How to Create and Distribute
a Winning Wal-Mart Product

Come up with new product ideas that will sell well in retail stores.

Quickly evaluate your ideas so that you don't waste time on ideas that won't work.

Understand the way retail buyers think, and how their performance is measured, and how to make sure your product works for his store as well as for his consumer customers.

Determine if your idea is better than anything out there now.

There are 3 different techniques I have used to create Wal-Mart products, as well as products that have been sold to Target and thousands of other stores. We will review each one and I will give you actual examples of how I used that technique to produce millions of dollars in sales.

When I added it up, the total sales of the products I created this way has been $39 million.

Sound interesting? Let's get started.

Why You Should Care

Let's start with the "why you should care" part! When you are creating products to sell in stores, obviously people have to buy them in order for you to be successful.

What is not so obvious is that if your product doesn't meet the retailer's criteria, it will not even get into the store in the first place!

I have seen figures that 95% of all products presented to store buyers do not get in the store and that 95% of all the idea patented are not commercially successful.

If you want to be in the 5%, listen up...

How Buyer Performance is Measured

A buyer's performance is primarily evaluated by the profit that buyer brings to their business. In retail this is measured by gross profit/square foot/month.

Gross profit is the profit margin your product provides the retailer. If they buy your product for $1.00 and sell it at $2.00, that's a 50% gross profit. ($1.00/$2.00 =0.50 = 50%). Said another way, their profit of $1.00 on a $2.00 sale is 50% of the selling price.

The more space your product takes in the store, the less profit per square foot they make. Since they only have a limited amount of space, the amount of profit per square foot is a way to compare two different products for profitability. The higher the profit per square foot, the better for the retailer.

Lastly, they look at the turnover, or how many units they sell in a given amount of time — day, week, month, year. Having a high profit margin and not using much space are both good, but if the product doesn't "sell through," they will not buy it again.

When presenting your case to a buyer, especially in a major chain, you should be able to give them your estimate of their profit calculated this way.

An Example

When you begin to think this way too, it can make a big difference in how you package and display your Wal-Mart product.

For example, if you have a product packaged in rectangular boxes that can be stacked on top of one another, you can fit 2–3 times as much product in the same shelf space as a product in a package that cannot be stacked!

What Do You Know?

The best place to start is with you own personal expertise and experience. What is it you know a lot about?

What types of Wal-Mart products do you buy and are you intimately familiar with? What have you bought that you thought you could make better?

What Interests You?

What are your interests? Even if you do not have knowledge in a certain area, is there an area you would like to learn about?

Here's How To Do Your Market Research

Next, go to some stores that stock the kinds of products you have an interest in. If you have a home improvement product idea, go to Home Depot or Lowe's stores and see what's there now.

If you have an idea of how to do something in a different way or better than what you have seen, go to the stores and see if there's anything there now like your idea.

Talk to the store manager or sales clerks if they are knowledgeable. Without mentioning your idea, ask what they have that would allow you to do (whatever your product does). See what the choices they suggest.

How do these compare to your idea? Is your idea better, cheaper?

If you are interested in coming up with a product in an area you do not know much about, do more research in trade magazines and with trade associations in your area of interest.

Many people who think they have an original idea in an area they don't know about will find it's been done before by somebody else.

Your local library has both a directory of publications and a directory of trade associations. You can get sample copies of trade magazines free by calling and asking for a "media kit" and a sample copy of their magazine.

What you are asking for is their advertising rate card and their information on why to advertise with them instead of their competitors. Since you are a potential advertiser you will get this info for free and about 6 weeks faster than subscribing!

But what if you're not creative? That's okay. There are plenty of other opportunities.

You can find products selling well in one distribution channel and introduce them into another. Take a product selling on the Internet only and get it into stores.

Take a product selling in another country, import it, and sell it here. (This is a good way to write off your international vacations — do your research in other countries!) I'm not all that creative, so the way I've created most of my products has been by improving on an existing Wal-Mart product that already sells well.

This takes most of the risk away. With a totally new invention or completely new product, you don't know at first whether it will sell. If you start with something that sells well already and you make it a lot better, that shouldn't be a problem.

An Example:

When I started my first business, my partner had a small screen printing operation and we set up a joint venture together to explore products I would create and sell and he would make.

He was selling souvenirs and a popular look was to make decals out of prismatic vinyl. This a metallic material with a pattern embossed into it to reflect light into rainbows.

Though I started by selling souvenirs, before long I noticed there were hundreds of companies starting to make stickers for kids and they were collecting them.

Most of these stickers were just traditional paper, so I decided to try our prismatic material and see how it would sell. We put a product line together of prismatic stickers on rolls and started selling some gift shops.

Sales were incredible...

They sold better than anything else in the store so we made more designs and they sold too.

The next step was to make stickers in packages to sell to the major chains. long story short, in another couple years we were in Wal-Mart, Target, K-Mart, and about every other major retailer and we were selling up to $1.5 million of stickers every month!

A few years later, I started another company selling school supplies exclusively to the major chains. We came up with an entire line of folders, notebooks, pens, pencils, 3 ring binders all with the prismatic/holographic look.

All I did is take a look that worked on stickers and put it on another kids' product.

Result — another multi-million dollar success. This one even got us the "Best New Vendor of the Year" award from Target.

I wasn't done yet — I had also discovered that kids'' stickers were sold to the medical market as giveaways for pediatricians, dentists and others to give to kids when they came in to their offices.

The products being sold at the time were all plain paper circles just like the retail market had been 5-6 years earlier. This time I started a mail order company to sell the prismatic look stickers to medical offices.

Another success...

After we grew to having over 10,000 medical offices and hospitals as customers, I sold this company to a larger competitor.

