As a CPG founder, choosing the right sales channels for your products is a crucial aspect of your brand's success.
With multiple options available, it can be overwhelming to decide which sales channels to focus on. Let’s explore your sales channel options and help you determine the best fit for your CPG brand.
Direct-to-consumer (DTC) sales involve selling your products directly to customers without intermediaries, such as retailers or wholesalers. This can be achieved through online stores, social media, or even physical pop-up shops.
Selling through retail channels means partnering with brick-and-mortar stores that stock and sell your products. This can include independent retailers, specialty stores, and large chains like Target and Walmart.
Typically, when you’re just starting out, you’ll want to approach smaller, independent retailers, like your natural foods stores or corner shop — make a list of stores that are close to you so you can easily get product to them and who serve your target customers.
Smaller retailers are also a good stepping stone because it’s much easier to talk to their buyer. More often than not, these stores will have someone present to talk to you if you just show up and often don’t require you to go through a distributor (which will help save you some money, as you’re getting started).
Keep in mind: You’ll need a couple of things before you approach a buyer or retailer representative. These include:
For CPG brands in the food and beverage industry, selling through food service channels can be an effective way to reach consumers. This includes partnering with restaurants, cafes, hotels, and catering companies that incorporate your products into their offerings.
Alternative channels refer to non-traditional or unconventional sales outlets for CPG products. This can include large discount stores like Target and Walmart, as well as unconventional partners such as subscription boxes, specialty boutiques, or even fitness studios.
Selling your CPG products through wholesale involves partnering with distributors who purchase your products in bulk and resell them to retailers or other businesses. This can provide broader access to retail outlets and simplify the sales process.
Selling your CPG products through online marketplaces like Amazon, eBay, or Etsy can provide additional exposure and sales opportunities. These platforms enable you to reach a global audience and can complement your other sales channels.
Now that we've explored the various sales channels available to CPG founders, it's essential to consider which channels align best with your brand's goals and target market. Here are some tips to help you choose the right sales channels for your CPG brand:
Your target audience's preferences and shopping habits should play a significant role in your sales channel strategy. Research your target market and determine which channels they are most likely to use when purchasing products like yours. For example, if your target audience is health-conscious millennials, selling through online marketplaces and specialty health stores may be more effective than traditional retail outlets.
Each sales channel comes with its own set of requirements and challenges. Assess your brand's resources, capabilities, and scalability when choosing sales channels. For instance, if you have limited production capacity, focusing on wholesale may not be the best option until you can meet larger order volumes.
Your product's unique selling points (USPs) can guide your sales channel strategy. If your product's main USP is its innovative packaging or design, selling through retail channels where customers can physically interact with your product may be more effective. On the other hand, if your product's USP is its customizability or personalization, selling through DTC channels may be a better fit.
It's crucial to monitor your sales channel performance and make adjustments as needed. Start by testing your products in a few different channels, tracking your sales data and customer feedback. Use this information to refine your sales channel strategy and focus on the channels that provide the best return on investment.
While focusing on a single sales channel may seem simpler, diversifying your sales channels can help you reach a wider audience and reduce the risk associated with relying on a single channel. As your CPG brand grows, consider expanding into new sales channels that align with your target market and business objectives.
Choosing the right sales channels for your CPG brand can be a daunting task, but by understanding your target audience, assessing your resources, and considering your product's unique selling points, you can make informed decisions to optimize your sales strategy. Remember, it's essential to continually monitor, test, and refine your sales channel strategy to ensure your CPG brand's long-term success.
Most commonly, CPG companies will start off selling direct to consumer using their own Shopify website and then expand into retail. We’ll primarily focus on these two sales channels going forward.
If you’ve started your own CPG business, it’s probably safe to assume that your eventual goal is to get your products into major retail stores. But in order to do that, you have to hit a couple of key milestones.
When evaluating new CPG brands, buyers at retail stores are typically looking for a couple of things:
So let’s focus on that first piece, since everything stems from consumer demand.
Creating initial demand and increasing sales for your CPG products can be a challenge, especially for emerging brands that are not yet selling in retail stores. But, with the right strategies and a bit of creativity, you can generate buzz and establish a loyal customer base with your direct-to-consumer channel strategy.
Selling direct-to-consumer (DTC) allows you to connect with customers directly, bypassing traditional retail channels. This enables you to offer unique products, create personalized customer experiences, and build a strong brand identity.
