Consumer Product Startups: How can I achieve rapid, nationwide retailer growth?

By: Ted Fienning

Consumer Product Startups: How can I achieve rapid, nationwide retailer growth?

Startup life can be very busy: managing operations, staff, cash cycles…you need to find as much leverage as you can when it comes to selling to retailers.  Fortunately, there’s expertise available to you at a relatively low cost when it comes to breaking further into retail: sales representatives, or sales reps, are industry specific experts with an existing customer base- they make the sales calls by phone and in person so the business doesn’t have to.  Often these sales reps are in house (think pharmaceutical sales reps that visit doctors’ offices) and are unavailable to you, but there are many, many high-quality, independent sales reps available to consumer product startups.  


Typically, these reps will charge 10-15% of your wholesale price on any sales they make.  While your margins take a hit and your administrative requirements to track sales rep commissions increases, if you’re able to find a rep that increases your sales by more than that percentage of wholesale sales, they’ve already paid for themselves.  Hopefully, you’ll find reps that will bring in much more than that!

Finding the right rep and coming to appropriate terms with them is important- here are a few tips I recommend:

1) Identify the boutiques and chains you would like to be in, then call them up and ask who their favorite reps are that visit and sell to the store.  Gather those names and cross-reference them across a few stores in an area or region.   This eliminates an internal HR search for salespeople, eliminates the need to pay for anything but performance, and gets you in front of accounts you may not even be aware of (but the regional rep knows).   This strategy can be applied coast to coast in the U.S. and yield, with a few weeks effort, a nationwide sales force that knows and is incentivized to introduce your product to their existing customer base.  No more cold calling- the right sales rep will already know the players in their territory!

2) Once you hear the same name a few times (and you will) as a well-loved sales rep, send them samples and set up a meeting with them over the phone.  Making a single sale to the right, effective sales rep is worth multiple, multiple sales in a particular region or vertical.  A word of caution: do NOT go with the first reps that approach you at a trade show.  Carefully vetting the right reps is critical, there are a lot of folks that would love to represent you that shouldn’t.

3) Another point on managing the rep relationship: make sure territories are clearly defined both by geography (often done by state) and by category (toy and gift or clothing, for example) to make sure you avoid unnecessary conflict between reps to the maximum extent possible.  Keeping successful reps happy helped grow one business I own tremendously in a critical first two years starting up.

4) Lastly, have an out for both you and the rep in the event things aren’t going well.  Make sure the agreement you strike with them allows a mutual 90 day out clause, that ends all commissions at the end of that period.  It’s not worth anyone’s time to continue a difficult relationship.

Building out a successful team of independent sales reps can bring a lot of new business and exposure to your venture, good luck building out your new, independently contracted sales force!

 

Ted Fienning is the co-founder of Babiators, a children’s retail brand (named one of America’s Most Promising Companies 2014 by Forbes) that just celebrated their first $1MM sales quarter for Q1 2015.  Ted co-founded Babiators with his wife and two friends from Harvard College in 2011.  He lives and works downtown in Charleston.