Staying in stock is challenging when you are new because your retail buyers have not had any experience with your branded products. Their question is, “What if it doesn’t sell?” They are afraid they will get stuck with unsold inventory that takes precious space away from other branded products they know will move.
So here you are trying to get them to carry your brand but they only want to buy the very minimum to fill the allotted space they have granted you on the shelf. They have mitigated their risk, but have set you up for failure.
Why? Because once they run out, they can no longer measure sales of your brand. If, for instance, they sell out of the initial stock they purchased in two days, but did not reorder for a week, and it takes five days to get resupplied, their two-week sales reports will show the sales they made in the first two days. You brand will be dubbed a slow mover as a result of the run out.
Ideally, you or your representative will be watching their shelves daily for movement and advising buyers to reorder well in advance of a run out. This requires constant vigilance especially with new accounts. Although this level of service can become very expensive, the alternatives are even more expensive in the long run.
What we find troubling is that most new brand builders think this is someone else’s responsibility. They think the retailer will have an interest in not being out of stock. They think the distributer or jobber’s representative will be watching the shelves for the opportunity to sell more of your brand. Forget about it!
You and your team are the only ones who can solve this reoccurring start up problem. Remember, the retailer is only looking at the scans that go out his door. If it’s out of stock, it simply doesn’t scan. But there’s no report that says “Here’s what you could have sold if you had bought in more to begin with and did not run out.”
In addition to getting the reputation of being a “slow mover” when you actually sold out fast, there is yet another more ominous problem. The consumers that bought your brand, loved it, and went back for more were in for a rude awakening; it was no longer there! So now they are disappointed. They think your brand is great but undependable! They return to their old brand which may not deliver the value but at least it’s dependable.
This is the kind of double jeopardy new brand builders face and must take seriously. This is why we advise our clients to start small and spend a lot of time servicing their very first accounts, and in every territory to watch all new placements carefully. In fact we have learned that the greatest chance of discontinuance is in a new account!
So instead of prematurely celebrating all those new accounts, you should be very focussed on restocking them fast enough to get the reputation of being a fast mover for your retailer and a dependable product for your consumers. It not how fast you roll out you new consumer brand, it’s how fast you get the reorder. You want to convince you new retail buyers that your brand merits a larger and larger back stock. Mitigate their risk with diligent customer service!
Who We Are
Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.
Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.
They offer their Guiding Principles for Success (GPS) & Shelf Smarts courses to help consumer product brand builders achieve success. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.
Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular business site at www.thebarefootspirit.com.
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