Events and farmers markets provide an excellent opportunity to showcase your CPG products and interact with potential customers in person. These venues can help you create initial demand by offering product samples, live demonstrations, and exclusive promotions.
Partnering with local businesses, such as cafes, restaurants, and specialty stores, can help you create initial demand and increase sales by introducing your products to new customers in a familiar setting.
Online marketplaces like Amazon offer a vast audience and an opportunity to increase initial sales by tapping into their established customer base.
In addition to your channel strategy, a well-executed marketing strategy can help you create initial demand and increase sales by educating potential customers about your products, sharing your brand story, and establishing your brand as an industry expert.Before you implement a marketing strategy, be sure you’re clear on who you are as a brand, what your mission and purpose is, and who your target consumer is, as this will drive everything from retailer choices to marketing messaging.
Collaborating with influencers and setting up an affiliate marketing program can help you create initial demand and increase sales by leveraging their existing audiences and expertise.
Creating a sense of urgency through promotions and limited-time offers can encourage potential customers to try your products and help you create initial demand.
Listening to your customers and acting on their feedback can help you refine your products and marketing strategies, leading to increased demand and sales.
1. How do I make my CPG brand stand out in a crowded market?
To make your CPG brand stand out, focus on developing a unique selling proposition (USP) that differentiates your products from competitors. This can include factors such as taste, packaging, ingredients, or brand story. Additionally, invest in eye-catching packaging, a strong online presence, and targeted marketing efforts to build brand recognition and reach your target audience.
2. What can I do to improve my chances of being picked up by a retail buyer?
To improve your chances of being picked up by a retail buyer, make sure you have a strong brand identity, professional packaging, and a well-executed marketing strategy. Additionally, demonstrate a proven track record of sales and customer satisfaction through testimonials, case studies, or sales data. Prepare a compelling pitch that highlights your product's unique selling points, market potential, and plan for in-store promotion and support.
3. How can I build relationships with retail buyers?
To build relationships with retail buyers, start by researching potential retail partners and identifying key decision-makers. Attend industry events, trade shows, and conferences to network with buyers and introduce your brand. Be prepared with a concise pitch and product samples, and follow up with personalized emails or phone calls. Maintain open communication, be responsive to their needs, and establish trust through professionalism and consistency.
4. How important is packaging for attracting retail buyers and creating demand?
Packaging plays a crucial role in attracting retail buyers and creating demand for your products. Effective packaging not only protects your product but also communicates your brand identity, grabs attention on the shelf, and entices customers to make a purchase. Invest in high-quality packaging that reflects your brand's values and appeals to your target audience.
5. How can I leverage social media to create initial demand for my CPG products?
To leverage social media for creating initial demand, develop a cohesive brand identity and post engaging content that resonates with your target audience. Share product updates, promotions, and behind-the-scenes stories to build a connection with your followers. Engage with your audience through comments, messages, and collaborations with influencers to increase visibility and create buzz around your products. Use social media advertising to reach a wider audience and drive traffic to your online store or retail locations.
6. What role does product sampling play in creating initial demand?
Product sampling plays a significant role in creating initial demand by allowing potential customers to try your products before making a purchase. Sampling can help increase product awareness, encourage trial, and generate word-of-mouth marketing. Offer samples at events, farmers markets, or through partnerships with local businesses, influencers, or online giveaways to introduce your products to new customers and drive sales.
Okay — so you’ve made it to the point where maybe you’ve been selling direct-to-consumer through your website and social media for a little while now. Maybe you’ve gotten some good feedback from customers and you’re seeing steady sales.
Maybe you feel like you’ve started to get a handle on things and, as you wander the aisles of your local grocery store, you’ve started to wonder — could I be on these shelves?
Expanding into retail is a natural stage of evolution for any CPG brand. While you can continue selling directly to customers, diversifying your distribution strategies is key to your brand’s growth.
But you’re also savvy enough to know that expanding too much too quickly might be dangerous. So how do you know when you’re ready to expand into retail? And how should you prepare for the transition?
Here are a few signs that it might be time to invest in an omnichannel distribution strategy:
Strategic Partnerships: You may have the opportunity to collaborate with established retailers, distributors, or other partners, helping to expand its reach and leverage its expertise and resources.
