TLDR: product selling well online, not enough to cover fixed yearly expenses/salary. Want to expand to B&M retail in US and Canada. Don’t mind calling stores all day. What should I know?
BACKGROUND
I have a product that is currently selling on Amazon/eBay/my own site at a decent clip with no ad spend. Should generate around $100-120k per year at healthy margins.
My current challenge is that the gross profit won't cover my fixed expenses (subsistence salary, insurance, etc). The cost of acquisition on all the popular channels is too high to be profitable at this time with only a single front-end product.
I have decided to tackle distribution in retail stores across the US and Canada. To break even, I’d only have to do about $30,000 wholesale in the next year. Surprisingly enough, our % margins are almost the same at wholesale as B2C on Amazon due to all the fees and fulfillment costs.
A few points:
- I'm physically in Canada, and doing this full-time
- Product is premium in terms of branding and actual quality (exceptional reviews, repeat customers)
- Competitors' pricing ranges from $20 to $40, we're around $30 retail/$15 wholesale/$9 cost
- Packaging is designed and will be printed in the next 6 to 8 weeks
- Since I'm in Canada, I need to use a 3PL company to warehouse and fulfill wholesale orders in the States
B2C USA
Using Amazon's FBA to fulfill orders on Amazon, Shopify site, and eBay.
B2B USA
The margins are too tight in the States to be able to work with a distributor.
My plan of attack for this is to build a list of retailers in a region where my product would be a fit, and then work my way down the list calling each retailer, asking for purchaser's email address, sending sales page and pricing, with automated followup campaign (DripEmail + Close.io as CRM).
I would be spending 4 to 5 days per week calling new customers (target of 30 prospects per day).
Once we build a big enough base of customers in a region then I can contact one of the distributors and say “Hey, we’re already selling 20 of your customers’ stores, each one is moving a case per week” or something to that effect. Obviously our margins will have to improve between now and then to accommodate the extra step in the supply chain.
B2C Canada
Same as B2C USA
B2B Canada
In Canada we have enough margin to work with distributors. The market is less competitive here: I've already contacted 19 and have 5 that are interested in samples. I believe this would be a more efficient way to grow than trying to call my way through Canada and the US at the same time.
Right now I’m in a bit of a holding pattern. Waiting for packaging to be complete, sending samples to distributors, waiting for supplier and designer, etc.
So I figured I’d ask on here to get some input from anyone that’s sold to retailers and distributors in either Canada or the States. They don’t have to be big box or regional chains even, since I’m looking to start with mom and pops/independents.
Questions
What main challenges will I face that I probably don’t even know about? Logistics, defects, getting paid on time, promotion, anything.
What kinds of things should I be focusing on right now to do it right? Should I expect to put the product up on consignment or demand up front payment?
Do you have any suggested resources to get up to speed on selling to retailers? Books or anything?
Do retailers use marketing materials included with cases of product? I’m trying to see if it’s worth it to include a sell sheet/poster/flyer for the consumer that the retailer could place near the product to help sell it.
@Vigilante @biophase @Likwid24 @ZCP @AllenCrawley
I read all your threads (thank you for sharing your processes and insights) and have learned so much from them it’s insane. I’m posting this here to see if I'm missing anything on the “nitty gritty” of selling wholesale.
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