Sell-in v’s Sell-out
Toyota is the largest car manufacturer in the world. Like most other marques, it is totally dependent on independent motor dealers in Ireland to sell its cars. In most other countries, it is vertically integrated and it owns its own networks. In both business models, it has huge input and control over how consumers experience the brand and purchase a vehicle. That’s why they proudly aspire to be the ‘best retailer in the towns’ that they are in. And it believes that aspiration is realistic.
Samsung is another global brand that relies on intermediaries to resell its products. Retailers of home technology will usually stock a range of TVs from various brands. The purpose of that is to broaden their catchment audience, providing consumers with a choice that spreads across ‘good, better and best’.
Global brands recognise that selling product in to retailers is only half the battle. Helping retailers to re-sell their products is a different and more challenging question. Because they have deep pockets, they don’t leave it to chance. They allocate budget across the spread of marketing activities and that includes concepts to support the retailer’s sales effort.
Is the notion of supporting your resellers on your radar?
What if you are a smaller company facing this challenge, but don’t have the big budget to support your retailers? Is the notion of helping them even on your radar? Or are you assuming that the reseller is as passionate about your brand as you are? How many artisan food companies are there that created the most tasty and nutritious products ever, but couldn’t get repeat orders from supermarkets?
Due to the lockdown and the shortage of new homes, the RMI market (renovations, maintenance and improvements) is in growth. I see this with a number of my clients where sales are growing in kitchens, lighting, windows, paints – and professional services such as interior décor and design. If you have tried to find a small builder in the last couple of years, you’ll know exactly what I mean.
I met with a tile merchant who has a 2-tier selling model, selling products direct to builders and also to retailers. The operation is geared up really well to service the direct market. It carries very high stock levels to fulfil orders at short notice. It has sales executives on the road calling to customers on a cyclical basis. In each division, it has a range of products in all qualities, good better and best. It has a delivery service that is second to none.
Yet, this company faces the classic challenge that I alluded to above. Its retail partners have all sorts of competing products on their floors to suit their wide consumer base. Due to cost structures and need for margin, retailers are usually very tight on the number of sales-people on the shop floor. Consequently, much of the selling is influenced by product positioning, signage and merchandising. Customers self-select before they get to talk to a sales-person.
Tips on how to influence sell-out
Distributors and wholesalers are now coming to realise that they also have a role to play in helping retailers sell the product ‘out’.
1. Observe customer traffic on the shop floor
Take time to visit a few of your resellers sites and just watch how consumers shop the section that your product is in. What can you learn from their behaviours that might change positioning, merchandising or signage? Study the shop floor.Think about the consumer’s mindset when shopping. Is your product placed in the right location vis a vis the adjacent categories? For example, kitchen worktops located beside garden furniture does not make sense.
2. Check the standard of merchandising
How well is your brand merchandised compared to your competitors? Are the shelves well stocked with your product or are there empty spaces? Is the back-up stock from the stock-room being filled out regularly?
3. Consider the quality of signage presenting your brand
We know how important signage is for informing the consumer while they wait for attention from a salesperson. What is the quality of your brand and product signage like? This tile merchant has invested in a flat-bed printer so that they can create tailored signage. This allows them to work with each retailer to develop exclusive local brands and promotions.
4. Ask your customers for their input
Most of your customers will appreciate that you are trying to achieve a win-win outcome for both of you. They will have suggestions that you can then decide on which are equitable for both of you. Work with them to build a strategy that includes and promotion and replenishment.
5. Train and incentivise retail salespeople
Show retail salespeople how to best sell your products to the consumer. Make sure they know the features and benefits of your product range and what makes you different to your competitors. In collaboration and with permission of local management, consider appropriate incentives.
A number of years ago I was engaged by C&C Wholesale (now Britvic) to enhance their customer service. I discovered that they were already very customer focused, being efficient and well regarded in the trade. The project changed to what other support they could give their pub customers with ‘sell-out’ activity and it successfully included much of what is discussed above.
If you are a company that relies on re-sellers to sell your product, then maybe it’s time to think differently. While my example mainly focused on selling to retailers as re-sellers, the messages will apply to you too even when there is no retail store involved.
If you don’t, there’s a risk that sales of your products don’t meet expectations. Eventually repeat orders will not happen and the reseller might ultimately de-list your brand.