print… as a manufacturer take advantage of those opportunities. I would say as a merchant in my past life for two different building retailers, less than 10% of my vendor base took advantage. 

04:31 | YJ:  I went over and above, means our 90% were easy replaceable, but other vendors down the road, it still we’re going to hit those goals.

04:42 | KM:  I mean, overall, it’s a really interesting theory you’re talking about here because it’s something that’s a bit of a misconception. Once you get into the big retailer, first of all, if you’re a 1 or 2 or 3 skew product, you’re not going to be getting into every store on day one, anyways. You are probably getting put in 5 or 10 stores or whatever the initial pilot project might be, unless obviously it’s some special scenario and there are some exceptions to that rule, but the reality is you’re generally starting small. 

05:07 | KM: They want to test you out and see how it works. And that’s where a lot of product owners, as you mentioned, 90% of product owners, they set it and forget it. And that’s what’s so amazing. To me that’s the opportunity because you can be the 10% that really helps. And that the buyer likes that is doing things to really advance that product within that store, making that buyer look good, making the store look good, building that relationship.

05:33 | KM: So what are some of those things that you can do, once you’re actually in the store, once you’ve got the pilot, what are some of those things that form that 10% of people that make that 10% of products look good to that product buyer? And what are some of the key, I guess, before we go too deep into the tips and tricks, what are the key things that buyers want to see? 

05:50 | KM: You mentioned some KPIs which are critical that buyers are looking for. And then how does that distill down to certain things that an individual or brand can do to help support that product line as it grows?

06:03 | YJ: Sure. Just like in school, each vendor has a report card. And the vendor has to meet or exceed that internal report card. Retail buyers, doesn’t matter if it’s on-air, in-store, in print or online, they have at a very core, at least 3 KPIs, key performance indicators. 1 is, will your product drive top-line revenue for my business? 

06:31 | YJ: Number two, will your product drive, my bottom-line profit. If I’m not making money, can’t keep the doors open and the lights on. And the third thing Kevin that Retailbound is looking for your product, is will product turn X number times. Meaning that  if I buy a thousand widgets, will sell through a specific amount of time. Now that that number will vary. So if I’m a consumable, it’s a bag of potato chips. 

07:02 | YJ: That number is a lot higher in number of turns per week, per month, than a four thousand dollar HD, 8K TV at Best Buy. So that number varies, but those are the 3 KPIs, top-line sales, bottom-line profit. And you as a vendor need to hit all 3 KPIs to continue in the buyers and swimming for next year.

07:29 | KM: That’s great. Now what can they do to drive those numbers up? And I think that really comes down to, a big thing is, how do they get people into the store? Because that’s such a big thing, especially when we’re talking physical retail stores, the retailers want to get people in there. You see, that’s why they have coupons and lost leaders and flyers. 

07:48 | KM: And there are huge, massive internal marketing campaigns that they have to get people into the stores. But one of the best things you can do of course, as a vendor, as a product, is getting people into the stores for them. And of course, if you have a brand following and loyalty, and you’ve got a great product or innovative, you can do that, you can actually get those people into the stores to help increase those KPIs.

08:11 | KM: Increase, at least the sales number. Increase the amount of turns and as well increase the foot traffic for that store as well, which is all good things for that buyer. So what are some of the tips and tricks you’ve seen along the way to really accelerate and grow that for an emerging brand? 

08:26 | YJ: So there are really 3 things, like 3 pegs to a store. The first one is the marketing, so that’s common sense, the law young brands forget. So it’s the doing promotions. Not all the time, because it could de-badge your brand and it teaches the customer to wait until there’s a sale. But key times, like boxing day or thanksgiving or dad and grads. We’re at key times to drive sales, when they say, the geese are flying. 

08:59 | YJ: Doing PR, these are more internal stuff on your own side. But, doing where your placed in online media or print media, bill, whereas of, hey, this is a really cool product. Where to buy? Other forms of marketing, influencers, a big kit over the last couple years. Find a person who has a large following, does unboxing video and drives traffic to a retailer. A lot of retails like Best Buy Kevin or Staples have a marketing calendar.

09:35 | YJ: What do you call it? External marketing leverage. It could be page search on their site. Like Amazon has, like pay per click. It could be a blogger or paid reviews, email blast, banner ads. There are certain things that a retail has. It could be as little as free to hundred thousand dollars. So you can pick and choose what lever makes sense for your brand to drive sales off the in-store or online. 

10:07 | YJ: Besides some of the typical marketing levers that you could do to drive sales. Also it’s in-store you mentioned, training. So as Best Buy and all those great blue shirts. They have hundreds of thousand products in-store and a lot more online educating the blue shirt. That’s another task, another part of that stool where, okay, it’s educating the blue shirts about your product.

