Jon Schallert has been president of Schallert & Associates Inc., a national retail consulting firm, since 1983. He worked for more than a decade at Hallmark Cards Inc. We asked him about his experience with entrepreneurs placing their products with retailers.
Q. Why do people with good product ideas often have trouble getting them into stores?
A. Most entrepreneurs don't have a clue as to the complexity of taking a product from conception to selling it to a consumer. For example, let's say this great product idea actually gets manufactured. Many entrepreneurs manufacture products without analyzing the true potential of the product in the distribution channels available to them, and many don't understand that uncontrolled distribution in all types of retail outlets eventually undermines the uniqueness of the product. Some manufacturers create a product that they love without conducting any type of market analysis with the people responsible for moving the product to the consumer, the retailers who have to put it on their shelves. I've also seen manufacturers who have a great product, but don't have access to a strong sales force that can actually get the product in front of the right buyers in the right distribution channels.
When it's all said and done, coming up with the product idea is really the easiest part of the process.
Is e-commerce opening up more avenues for entrepreneurs to move their unique merchandise?
Sure it is. It's especially effective moving product from manufacturer direct to consumer. But if a manufacturer is looking for huge sales volume, selling items direct to consumers is not a guaranteed way to do it. E-commerce is also not very effective in putting product in front of retailers who might purchase it for their stores.
What are some of the factors entrepreneurs should consider when deciding which retailers to target? Should they start out small or go for the big sale?
That all depends on the product, and how long of a "life" you believe the product will have. If your product can be copied and knocked-off easily, and you suspect it has a limited time where it will be seen as being unique in the consumer's eyes, mass distribution might be the best method. If the product is a one-of-a-kind item, difficult to copy, with an image that you feel could develop into a brand name that the consumer will come to recognize and insist upon, selective distribution would be best. Making the product difficult to find and in limited supply also tends to lengthen the life of a product, and strengthen the uniqueness of the product. One only has to look at Beanie Babies to recognize this.
What are some successful strategies you've encountered from entrepreneurs moving their products into stores? What are some good ideas?
First, do your homework and market research before the manufacturing begins. Survey retailers and consumers about the product before you've invested money in the whole manufacturing process. Next, identify the most profitable distribution channels available, and evaluate the upside potential and downside challenges of all available retail channels: specialty stores, department stores, discount chains and other channels suited for your product. Don't try to be everywhere.
Second, remember that there is always another entrepreneur who likely has a similar product to yours, and that the difference in getting that product on a retailer's shelves will not necessarily be the color, materials, function or price of the product. It's the product's image and emotions you associate with it; that's what makes a retailer and a consumer prefer one product over another. That's the brand-name recognition of a product. For example, I think other companies make better athletic shoes than Nike. But Nike is the clear brand-name leader, thanks primarily to the magic Michael Jordan brought to those shoes.
Developing, growing, and protecting a product's brand name are the foundations by which retailers and consumers begin preferring one product over another. I learned that from working for Hallmark Cards. Working for Hallmark also showed me how easily a company's precious brand name can be lost and eroded with haphazard, uncontrolled distribution, which can turn a valued, one-of-a-kind product into a commodity.