Clear $250,000 on One Sale

by Steve Robertson 22 replies
I've been trying to get a conversation started on selling to large retailers. Maybe an example of the potential profit will persuade you to join in.

Let's say you have developed a great product to sell to a particular type of retailer. You talk to a buyer for a retail chain with 1,000 stores. The buyer decides to order 50 copies of your product for each store. That's a total of 50,000 copies of your product in this order. Let's say you have priced your product so that you clear $5 on each copy sold at wholesale. Total profit from this sale - $250,000.

Now, you might be thinking "How do I manufacture 50,000 copies?"

For the type of product I have in mind, you can easily outsource the manufacturing. You could have 50,000 copies ready in ten days at a cost of about $37,500. If you have good credit, the bank will lend you the $37,500 on a short term loan.

Are my other numbers an exaggeration? One of my clients and I have developed a type of product that is well suited for selling to a large retail chain. My client is in negotiations with a retail chain that has 1,000 stores. If she makes a sale, she will clear around $5 per copy. The only variable in doubt is the total number of copies the retailer orders. And, of course, whether she lands the order at all.

I'm still looking for a few people who want to try this technique and help me collect some real world data on how well it works. If you're interested, just PM me with a short statement that you won't pass along the details to others.

Now, let's brainstorm this subject and come up with some good strategies for selling to retailers.

Thanks,
Steve R.
R.A.M. Video
#main internet marketing discussion forum #$250 #clear #offline #retail #sale #video #wholesale
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  • Profile picture of the author julesbrad
    Retailers would normally test launch a new product in just a few stores to see how it sells before rolling out across the full 1,000 stores.

    Retailers generally would want the product supplied atleast 50% of retail price so if you are looking at a retail price of $9.99, they would want it for $4 or $5

    Also, retailers prefer to deal with suppliers who have more than one product so if you only have the one product, it will be a little harder to get it on their shelves (but it can be done)

    To start, I would advise simply phoning a few retail chains, ask to speak to their buyers and simply discuss whether they would be interested in the type of product you are looking to supply.
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    • Profile picture of the author Monetize
      Selling to retailers is iffy at best. If you've got a great product
      consider taking it directly to the consumer via HSN, QVC or any
      of the other TV shopping outlets.
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      • Profile picture of the author Steve Robertson
        Originally Posted by Monetize View Post

        Selling to retailers is iffy at best. If you've got a great product
        consider taking it directly to the consumer via HSN, QVC or any
        of the other TV shopping outlets.
        I can't see the reasoning here. If you have a product good enough to interest retailers, why not try to sell thousands of units in each sale instead of doing all the extra work required to sell to individuals one copy at a time?

        Wouldn't the home shopping networks take at least 50% of the selling price as their commission? And be just as choosy about which products they sell as any retailer?

        Besides, the type of product I'm dealing with has a tie-in to the retailer's other merchandise. In other words, buying my product leads to the purchaser buying more products from that retailer. That's why I think it would be attractive to the retailers.

        Steve R.
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      • Profile picture of the author Steve Robertson
        Originally Posted by Monetize View Post

        Selling to retailers is iffy at best. If you've got a great product
        consider taking it directly to the consumer via HSN, QVC or any
        of the other TV shopping outlets.
        I can't see the reasoning here. If you have a product good enough to interest retailers, why not try to sell thousands of units in each sale instead of doing all the extra work required to sell to individuals one copy at a time?

        Wouldn't the home shopping networks take at least 50% of the selling price as their commission? And be just as choosy about which products they sell as any retailer?

        Besides, the type of product I'm dealing with has a tie-in to the retailer's other merchandise. In other words, buying my product leads to the purchaser buying more products from that retailer. That's why I think it would be attractive to the retailers.

        Steve R.
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        • Profile picture of the author Steve Taylor
          Wouldn't you want to go through all the steps to secure a patent on the product first?

          What if the product became a hit and the next thing you know it's on the market and you're out of the market.

          I was thinking along these lines many years ago and gave up because of the rip off factor...I was younger and didn't have the contacts...or should I say the trusted contacts to pull some ideas off.

