Know-How Exchange : Other

We look forward to your feedback!

I have consulted with a number of clients who had essentially the same question you have. The short answer is that it isn't easy, will take much longer than you anticipate, and will require a substantial investment for inventory, marketing and receivables carrying costs.

The first step is to prove that there are thousands/millions of consumers who will pay the retail price for your item. The way to do this is to actually make and sell thousands on your own, at a retail price that would allow Target to make their 45% margin. A "research proof" usually won't cut it.

Next you have to have a marketing plan that Target believes will generate the demand to enable your product to sell enough to warrant the shelf space it occupies. They have minimum hurdle rates for profit-per-foot of shelf space, and they are constantly rotating items in and out so as to maximize their return on available space.

Your enthusiasm for the product won't mean much to them. They have a never-ending stream of entrepreneurs with great ideas who try to sell into Target with enthusiasm. They discount the enthusiasm almost entirely.

What you need to do next is invest in a solid, professional business and marketing plan. You can try to do it yourself, but that rarely works unless you have created business plans before. Or you can hire an outside expert/professional to do it, with your input and collaboration. That's more expensive, but it has a much better chance of working if you find the right expert.

I've recently been through this with another client in a similar situation, and while we were successful, it took a long time and required a lot of effort. You need to be prepared for that. There's no short-cut. The folks at Target have been through this drill thousands of times, and they can spot the amateurs from miles away.

Want to discuss? Contact me via the email address in my profile.

@mgoodman: very good insight.
@dshavatt: you should look into crowdfunding (kickstarter, indiegogo) for the first part of the process. You can find on udemy a good course on this called "the 400k crowdfunding launch formula" which will help you with your thought process and organising things. If everything goes well with this you might not even want to sell your product through Target.
Good luck on your endevour!

Separate question: Why Target? There are dozens of other retail outlets besides Target. How did you pick Target as your ... well, target? Why not CVS or Wallgreen's or Walmart, for example?

All the major retailers will require the same kind of up-front planning, preparation and investment, but some are smaller (than Target) and could probably reduce your initial investment in marketing, inventory and carrying costs.

Perhaps you can find a local retailer who would participate in a limited marketplace test with you.

I worked with a company that was looking at getting in to big box retailers, and in the end we chose not to. Here are some of my notes from that time (the lines starting with "•" were my comments to my client, the line starting with "o" are quoted comments from people I talked to):

• Return policy “truly punitive – manufacturer pays for everything”
• Common fees: slotting/stocking fee, buy back fee, end-cap fee, marketing support.
o “We have found that some retail stores will charge a "stocking fee" or "slotting fee" - Fees paid by a manufacturer to a retailer or fees received by a retailer in order to secure distribution and shelf space for a new product. The fee covers the cost of making room for the product in the warehouse, reprogramming the computer system to recognize the product's universal product code, and including the product in the retailer's inventory system. These fees can run anywhere from several thousand dollars to $50,000 or more per store in a chain per year.”
o “When we took a client into STAPLES, there was also a "Catalog Fee" that was from $30K to $60K.”
o “they expect most-favored-nation pricing and solid marketing support -- promotions, discounts, display samples, etc.”
• Stores want proven products (something that is already selling through other channels). “They tend to be reactionary, meaning they'll take on products with already proven markets and offer at discounted rates.”
• Our packaging may not be good enough – need something where the packaging helps sell the product.

And here are some links with information related to how to get into Bog Box stores:
WalMart: https://howtosellyourproducttowalmart.com/ and https://www.extension.org/pages/36598/how-do-i-get-wal-mart-to-sell-my-prod...
CostCo: https://www.evancarmichael.com/Marketing/552/Ask-the-Expert-Getting-into-Co...
Big Box in general: https://sbinfocanada.about.com/od/marketing/a/bigboxretail.htm