10:34 | YJ: Why is it different than the other six products on this shelf? Some retailers allow you do Spes or sales contests to educate the sales associate about your products. So when someone comes in the store and says, hey, Kevin, I’m looking for a really cool pair of Bluetooth headphones, there’s 50 on the planogram. Which would you recommend? 

10:56 | YJ: Hopefully you train an associate oh, well, what are you looking for? Is it comfort? Is it price? Is it, this, is it that right? And then probably the third thing, besides promotions and marketing, internal, external, and training, sales, associates. The last thing is being sure that your product is actually on the shelf. We call it plan, grant compliance. 

11:20 | YJ: We audited two different companies this past November in-store and found that over further stores, the product were on the shelf. They were in the back stock room. They were on location in the store or they’re out of stock. So you spend all this money in marketing, trying to a store, training sale associates. The product is on the shelf, it is the last lap. You drop the ball at the goal line. 

11:51 | YJ: So it’s important that as a manufacturer you cover all three things. Make sure that your products action the shelf versus the back stock room. Two, make sure your sales associate knows about your product and just reading a box. And third thing is you’re doing some promotions and some PR and whatever you feel, wheres your product and say, hey, this is where you buy, Best Buy, QDC and so forth.

12:16 | KM: That’s great tips. And the best thing about a small brand or somebody that’s first started to get into these stores. As we talked about before, it’s going to be a pilot, likely the pilot is going be regional. So it’s going to be maybe 5 or 10 stores within a specific geography. Maybe it’s around, if you’re an Austin, Texas inventor, maybe it’s all the air areas within a hundred kilometers of Austin, for example, in a particular store. 

12:38 | KM: The beauty about that is you can do a lot of this work yourself. You don’t have to pay a whole team of experts in order to check out the stores When you’re small, of course. You can just walk to the stores and make sure that they’re there. In fact, it’s a really exciting time. Many of our clients love that part of the product, when they get to walk into the store and take the Instagram photo and whatever else. Their product that they had as just an idea months ago, is now sitting there on the shelf, ready to get bought.

13:06 | KM: The other thing that I would say in terms of the marketing, again, when you’re talking about geography, it’s far easier to do what we call gorilla marketing, which is marketing to a small area, one specific niche region to drive a lot of traffic there and see how that impacts just the sales within that local area. The beauty about the PR side of things in conjunction with marketing as well, is that PR, especially if you can get media, it’s called earn media, that’s free. 

13:34 | KM: The best way that you can get earn media or one of the easiest ways I should say, is in your local town, selling to local retailers. And the fact that you’re in the retailer, you can use just the very fact that you are in Walmart as one of the big pitches to why a writer should write about you. Because you landed in Walmart, you’re on the shelves, you’re taking the photos in there, you’re driving up some hype on social media. Then you’re leveraging that to get free earned PR to then drive more traffic into the store. And then this thing starts to snowball. That’s the beauty of a small brand, right? 

14:06 | YJ: Yeah. And as a former merchant, and as a consultant, I work with a lot of young brands that gets you the to look aside. You work so hard with your client. He has a really cool product. He spent been 6, 7, 12 months of developing strategies, selling the product and negotiating. It does well online. It gets in a couple of stores, where it’s a 50 store test or 200 store test, and then seeing it in your local store it gives me the biggest high, like the runners high. 

14:33 | YJ: I love seeing our clients and we take a lot of picture on behalf of our clients, especially clients who aren’t based in the US or North America. Based in London or based in Hong Kong. We tell them, hey, look, we’re at a Best Buy in Toronto or a Best Buy in Orlando. And look, there it is. And it gets them so excited as well as we do. 

14:54 | YJ: And if by chance, if the stores aren’t local, to your community. There are companies like Retailbound. We have a service called Retailbound Vision that can go to any store in US and Canada and audit and make sure that your product is actually on the shelf. And do a mystery shop for about 20 bucks US per store for 50 stores. 

15:20 | YJ: It’s a very affordable way, then fly down to Hong Kong to the US, thought at 50 stores. So Retailbound can do that for you. 

15:31 | KM: Well, let’s talk about some of the stuff that you guys do, because that’s really big, especially as you’re scaling. You’re only local when you start, and you’re only local when you are those first few stores. But at some point, the point of listening to this podcast, is you want to scale beyond that. You want to become in hundreds, if not thousands of stores across the US and ideally worldwide, internationally. 

