Want to Sell Your Products in Walmart?

Here's How to Scale Up for Big Retailers and Not Miss Your Opportunity

I am a board member of Count Me In, a non-profit that helps women-owned businesses succeed, and was fortunate to be part of an exclusive one-day session this month to help small business entrepreneurs learn what it takes to really scale up. The goal: to get five or six of these companies selling their wares to Wal-Mart.

Five of the top 100 million dollar sellers to Wal-Mart shared what they know to go from a garage-based business to a mega-manufacturer. The 15 invited entrepreneurs who want to prep their products for the retail giant’s buyers included everything from a stylus that makes attaching crystals to any surface fast and easy to point-of-sale vacuum packed individual diapers.

Turnaround titan Lynn Tilton, CEO of Patriarch Partners; clothing mogul Mark Adjmi, CEO of Adjmi Apparel Group; expert “closer” Joey Setton, executive vice president of Saramax Apparal Group; licensing wiz Yehuda Shmidman, CEO of Sequential Brands Group; and event co-sponsor Ariela Balk, founder and CEO of lingerie and swimwear brand Smart & Sexy, are committed to helping small businesses as a path to economic growth, but in a decidedly new way – not by small, step-by-step growth, but by getting these businesses into market-flexing, broad-based sales from the get-go.

The intense session came on the heels of Wal-Mart’s announcement about its commitment to buy an additional $50 billion in U.S. products over the next 10 years. For small business accustomed to producing quantities in the low thousands, the opportunity to supply tens of thousands of products to 3400 Wal-Mart stores can be either a dream come true or a nightmare if they are not prepared for the retailer’s expectations. The panel shared advice for making such a major transition in both production and strategy – and it’s applicable to any producer who has dreamed of getting a crack at Wal-Mart’s 138 million weekly shoppers.

Make sure your product fits Wal-Mart, Wal-Mart doesn’t have to fit your product. The five panelists agreed on three basics for anyone considering selling to Wal-Mart: Does your product appeal to Wal-Mart customers; does it fill a void on the retailer’s shelves; and are you willing and able to get your costs low enough to be both profitable and meet Wal-Mart’s strict pricing strategy?

Infrastructure has to meet order demands. Working with Wal-Mart “is a round the clock job and if you are not ready for that you should put off your effort to get on store shelves,” said Balk, who ships 60 million garments out a year – many of them to Wal-Mart. “Can you handle replenishment needs, logistics, and turnaround times? If you don't have the staff to handle those things, the burden will fall on you,” she says. If you can’t hold up your end of the deal, your first chance may be your last. That’s why Balk waited five years before making a deal with Wal-Mart for her Smart & Sexy line. “I needed to understand what I needed to deliver in terms of quality and pricing and what kind of staffing was needed to meet those goals.”

Yehuda Shmidman said if you don’t have manufacturing capabilities consider licensing your product to a manufacturer, as a way to scale your business to meet Wal-Mart’s volume demands. “You may be great at marketing but if you can’t make money from production you are out of business,” according to Shmidman. “That’s the business we’re in – we may not be able to find the best factories but we know how to build brands.”

Know the true cost of your product. It can be challenging to meet Wal-Mart’s pricing needs, which are lower than most small entrepreneurs are used to, especially if they don’t know what the product actually costs to make. “People often under-estimate the cost to produce their product and the overhead required to run their business,” said Lynn Tilton. “It startles me that so many smart people don’t know the true cost of making their product. It’s beyond cost of goods. Every company has to have a pricing model on every product. What is your wholesale cost? Do you have discounts? Will you take returns? What’s your overhead? Do you need inspectors on the ground?” she said. Wal-Mart, for instance, demands that manufacturers’ factories comply with their standards, and inspectors are necessary to ensure compliance. Those people cost money, which has to be worked into your bottom line.

Ferociously prepare. Once you've got an appointment with Wal-Mart, do your homework. “Before your first one hour meeting with a buyer you need to put in 100 hours of research,” said Adjmi. That means visiting the departments where your product will likely be stocked and really studying them – the layout, stock, traffic pattern, shoppers in the aisle – everything. It also means familiarizing yourself with Wal-Mart’s supplier expectations, which are detailed on its website. “A lot of people say, ‘I know my business’ but that’s just half the game. I’ve seen these people get blown away in Wal-Mart meetings because they don’t understand what they need to know to answer Wal-Mart’s questions: What does the competition look like? Do your factories match Wal-Mart’s expectations? What margins are you expecting to get? Where will the product fit into the existing category mix in the stores? Is it a regional product, good for 500 stores as opposed to 2500 stores?” Not only do you need to know your product better than anyone, you need to know Wal-Mart better than your competitor. “If you don’t, stay home and reschedule the appointment,” says Adjimi.

Have confidence, yet be humble. You can know everything about your product and as much as possible about Wal-Mart’ needs but there’s always that question that seems to come at you from the side. “Don’t make up an answer,” advised Balk. “Tell them the truth – say “I don’t know but I’ll get back to you tomorrow,’ and then find the answer and get back to them.”

Never leave without a deal. “In order for your company to have revenue you have to sell something,” was Joey Setton’s advice – which may seem like a no-brainer but often times the small manufacturer can be so overwhelmed that they don’t leave a buyer meeting with a purchase order in hand. “The biggest impediment to closing is not focusing on what the buyer is saying,” said Setton. He told the story of a salesman who went into Wal-Mart with a great product displayed on a beautiful glossy easel board. Setton was excited because he really thought they had a home run. “My colleague talked about the items and price points. He was doing a great job. At one point the buyer said, ‘Oh that’s a really cute item and she started writing notes about. But my salesman kept going, talking about more items, flipping the easel board past that item the buyer was so intrigued with.” Setton stepped in and reengaged the buyer on the product she liked. “We spent about 45 minutes talking about how many she would take per store, even though there were 40 other products on the easel display to talk about.” Ultimately, they only got through five or six pages but they wrote orders because Setton listened to the buyer and wasn’t only concerned with getting through the entire product line. “If a buyer is saying, ‘stop I like this’ then stop because it’s likely you’ll get the order. Your job is not just try to sell, you have to close.”