Hitting the BIG Time

Hitting the BIG Time

After 15 years we have finally gotten our InstaTrim Products into Menards, a regional big box store in the Midwest. We have dreamed about this for years and it has always been our ultimate goal. However, reality rarely matches what you have dreamt about all this time, and we are about to enter a very cutthroat selling environment.  After 15 years of selling our products on Ecommerce platforms we are entering the retail marketplace.

It is very exciting and almost like having a child.  Finally, we have reached the “big boy” club and are excited to see where this new journey goes.  As wonderful as this is, now the real work starts and will continue for hopefully many years.  Going into the big box retail marketplace is a numbers game.  Our profit margin from ecommerce is good but the volume is not anything near what a big box store can do.  Volume, volume, volume.  Would you prefer to sell 1,000 products with a 40% profit margin or sell 10,000 products with a 15% profit margin?  The game becomes one of reducing our manufactured price by volume purchasing because there is more risk and stress for us as we purchase high volumes of raw materials and wait for the next purchase order to come in.

Now that the celebration is done, we now must deal with the elephant in the room.  We are not 100% in control.  Any large retailer is going to have very strict expectations with any new product going onto their shelves.  Keep in mind that the shelf space you see containing numerous products is very valuable.  The retail chains’ revenue stream depends on the buyers’ selecting products that will sell and will achieve the dollars per square foot to meet the retailer’s forecasts.

We knew going in that price negotiations would be generally one-sided and not in our favor so the process for us to make sure we knew exactly what the COGS (cost of goods sold) is for each product.  This includes manufacturing InstaTrim, packaging, shipping, commissions and more.  Since we work through a distributor, we did not have to deal with the store chain ourselves and could concentrate on running the rest of the business.  This is a huge time saver for us but it also costs money.  Simply another discount to the distributor.

Creating new packaging must be approved by the retailer and the “exact” dimensions of each package so the store can set up their Planogram (this is the plan to layout organize all products in the store for maximum inventory and visibility).  Our first purchase order was to get our products to the distributor and is one of the largest we have ever received!

Now we wait with anticipation until we hear from the retail buyer how sales are going.  For the first three months there was very little retail input as it simply takes time for the consumer to start seeing our products and ultimately purchasing.  From our perspective, sales appear very good, but we really don’t know what the buyer has set as a forecast for sales per square foot on our space.

This is new territory for us and we’re fortunate to have a distributor that is on our side to ensure everything works as best it can.  We’re learning as we go and hope to expand our footprint in additional big box store chains such as Lowes and Home Depot but to do that we must perform in Menards.  Time will tell as it always does.