          I love this kind of thinking and marketing...every thing you touch...someone is making money on.

          Best to you.

          -Steve
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          • Profile picture of the author Steve Robertson
            Originally Posted by Steve Taylor View Post

            Wouldn't you want to go through all the steps to secure a patent on the product first?
            Hi Steve,

            The type of product I'm working with makes use of Copyright protection rather than patent protection. That's one reason my type of product is a good one for a serious internet marketer to sell to retailers.

            Steve R.
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  • Profile picture of the author julesbrad
    Just given me an idea for a product which I can't produce but may be of interest to others who could produce them.

    How about short DVDs which have titles such as '10 easy vegetarian meals' 'Cooking rice dishes' etc and these DVDs could be located near the main ingredients used in the recipes. Rather than big cookbooks, this would be something people could cook while watching the chef on the DVD showing you how.
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    • Profile picture of the author Steve Robertson
      Originally Posted by julesbrad View Post

      Just given me an idea for a product which I can't produce but may be of interest to others who could produce them.

      How about short DVDs which have titles such as '10 easy vegetarian meals' 'Cooking rice dishes' etc and these DVDs could be located near the main ingredients used in the recipes. Rather than big cookbooks, this would be something people could cook while watching the chef on the DVD showing you how.
      Exactly!

      You have hit on the exact type of product I'm working with. In fact, another Warrior sent me the same suggestion for a cooking DVD in a PM a few days ago.

      My current client is creating DVDs with Arts & Crafts projects. With a little thought, you can come up with many more situations where you can use a "how to" DVD to promote the sale of other merchandise in the retailer's stock.

      There are many more details to consider when you decide to produce a "how to" DVD. As I said in the first message, just send me a PM and I'll fill you in on what we've learned so far.

      Steve R.
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  • Profile picture of the author GarrieWilson
    When I first read the OP, I thought, "Good luck with that."

    But the I stepped away and thought about it.

    While trying to get in the big boy stores would be damn near impossible, you could get in the smaller chain - niche - stores. Even mom and pop stores.

    A few examples:

    1. Computer stores: Working w/ Windows, anti-virus/spyware utility cds w/ videos explaing the software, installing and proper usage
    2. Camera shops: How to edit photos, taking pictures, lighting, etc
    3. Sowing shops: How to do certain stiches (I dont know other examples, I dont sow)

    Lots of possibilities IF you can create something professional looking.

    Garrie
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    • Profile picture of the author Steve Robertson
      Originally Posted by GarrieWilson View Post

      While trying to get in the big boy stores would be damn near impossible, you could get in the smaller chain - niche - stores. Even mom and pop stores.
      Hi Garrie,

      I think you're being a little pessimistic :rolleyes:

      But you have a good point. Producing a "how to" DVD can be done with a relatively small investment. While you are trying to make the big sale, you can also sell that DVD through Amazon, eBay, your own website or by personally making the rounds of small retailers. You could easily recover your investment before you land the first big sale.

      And a sales history from these alternate distribution paths might help you make that first big sale.

      Steve R.
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      • Profile picture of the author Raphael1988
        Originally Posted by Steve Robertson View Post

        Hi Garrie,

        I think you're being a little pessimistic :rolleyes:

        But you have a good point. Producing a "how to" DVD can be done with a relatively small investment. While you are trying to make the big sale, you can also sell that DVD through Amazon, eBay, your own website or by personally making the rounds of small retailers. You could easily recover your investment before you land the first big sale.

        And a sales history from these alternate distribution paths might help you make that first big sale.

        Steve R.
        As for mentioning using your own website to sell products along with using other distributor's to broaden your sales horizon. I know a perfect webdomain distributor that sells domains for cheap and you can use your domain for anything you want. Just send me a note and we can get started.
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  • Profile picture of the author Instructor
    One big issue now is that banks are real tight with money.

