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 Are We.
Having built and sold a bestselling national brand, we appreciate the value of brands and everything it takes to make them successful. Companies are valued by their brand equity. Achieving and maximizing brand equity requires tremendous respect for all your customers, from your wholesaler to your end user.
Starting in our laundry room with no money and no knowledge of the industry, we built the famous Barefoot Wine brand. We learned a lot they don’t teach in school and much of it the hard way. Although our success was in consumer products, our real world experience will be helpful to anyone looking for information and advice about brands.
We have written the New York Times Bestselling Business Book, The Barefoot Spirit: How Hardship, Hustle and Heart Built America’s #1 Wine Brand, which chronicles the history of the famous brand from its inception through its acquisition. Our book is now required reading in schools of entrepreneurship across the country. We hope this book will provide inspiration and encouragement for all those contemplating starting a brand or wanting to improve their existing brand.
Michael Houlihan and Bonnie Harvey
-Barefoot Wine Founders