15:52 | KM: So one of the things that I think is very important to what you do at Retailbound is strategizing all these intricacies, especially as, first and foremost, to get you into the stores, which is a big piece of the puzzle. But then once you’re in the stores, how to actually scale. So talk about some of that big picture, thinking about some of the things that you are doing in terms of bigger scale, beyond just the regional play and maybe how that regional play actually helps in the expansion as you go statewide or national or international.

16:21 | YJ: So retail is not for everybody. There are certain brands that we talk to on a daily basis, that tell you the truth, stay direct to consumer. Retail is not for you. Success and retail varies. Being in ten thousand locations may be great for one brand, where another says we are in 3 retailers, Best Buy, Apple and Home Depot and we’re fine with that. I think there’s a lot of confusion out there of, hey, is retail going to be dead, brick and mortar? The answer is no. 

16:53 | YJ: Retail continue to change. And our job is to be the experts, the Sherpas, helping that young brand climb that mountain. And say, hey, we’ll create a strategy for you, where you’re a small brand or you’ve been a brand for 50 years, what makes sense for your company. 

17:12 | YJ: I would say the answer to your original question. Now the things that you should do in retail, is go over and above, make the bar look good. Driving traffic to the retail using various internal market levers you have, as well as some of the external marketing levers that retail have. And you’re guaranteed a long term relationship with a retail buyer. 

17:37 | YJ: Because again, while it’s easy to get in the store, it is even easier to get kicked out of the store, I guess. So it’s important to do a good job and do it for a very long time. 

17:49 | KM: I think something that you mentioned there, is really important to highlight, is the fact that you should really over-commit. And do great to your partners. I mean this is just good in business in general, always try and give more than you’re taking, always try and be that reliable partner that goes the extra mile. That goes so far. And that’s not something you stop at from the beginning of this conversation when we talk about getting into retail and then setting it and forgetting it. It’s something that you should continue to massage, keep in touch with that. That’s one of the easiest things. 

18:24 | KM: Talk to your buyer. See how they’re doing. See what they think about what you’re doing. How is your product going? What are they seeing internally? What are some tips that they might think to help you continue to scale the product? Talk to them about what you’re doing in the industry. What is some of the PR that you just landed potentially, as we were talking about earlier? What’s some, maybe an influencer that just started talking about it on social media? 

18:46 | KM: What are things that you can do to make them look good? Because if you an overcommit in the beginning and I would argue. And a lot of people don’t like to hear this, but I would argue, don’t worry about losing money on your initial orders. So definitely your early orders. And even as you start to scale, if anything, be reinvesting that money back in, double down. You’ve got a product that is growing, that people are buying, that there’s an interest in, that there’s a hype.

19:08 | KM: So you’re far better off from an equity-evaluation standpoint of your product business to start showing that growth and revenue, than it is to start showing the growth and profit. Profit is something that you can eventually get to when you get to scale because not only are you growing in retail stores. Not only is there a snowball effect happening in your community. So you’ve got more buyers and people are spreading the word faster. And all of that. 

19:27 | KM:  In addition to that, remember you have economies of scale and the manufacturing side as well. So as you’re producing more units, you’re working with the manufacturers and with your design teams to continue to cost down that production, to make it more efficient, to make it essentially less costly per unit. So eventually your margins will start to grow. And the craziest thing I would say right now, if you look at 2022 is look at valuations to some of these hardware companies that are coming out.

19:50 | KM: Look at Peloton as a great example. I mean, I must say it was a great example when they launch, maybe not so much now. Who knows what’s going to happen in the future, but no matter which way you cut it, that’s a multi-billion dollar company that is still operating at a loss. And we have countless examples of this. But what they are doing that’s much more valuable than the day-to-day cash flow, is they’re building a community. 

20:11 | KM: And they’ve got a product brand that’s expanding and they’re growing their sales and revenues. And they’re being really good to their partners. Anybody that they’re involved with along the path, as you said those 3 KPIs is working very well for them. So the reality here is keep pushing on those levers in the early phase, don’t worry so much about profit. Don’t worry so much about going the extra mile. Do that in the early phase so you can get that traction going. 

20:36 | YJ: And I would say to add on top of that image about the company scale, you do a good job at a 1 skew brand. You’re spending the money and you’re going over and above the dry sales or in-store and online, where you get those repeat POS. It’s a good chance to get an opportunity to expand your shelf space. So now it’s not 1 skew, now you have four skews, and now you can amortize some of the loss skew 1. 

21:03 | YJ: Makeup, on skew 2, 3, and 4 on the plan. So now you’ve averaged the margin overall, and now you’re making more money and you continue to drive sale. You have more products on the shelf with a bar. Now you mean more to them . They mean more to you. Because you’re a 1 skew brand, you’re not doing well, I can kick you out. 