    THEY are even scrambling for cash.
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  • Profile picture of the author mr2monster
    Jimmy Krug used to talk about this kind of thing... Creating little how-to guides and personally branding them for each business, then selling them in bulk was his racket though.

    i.e. 101 things to look for in a used car, branded with a credit unions name and logo so they could hand them out for marketing. bla bla bla. Then he'd sell them 50K copies or something.
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    • Profile picture of the author Steve Robertson
      Originally Posted by mr2monster View Post

      Jimmy Krug used to talk about this kind of thing... Creating little how-to guides and personally branding them for each business, then selling them in bulk was his racket though.
      What goes around comes around! This is basically the same idea updated for the digital age. I can even see situations where a retailer or a service business might want to give away a "how to" DVD as a branding tool.

      Steve R.
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  • Profile picture of the author Steve Robertson
    Originally Posted by submit2.0 View Post

    Really interesting Topic, wow the idea is not bad, but it's up to luck
    I guess there is a bit of luck involved. The retail buyer could find some excuse for not buying even if you have the greatest product since sliced bread.

    But this technique is just like any other business. If you do your research, you can be sure you are creating a product the retailer SHOULD buy. And if you do your research on the process of selling to large retailers, you can be pretty sure you'll get your shot at the big order.

    Steve R.
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  • Profile picture of the author Gail Sober
    Offer to place in a few stores where you get paid for what is sold. Agree that if it meets expectations they will buy for all stores ??

    This way you won't need such a massive outlay of cash to produce the limited amount (enough for one or two stores) and when the buyer places the big check in your hand, you won't need the bank.
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    • Profile picture of the author Killer Joe
      Gail,

      It's not unusual for the store (chain) to set you up on a 30, 60, or 90 day payout after recieving the merchandise.

      If stores paid you up front the new business model would be to declare bankruptcy as soon as the check cleared. It's been done.

      Additionally, a legitimate purchase order from an established company can be used as collateral for a bank loan.

      KJ
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    • Profile picture of the author Steve Robertson
      Originally Posted by Gail Sober View Post

      Offer to place in a few stores where you get paid for what is sold. Agree that if it meets expectations they will buy for all stores ??

      This way you won't need such a massive outlay of cash to produce the limited amount (enough for one or two stores) and when the buyer places the big check in your hand, you won't need the bank.
      Hi Gail,

      This brings up an important point about DVDs. Most internet marketers who use DVDs use services such as Kunaki to duplicate their DVDs in fairly small quantities. Those services use DVD burners to do their duplication.

      If you are planning to sell DVDs to retailers, it would be a good idea to use a DVD duplicator that uses "glass masters" to manufacture your DVD copies. That probably means a minimum order of 1,000 copies. But you get many more options in your packaging.

      Steve R.
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  • Profile picture of the author davebo
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    • Profile picture of the author TheWatcher
      Another approach would be to go after individual manufacturers supplying the retail chain.

      There is huge brand vs brand rivalry that goes on. Brands compete not just for sales, but for shelf space and prominency within the store.

      Manufacturers often run in-store or on-pack promotions to maintain the edge over the competition.

      This approach would allow you to get into the retail chain by the back door, so to speak.

      -Mark
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    • Profile picture of the author Steve Robertson
      Originally Posted by davebo View Post

      Not to sound harsh, but you are being extremely naive with that example.
      Don't worry about sounding harsh! There's no doubt that I'm naive when it comes to selling to retailers. That's why I started this thread - to try to bring out some of the real life issues you would face in dealing with retail buyers.

      But I haven't heard anything yet that would be an absolute deal killer. All of these horror stories about dealing with retailers tell me that you need to do your homework and be careful. Good advice for any business deal!

      And remember that you don't have to sell these "how to" DVDs exclusively to retailers. You can also sell them through all the internet marketing channels.

      Steve R.
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      • Profile picture of the author Edward J Turner
        Why not eliminate the hassle of being a supplier and simply license your product?

        Find another distributor who sells into the retailers that your product is meant for, and work out a licensing deal where you get $1 for each copy of the product (DVD in your case) they ship to the retailer.

        Sure, it might seem like less $$$...but it's far less headaches and financial risk on your part too. Seems like an easier way to get started too.

        Ed
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  • Profile picture of the author NickMarks
    Steve,

    You're looking for something that is already right in front of you. Bring this idea online. I can't really go into that much details as I'm about to do the same thing. But this idea will work much better online. I'm sure of it.
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