How can I attract retail buyers?
My company has developed a new product to sell to major retailers in the UK and beyond. We are looking to approach some retail buyers quite soon, and I’d appreciate some guidance on how to prepare for those meetings and on the type of questions that they are likely to ask.
A. Imran Hakim writes:
There are a number of deal-making pitfalls that can make or break your product. You need to get the buyer to believe in the product, or it will never get the focus it needs. You must research well and present a compelling case, outlining your product’s market, unique selling points (USPs) and why it is innovative or better than others on the market.
Make sure there is enough ‘fat’ in the deal for you both, along with a sensible ‘on the shelf’ price. A buyer’s margin expectation depends on the product type, so look at industry norms. If you tell the buyer they’ll make 10% when the industry average is 30%, you’re unlikely to secure a listing. Most volume retailers will also be looking for a trade discount, plus an early invoice settlement discount. These can hit your margins, so make sure this is built into your calculations. Also, examine the small print and check if this is a purchase order or just a forecast. If it is the latter and at the end of the season the product has not sold well, you’ll have to absorb those returns. This is in addition to any faulty returns, which you will definitely be invoiced for.
It can make sense to offer the product ‘free on board’, especially if you are manufacturing in the Far East. The retailer will want a bigger margin, but it cuts some of your own risk as ownership is transferred to the retailer as soon as the ship has left the port.
Finally, the buyer will want to know about your marketing strategy and how you plan to create awareness and demand. If you cannot deliver a decent sell through, your chances of securing any future listings for the product will be highly unlikely.