All in all, 3 national businesses founded and grown from one simple idea applied over and over...make an existing Wal-Mart product better.

In addition to depending on the consumer acceptance of the improvements like I did with the examples above, increase your success by making the product cheaper, too!

The stickers with the holographic/prismatic look did cost more — in some cases as much as 4 times more — than the paper products we replaced. Retailers were initially very skeptical that the products would sell because of that.

For example, a typical paper portfolio printed in full color with attractive designs was selling for 59¢-69¢ for the nice ones and as low as 29¢-39¢ for the budget models without any art.

Our portfolio was to retail at $2.00!

Though they sold better than everything else, there was quite a bit of initial buyer skeptism because of the price.

Here's the sure thing...

Make it Better, Faster, AND Cheaper

When you make the changes to improve the product, do it for less money, not more! And I don't mean just a little bit better either — make it a lot better.

A couple examples will show you what I mean.

By watching the trends in my raw materials, I found out right away when the prismatic and holographic materials started to be made of paper instead of vinyl or polyester. At the same time thin film technology appeared to make the brighter film products much thinner to match the paper costs.

Using these new materials I introduced a seasonal product line of Christmas address labels, gift tags and stickers. What made these different was that while my earlier regular sticker product was a 4" x 6" sheet of stickers retailing for $1.00, I was now able to do a 8" x 10" sheet of stickers for the same price!

This was over 3 times the stickers for the same price! What do you think happened? If a small sheet sells well for $1.00, how will a package 3 times the size do at the same price?

Very well.

Another Example — Even Better

Though not my product, a guy I know has a process for making plastic and rubber products from recycled tires and scrap plastic.

He started first with those rubber protectors for ice skates. The existing products on the market wore out fast because of sharp ice skate blades were cutting through the rubber blade covers.

His product was actually more durable and lasted much longer.

But here's the good part:

Because he used scrap material he gets his raw materials for free! Not only did he make a better product, but instead of a $6.00 retail price, his product retailed for $2.00 and put all his competitors out of business!

When you think of a fad, I'm sure the "Pet Rock" comes to mind, or maybe the hula hoop — if you are old enough!

Though those products were definitely fads, as far as I know, there is no way to know when someone's off-the-wall idea like that will take off.

I have tried a few things like that in my life — all of them flopped.

This about something totally different with a much better chance of success.

Hamburgers To The Starving Crowd

I think I first heard this from Gary Halbert. He said more important than your product quality, price or anything else is the demand.

His analogy is the hamburger stand at a baseball game where they have the only food concession. If you are hungry it's the only choice.

It doesn't matter if your burgers are overpriced — and all the ones I ever saw at ballparks were — and it doesn't matter what their quality is — I'm starving, give me one!

My application of this concept is to be aware of the trends around you and provide the hungry crowd their hamburgers!

Another Example

A couple examples. Do you remember the "Baby on Board" yellow signs that hung in car windows? They evolved to an entire line of funny sayings.

We were not first with this, but we were a quick second. Without violating anybody's copyrights, we were able to sell hundreds of thousands of them before the fad died.

All we needed was the ability to get it done quick,a competitive price and a distribution channel already set up to sell to. We had the customers because of our other products so it was easy to do.

Be aware of your capabilities product- and process-wise and be alert for opportunities to use your abilities.

One More

Sometimes, the ability to deliver is everything. At the time of the first war with Iraq, it seemed to me there would be a demand for a "Support the Troops" window decal for cars with an American flag.

When it became obvious there was going to be a war there was only a day or two to react. At this time I did not have a printing company, so I went to one and convinced them to drop everything, work on the weekend and make me 250,000 flag decals.

On Monday we Fed Exed samples with an order form to 50 chain buyers. The buyers we talked to said they would take them if we could ship that day and we sold all the flag decals in 48 hours.

This was not rocket science, just hopping on a current event very fast. Even so, we were too late for 45 chains. That was OK because we sold out.

The next week every printer with a printing press had a flag product and you couldn't give them away...

A case of do it in 24 hours or it's too late...

Though there are many factors that come into play to determine whether a product will be a winner or not, there is one major one that most people I talk to don't understand — and it's the most important of all!

Earlier in this article, I discussed the importance of understanding the retailer's business and how they evaluate a product or a supplier

Like I said then, if the store doesn't buy your product you have no chance. If the consumer doesn't buy it, you are dead then too — but you cannot even find that out until you are in stores.

There are 3 key aspects of the first step in evaluating any product idea:

1.  

Does it have a real price/value advantage over its competition from the consumer's point of view?

2.  

Is there enough profit in it for the retailer to want to sell it?

3.  

Is there enough profit in it for you to want to sell it?

The quick way I evaluate this is to assume a price point in the store where it is a great value. Then allow for the store to make double their cost on the product. Next, allow for you to have a 2.5 times mark up yourself.

The numbers work like this: For a product retailing at $10.00, the store pays you $5.00. You need to be able to get it made for $2.00 so that you have room for salespeople's commissions, marketing and other costs.

The bottom line simple formula is: you need to be able make the product for 20% of its retail price. If you can do this, or very close to it, your idea passes this first test.

If not, drop it now and do something else.

You can do this analysis of any product idea you have quickly and for no money by just estimating a very competitive retail price and then seeing if you can get it made for 20% of that.

The same process works for a Wal-Mart product someone else makes that you import or market — make sure the margins are there for everyone or move on to something else.

For More Information Contact:

Joe McVoy
Profitable Marketing Systems, LLC
1100 Nautilus Court
Lafayette, CO 80026
Web: www.ProfitableMarketingSystems.com
Email: Joe@ProfitableMarketingSystems.com
Phone: (720) 890-8760
Fax: (303) 604-6839

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© 2006 Profitable Marketing Systems, LLC