We recently spoke with Ali Asghari and Arash Hosseini from PilotsFriend West Inc. to ask what they’ve learned as growing entrepreneurs and what they’d share with new entrepreneurs trying to break ground in the Consumer Packaged Goods industry. As District Ventures alumni, the duo has a wealth of knowledge to share as they have grown into a fierce competitor in the market.
YouInc: What are the top three greatest lessons you learned when getting into retail?
Perfect your pitch to articulate the features and benefits of your product in its best way. Know your target market and understand which retailer and which shelf at each retailer does your product belong. Consumers make the decision in the end. Pay close attention to the market feedback. If you have a good product and the demand is there, forming long-term relationships with retail partners follows naturally.
Ensure you don’t price yourself out of the market but be sure that you are accounting for the margins needed at every level of the value chain, as well as the costs of supporting sales. Understanding the value chain starts with knowing the industry average for the margins required at every level of the value chain.
Getting shelf space isn’t the hard part, keeping it there is what makes the difference. Make sure you have budgeted for the cost of what it takes to move your new product off the shelves. Getting shelf space is your start; supporting the sales and keeping your space is where creative marketing is needed. Professional marketing agencies like Venture Communications can add a lot of value in this regard.
YI: What advice would you give to entrepreneurs looking to approach retailers?
- Master the margins and price structure
- Be ready to scale
- Have marketing and sales support budget
- Have your sell sheets ready
- Time your reach properly and meet the right person
- Meet your retail partners in person as much as possible
Understand what’s unique about the particular retailer you’re reaching out to and adapt your pitch to show you have done your homework. Retailers are always on the lookout for new, innovative products, don’t sell yourself short.
The ideal situation would be to approach them when they are not happy with what they have (for example they don’t carry the product which is now getting trendy) and they have not searched for an alternative or met with any supplier which carries that type of product yet. You are an absolute winner if you meet them right during this window of dissatisfaction. However, negotiate with confidence but of course within your leverage bounds.
Retailers are always on the lookout for new, innovative products, don’t sell yourself short.
For example, as a leader in the health and wellness sector within the mass grocery industry, Sobeys family of grocery stores provide the consumers with the information needed to make healthy choices when it comes to their food and beverage selections. Approaching the stores with this in mind and as such adapting your pitch to show how your brand values are in line with their wellness vision, would increase your chances of a successful listing.
YI: What are some things to keep in mind for a beneficial company-retailer relationship?
PF: Visit the retailer in person and build a personal relationship with their team. Treat each store as if it’s the only store you’re selling to and give them your best support to maximize the movement of your product off the shelf.
Additionally, don’t lose sight of the power of digital marketing when it comes to supporting your specific retailer partners. Establishing your brand is not as capital intensive as it once was 10-15 years ago.
YI: How is selling in grocery retail different than selling at farmers markets or independent retailers?
PF: Small fish in a big ocean. Establishing your brand within this space requires a long-term frame of thinking as compared to your shorter-term strategies at a farmer’s market.
Positive word-of-mouth advertising is one of the most powerful tools you have at your disposal.
As well, understanding the corporate culture for the particular retailer you work with is of utmost importance. This understanding allows you to fit well into their culture and navigate the channel with confidence.
Lastly, keep in mind that the small mistakes with big partners can cost you a lot more in comparison to the farmers market or independent retailers. The latter are often more forgiving.
YI: What advice would you give to entrepreneurs when doing demos in retailers? Why are demos so important?
PF: Training your demo staff is of utmost importance. However, make sure you personally do the demos in your local stores as much as possible. No one else can do the pitch with your passion and care for your product. Demos not only introduce your brand and product to new consumers, they also introduce it to the store’s staff.
Getting shelf space isn’t the hard part, keeping it there is what makes the difference.
The majority of consumers are interested in learning more about new products that can add value to their daily nutrition intake. Providing them with the chance to taste and learn more about your product provides this opportunity.
Gaining one consumer at a time goes a long way. Positive word-of-mouth advertising is one of the most powerful tools you have at your disposal to support your sales at the retail level. We say the power of word-of-mouth advertising in the CPG startup world is akin to the power of compound interest rates in the investment world.