When should your D2C brand enter Retail?
The Business of Food
by Jennifer Barney
When should your D2C brand enter Retail?
2-min read
Unless you have a ton of money, it’s best to wait. Go-to-market strategies differ, but for the vast majority of you (non-frozen brands), retail can wait.
I’m not talking about a few stores in your town that you supply direct. I’m talking about delaying regional and national accounts. Sure, Walmart and Save Mart are more than excited to bring you in. But they don’t vet brands that are immature and unable to support retail. They’ll throw you on the shelf to see what happens. If you’re not ready, it can kill your biz.
Physical retail is totally different from selling online
The skillsets and support required to be successful in stores do not overlap with D2C. For starters, with digital, you can change your product offerings instantly, turn on or off promotional offers with a code, and explain your sustainable supply chain and value proposition with abandon. On store shelves, you have just your PDP (primary display panel) on a busy shelf.
Retail has not evolved over the years
There are few levers you can pull in retail to make anything happen. And those levers are old and rusty. Trade promotion in retail is nothing like buying ads on Facebook or optimizing on Instagram. There are just a few types of promos at the store level you can enact – which you have to plan for well in advance and hope to god they execute – and there’s still the old pre-shop (inserts, paper coupons) that some stores make you do. Demos are another driver, but some stores are not yet fully open for demos across the country.
Newer digital rebates (Ibotta) and Instacart Ads do work and are great – but difficult for small brands because of the expense and retailer cooperation necessary.
What could go wrong
Once in, you’re locked for 6 – 12 months and if you didn’t get something right (or THEY screw up) with the pricing, promo, merchandized location… any number of things, you are stuck.
The buyer is suddenly MIA because you’re small and not their priority.
You have to hire merchandizers to ensure your products are stocked and to tell you WTF is going on at store level because you don’t have data or the data is unreliable. You didn’t budget for this.
Your broker said they’d do the above but aren’t.
You change something about your formula to make it better and you can’t get the product switched out.
Product is getting close to date code and you want to do a fire-sale, but you can’t get the promo scheduled in time so you’re forced to buy it back with all the associated costs.
What ready looks like
You’re ready when
You have a plan to bring in seasoned sales help and a go-to-market strategy (that is in writing and vetted by an industry mentor)
You have the funds budgeted (get advice to know how much)
You have an audience that you can direct to the stores to ensure product moves off shelf Day 1
Growing your audience is something you can do with little to no budget.
More on this next week!
All my best,
Jennifer
This milk is expanding nationally with carbon neutral organic milk to more than 500 U.S. Whole Foods Markets stores this month. -- Berry on Dairy
“Neutral is a game-changer,” says Mark Cuban, owner of the Dallas Mavericks and judge on Shark Tank. “Neutral works with farmers to deploy on-farm carbon reduction projects focused on compost, manure management and feed changes. It’s a unique solution that can feed us while protecting us. It’s a program that I’m proud to be part of.”
I'd love to hear from you - get in touch at jennifer@3rdandbroadway.com