Many small businesses view getting their products onto the shelves of big box retailers such as Wal-Mart as winning retail Olympic gold. Besides dramatically increasing a business’s profits and opening doors to other lucrative retail contracts, having your products on a big box retailer’s shelves gives consumers and other retailers the message that your company’s products are winners.
However, competition is fierce; in 2004, “about 10,000 new suppliers applied to become Wal-Mart vendors. Of those, only about 200, or 2%, were ultimately accepted” (Gwendolyn Bounds, “The Long Road to Wal-Mart Shelves”,The Wall Street Journal Online).
So how can your company be one of those few companies? The first thing you have to do is ensure that your product and your company will be attractive to a big box retailer.
Preparing to Get Your Products into a Big Box Retailer
Big box retailers are looking for companies that:
1. Have a solid track record.
Big box retailers such as Wal-Mart don’t want to bother with the untried and unproven.
For one thing, there are so many businesses competing to be suppliers that they don’t have to.
For another, “Wal-Mart doesn't like to account for more than 30% of a supplier's total business; if it did, and suddenly had to change an order based on shifting trends, it could sink the supplier,” says Gwendolyn Bounds in “The Long Road to Wal-Mart Shelves”). So having other retail accounts increases your chances of getting the big box retail account.
2. Have a unique product.
That's the kind of product that big box buyers are looking for. Remember, in so many product categories there’s so much duplication that there’s absolutely no incentive for a big box buyer to commit to carrying another one. The ideal product is something different – that will still fit with the retailer’s current product lines.
3. Have a product line.
Even if you can get the buyer interested in your product, having only one product to offer can be a deal killer. Setting up a new supplier takes time and effort – so the potential supplier who can offer a complete line rather than a single product will always have the edge.
4. Are able to meet the retailer’s needs.
“You've got to have production patterns to get the product out the door to meet ship dates," says Steve Wurzel, a Franklin, Tennessee, consultant whose company, Marketforce Inc., specializes in helping businesses sell products to mass retailers (Karen Axelton, “Scaling the Wal – Doing Business with Wal-Mart Stores Inc.”, Entrepreneur).
And although it can take six months to a year on average for a supplier to get a first purchase order, when that first order comes in, you’re expected to move fast. The retailer may even want a 24 hour turnaround.
5. Are prepared to do what it takes.
If you want to be a Costco, Home Depot or Wal-Mart supplier, you’ve got to win over the buyer and show that you can overcome obstacles. Whether it's upgrading your packaging or changing your pricing you have to show that you’re willing to work with the retailer.
Getting a Meeting with a Big Box Buyer
When your company and your products are ready, the next step is meeting with a big box buyer and making the pitch. Getting a meeting, though, is a process in itself.
- To become a Wal-Mart Supplier
If you’re aiming to get your products on Wal-Mart shelves, you need to file an application to become a Wal-Mart supplier.
Wal-Mart's website gives step-by-step instructions for preparing and submitting your Wal-Mart supplier application package. You’ll see that the procedure varies slightly depending on whether you hope to become a national supplier or part of their local purchase program. In either case, you must also meet requirements such as having your financial information listed with Dun & Bradstreet, have Universal Product Code (UPC) Identification Number(s), and have applicable liability and workers' compensation insurance.
- To become a Home Depot Supplier
Home Depot’s Web site gives contact information for becoming a merchandise, non-merchandise, import or domestic logistics supplier, requesting that you send a “detailed email”.
- To Become a Costco Supplier
Costco supplies only a list of addresses for vendor inquiries, stating that "prospective vendors of non-food or sundry items can contact the corporate office..." while "prospective vendors of food and sundry items can contact the appropriate division office".
If becoming a Home Depot or Costco supplier is the goal, you’ll have to prepare your own proposal package. The Wal-Mart application may serve as a useful guide.
Trying to get your products onto the shelves of a big box retailer certainly isn’t an appropriate goal for every product-based small business – nor is it the only route to retail success. But if your products and company are a good fit with big box retail, becoming a big box supplier can be extremely rewarding.