21:22 | YJ: When you have 5 skews, 10 skews on a planogram. And maybe 1 is not doing too well. Tell you the truth, you got 9 that’s doing well. It’s a good chance you’re going to stay in that storefront. And finally if you continue to drive sales, you can add more of your product in store. You’ll continue to be a long term vendor with your retail buyer. 

21:44 | YJ: And guess what, your cost of marketing actually goes down. You first start in retail, you apply some more money in market percent good. Simply around 20% of your cost of marketing, is driving sales. But more now as your product and your brand is more well-known with both sales associates, as well as customers. Your ost of market or cost of acquiring a customer actually goes down. 

22:14 | YJ: So like you said, Kevin, if you need to drive more business, your cost of marketing goes down. Your cost of product goes down because of driving more sales. So it all kind of works out in a nice way. You need to do the right things.

22:28 | KM: Well, and then this whole competitive nature comes up because if you’ve got a growing and scaling brand and you’re starting to increase shelf space and the retailer likes you, well now, like you said, that somewhat the negotiating table switches. But not just between you and that retailer. Now you’ve got other retailers that will be interested in that product. 

22:46 | KM: Now you’ve got a bit of a competitive landscape where you aren’t just getting pushed around or potentially bullied around. You’re getting potentially fair deals because you are a hot product and it’s not just on the retail space, but now you’re likely to get in conversations with bigger potential partners or influencers or other channels to sell product as well, or other folks maybe to white label or bigger brands that may even and want to acquire you or do other things.

23:13 | KM: So the key to really anything as you start to scale is really focusing on long term value. And that all comes down to putting in the time, effort and money in the early days so that you can push all these value proposition items, really prove that your product is a good one. One of the greatest things I find to this too, you’re not only adding shelf space and all that, you talked about skews, but think about it. 

23:34 | KM: If you’ve done a great job on launching your first product with a particular vendor and they look good to their boss, like you say that report card, how much easier is it going to be for you to approach them with your next idea? Or let’s say the pro version of your product or maybe even an accessory to that product or something totally different, but it’s in the hardware space as well.

23:53 | KM: You’ve now established yourself as a reliable expert that launched a great product out of the gate. And therefore they’re much more likely to take a risk on you for the next one that comes through and so on. That’s how you build your brand. That’s, how you build your equity. That’s how you also build your personal name with these various relationships. You can really build something substantial. 

24:12 | KM: And that’s how, if you look at so many of these hardware startups that use retail to get to the 7, 8, 9 figure categories, this is the path they took. They started all the way from ground one with just that idea, that sketch on a napkin. And then they got it to the point where they could go to retail, but then they focused on scaling and retail. And that’s how you can go from a business which was 6, 7 figures to something that could be exponentially more. 

24:38 | YJ: Where’s Fitbit, where’s Spero, where’s Nassy, they all are 1 skew products. They start small online, maybe a couple of store and look at them today. You brought a good point, if you’re good to your buyer they’re going to take care of you. In my book, Retailbound, learn how to sell products to retailers. I said, if it’s one tip you take away from the book or even from today’s podcast, is always make the bar shop easier. To make it easier.  

25:05 | YJ: Especially those younger buyers who are just starting out as they go up and move up the food chain, guess what? They’re going to take you with them or if the buyers do move, they went from, especially if they go Best Buy, Target in Minneapolis or Costco and Amazon Seattle. Buyers change. So if you burn your bridge at Best Buy, with that bigger buyer. 

25:27 | YJ: When he or she goes Target, you think you have a chance? Heck no, but you’ve done a great job at Best Buy with that picket buyer. And he or she moves to target a good chance, you have an opportunity to work with that buyer at that retailer. So always take care of your buyer, always follow through on your commitments.

25:44 | KM: That’s great advice Yohan for retail buyers and just for business in general, in the hardware space. I want to thank you again for taking the time, a second time around to give us advice on now scaling up when into the retailers. Yohan appreciate it and we will talk soon. 

 25:57 | YJ: Thanks Kevin.

25:58 | KM: Take care. 

25:59 | Voice-over: Thanks for tuning in to this episode of the Product Startup podcast. The show that teaches you what it really takes to bring your product to market and turn it into a big success. This podcast series is brought to you by MAKO Design + Invent, the original and leading firm in North America to provide global caliber end-to-end physical consumer product development to startups, inventors, and small product business clients. If you’re looking for product development help on your invention, head over to makodesign.com. That’s M-A-K-O design.com, for a free consultation from one of MAKO Design’s, four design studios from coast to coast. Thanks for listening and see you next time.