Getting Your CPG Brand Onto Retail Shelves
6 min read
Consumer packaged goods (CPG) are products that consumers purchase, quickly use up, and must replace — such as food, cleaning supplies, or cosmetics. The CPG industry is valued at about $2 trillion, making it one of the most significant sectors in the North American economy.
Every CPG startup faces a unique obstacle not shared by other types of startups like SaaS startups; instead of selling products directly to customers (whether B2C or B2B) CPG startups sell their products to retailers, which then sell the products to consumers. This is an extra step in the sales process that means CPG startups need to consider not only how to get consumers interested in their products, but also how to get retail stores to stock them.
Let’s break down some of the most important steps CPG startup founders need to take to put their products on retail shelves.
Preparing to Approach Major Retailers
Here are a few key actions that you should take before you approach major retailers with your product:
1. Research your product category
The CPG sector is broad, and many of the categories within it are not relevant to your products. Narrow in on the specific category your product belongs in and focus your market research there.
For example, if your startup sells ice cream, you should research ice cream’s performance within the category of frozen desserts in general, taking special note of details like which flavors are most and least popular or the level of demand for dairy-free alternatives. Studying consumer trends in your product’s category enables you to make informed decisions about your retail strategy and how to position your product.
2. Research your target region
You should also identify the geographic regions in which your product is most likely to do well. Geographic research not only allows you to target these high-potential regions specifically, but also enables you to cater your distribution strategy to location-based consumer behavior. For instance, consumers in sparsely populated areas with fewer stores may be in the habit of shopping less frequently and appreciate larger package sizes.
3. Research your target retailers
Retailer analysis should be another component of your research. You need to know which retailers are most successful at selling products in your category in the region where you plan to sell. Identify each potential retailer’s % ACV (all commodity volume) for your startup’s product category and focus on winning the retailers with the best numbers.
4. Differentiate your product
Bringing in a new product is a great deal of work for a retailer, so you’ll need to give them a reason to go to the effort for your product in particular. Your product needs to be different in a significant way to justify occupying the shelf space alongside competitor brands.
5. Market your product
You should also commit enough marketing resources to your product to create a bit of traction and brand recognition. Large retailers usually need to see evidence of consumer demand for your product before they’ll agree to stock it. If you don’t have the budget to generate brand awareness via a traditional marketing campaign, word-of-mouth marketing efforts like a viral social media post can work just as well.
6. Start small
Focus your attention on a small number of retailers in your region first. Starting small enables you to build traction and create future opportunities to scale at a manageable rate. For example, success in a local market could impress a large, national retailer and entice them to stock your product.
How to Get Major Retailers to Stock Your Products
Once you’ve accomplished the steps above, you can start actively pursuing large retailers.
1. Decide whether or not you’ll use a broker
CPG brokers are like ambassadors that can help your startup connect with retailers and navigate the process of getting your products on shelves. They can be great for small CPG startup teams that want to accelerate growth. Since brokers have pre-existing relationships with retailers, they may be able to get your brand in the door faster. Brokers can also assist with much of the paperwork that’s involved.
2. Determine your ideal terms
When you strike a deal with a retailer, you’ll have to agree upon a number of terms, such as pricing, holdbacks, and slotting fees. Retailers will typically set most of the terms, but there may be room for a bit of negotiation as well.
3. Compile your pitch materials
Presenting your products to retailers requires some carefully-prepared materials to help you make your case. Namely, a sell sheet with a concise, compelling outline of your product and why it’s valuable, a spec sheet that gets into all the nitty-gritty details of the product, and a polished sales presentation. When you meet with potential retail buyers, you’ll use these materials to pitch your product.
4. Set up EDI
Most retailers use electronic data interchange (EDI) to coordinate product orders. Your business will need to be set up to send and receive business documents in EDI format. You can use on-premises EDI translation software or entrust the process to an EDI service provider.
5. Maintain solid backend infrastructure
Large retailers place orders frequently — usually at least once per week, and sometimes more. You’ll need dedicated in-house staff to keep the retail process running smoothly and ensure all orders are filled correctly. You can also enlist the help of a 3rd party logistics company to help you manage orders. This is often the preferred route of small startups who don’t have many internal team members to spare.
Case Study: ICONIC Protein
ICONIC Protein is a prime example of how to get consumer packaged goods onto retail shelves. Founded by entrepreneur Billy Bosch, ICONIC Protein is one of the largest natural protein supplement brands in the United States. ICONIC Protein is backed by millions of private equity investment dollars and is sold by over 5,000 retailers, including Macy’s, Whole Foods, and Walmart.
Billy’s founder story perfectly showcases the importance of finding the right market for your CPG before you partner with major retailers. ICONIC was founded in New Orleans in 2013, but demand for natural protein drinks simply wasn’t strong enough in that region to drive growth.
In 2017, Billy relocated ICONIC to California. His decision was based on product category trends that identified the West Coast (and California in particular) as the hottest geographical location for consumer wellness products. The decision to relocate has since allowed him to scale ICONIC far beyond what he could have accomplished with regional New Orleans retailers.
Getting your CPG into major retailers like Walmart or Whole Foods is a complex process, and the path forward isn’t always clear. Mentorship is one of the most valuable assets you have as you navigate the journey. Mentorcam will connect you with successful, high-profile individuals who have walked the path you’re on. You can speak with Billy Bosch from ICONIC Protein and other experienced entrepreneurs and get their advice about how to get retailers to sell your products.