While transitioning from e-commerce to traditional retail for the first time can feel daunting, with careful planning and execution, emerging CPG companies can successfully make the leap to brick-and-mortar retail from their e-commerce sites.
Expanding to a retail storefront, such as grocery stores or big box discount warehouses, from an e-commerce-only environment can be a significant step for a business. It’s crucial to carefully consider several factors before jumping into this transition.
Here are the key points to review to see if your CPG company is ready for the transition:
Some CPG companies continue to focus on retail e-commerce sales and stay satisfied with the outcomes they achieve. If you’re ready to embrace a new growth process as an emerging business and want to tap into the general retail market, you must be prepared in these categories.
If you are ready to make a move, the next step is to look at the potential advantages and disadvantages your company could face during its transition.
Transitioning from a strictly e-commerce approach (even Amazon only) to retail can offer several benefits, but this decision has several potential drawbacks to consider. Here are the different elements to review before proceeding.
Even when it seems like a great idea to transition to retail business models, the timing might not be correct. Reviewing internal resources helps determine if you’ve got everything in place to start this process before initiating this change.
1. Market Research
Before transitioning to retail, a CPG company must understand market trends, customer preferences, and competitors. This process includes analyzing the current demand for their products, identifying the target audience, and understanding the retail landscape.
Storefronts like eBay and Etsy are easy to manage because items are based on personal preferences and customer feedback. The research efforts must be more proactive when going to retail because a mobile app and other tools are typically unavailable.
2. Retail Strategy
Based on market research, the e-commerce business should develop a retail strategy that outlines the goals, objectives, and tactics for entering the market. It helps to review the retail channel types to pursue, identify potential partners, and develop a pricing and promotion strategy.
The critical elements of a retail strategy include product selection, pricing, and placement within a store layout. Each component should focus on creating a positive customer experience within the elements controlled by the CPG company.
These are similar to what an e-commerce store requires, but the physical nature of product selection and placement creates challenges if this step gets skipped.
3. Strong Identity
A strong brand identity is crucial for success within the in-store retail market. The CPG company should focus on building a brand that resonates with its target audience and differentiates them from competitors. Focus on your messaging, merchandising, and packaging that reflect your vision and values while resonating with potential customers.
4. Build Relationships
CPG companies should establish strong relationships with retailers to ensure that their products are prominently displayed and promoted in mortar stores. This process makes negotiating favorable terms and conditions easier, reducing the potential cost of transitioning while encouraging an immediate market share.
When relationships are present in this process, there is intuitive trust that isn’t always found with online marketplaces. That asset trickles down to the customer, creating a positive purchasing environment that benefits the CPG company and its retail partner.
5. Marketing and Advertising
Investing in marketing and advertising before getting into retail can help to create early brand awareness. By developing a desire to want what you offer, it is often easier to drive sales. Several low-cost opportunities are available in this space, including leveraging social media and other digital channels.
6. Performance Evaluation
By tracking the sale of goods, analyzing customer feedback, and adjusting your retail strategy as consumer preferences evolve, a CPG company can work to ensure continued success. Customers still abandon carts during checkout, so support yourself as a CPG business owner by ensuring your value proposition meets or exceeds expectations.
These metrics are essential for business-to-business and business-to-consumer transactions.
Deciding on the first retailer to approach can be a crucial step for consumer packaged goods (CPG) companies transitioning. Although each situation is different in U.S. retail or globally, there are some common factors to consider.
Transitioning from different types of e-commerce to retail can be a challenging process for emerging CPG companies, but it is often rewarding across multiple fronts. By carefully considering packaging, pricing, distribution, marketing, and production capabilities, a successful leap to brick-and-mortar retail is possible.
The total retail sales required to attract the attention of a broker varies on several factors, including the product category, the size of the business, and the specific broker's requirements.
Most brokers work with manufacturers or suppliers that have a minimum sales volume or revenue threshold, and this amount is highly variable. Some might require a minimum of $1 million in annual sales, while others may work with smaller companies with net revenues of $100,000 or less.
Brokers are often more interested in working with startup CPG companies with a proven track record of success than a minimum threshold or quota. They’ll look at your growth potential in their target market.
You'll be more likely to attract attention if you can demonstrate a consistent sales history with a clear strategy to keep moving forward.
Working with a broker can provide access to expanded distribution channels and more exposure to new customers. Choosing one that aligns with your values, vision, and goals while having experience in your product category to increase the chances of a positive result is essential.
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