MARKETING FOOD ONLINE



How do I sell my Food Product to Supermarkets

Posted by Damian Roberti on

 I thought it would be a great topic to discuss on our podcast is how to approach a grocery store to sell your product. And what does it take to get your product into a grocery store or a supermarket?

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So we're going to dive into that podcast. And as always, this is a marketing photo line. I am Damien Roberto, and we've got over 500 different episodes on our podcasts. You got to definitely check us out. We are on over a dozen platforms down below this video.

We'll have a link into the description section. I'm going to upload this podcast to YouTube, give you guys the access to the podcast as well. And as always, if you have questions about your food business, let us know down below, and we will get onto that as soon as possible.

We love to build content and answer your questions of course, as soon as we possibly can, but we'll definitely get into it as, as quick as possible. So this is a great question because a lot of food entrepreneurs, when they first start their dream and their goal is aspiration is to get into obviously food retail or in some type of grocery chain across the nation or retail stores.

Now it sounds like a great idea. And what I'm going to do is I'm going to go through 16 different things you need to do. You need to kind of factor into this equation in order for you to get a food product into a supermarket store, but stay with me to the end of the podcast. Because at the end of this, I'm actually going to give you some reasons why you may not want to actually be in a supermarket or retail store.

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And I know that sounds funny, creating a podcast, answering the question of how you can actually get into a store by telling you, you may not want to be in it, but follow me with this and stay with me to the end of this. And I'll explain exactly why we are actually a hundred percent online.

We have six e-commerce food businesses. I've been on both sides of it. I've actually had products in retail stores. We were in fresh market all over Atlanta. My wife and I, and there was a huge amount of stipulations. Of course, we had to go every weekend to sample out our food. We had to open a table, we had to demo it. We had to fill the shelves. We had to restock. And of course we had to give refunds or credit back to the stores when the product either expired or was damaged.

And that is something that I'm going to get into later in the podcast. Explain why that is extremely crucial for your success financially and whether your food business is profitable is of course, how many items are you actually selling? And what's the margin and are you selling enough of it? Okay. So number one, the first question you really need to take into consideration when you're doing this as a business, is where are you going to be starting this business? Okay. And the reason why I say that is there's only two places. You're either going to start from home with your food product and your food business, right. Or you're actually going to start in a commercial kitchen. Okay? So you're either in a commercial kitchen or so commercial setting of some kind or in your kitchen. Now, if you're doing it in your kitchen, you're going to fall under the cottage food laws.

And not every state will allow you to sell it, believe it or not. Some of them actually do, but not every state does allow you to sell a product directly from your home to a retailer or even into retail stores. So that's going to pose a big limitation as to where you're going to be able to sell this product, right? Plus the type of product that you can sell is extremely limited to every state will dictate that. But if you're in a commercial setting, you're in some type of commercial selling a food product to a supermarket or retail store obviously makes great sense. And of course, potentially profitable. And we'll get into that in a minute, but you've got to figure out number one, where are you going to be doing this? Okay. And then check with your state. You can actually go to Google and just type in cottage, food law.

And then from there, the name of your state, the first first three to four findings that you'll get that are, that are in the Google search. They're the top four, three to four. So you want to check into those and you want to look for a.gov website. Each state has it. And then you can look specifically on that webpage to find out exactly what you can make and where you can sell it. Okay. Now let's move on to the scenario where you're in a commercial setting. So what's the next thing. Number two is your recipe. Do you have the understanding? I know this may sound weird, but a lot of new food entrepreneurs may not understand this cancer, this concept, or this aspect is to understand your recipe, how you make it and how to scale it. Okay. Is your recipe, have you worked out the ability for you to make 50 units, a hundred or 500 units?

If you don't understand how the recipe works and you can't scale it properly, then the consistency of what you're making is going to change. And the retail stores aren't going to sell very well because customers are going to obviously tell the difference when you can either taste a difference or you know, that it's just not the same all the time. So is your, is your recipe scalable? Can you make it into 500 units, a thousand units if need be? Okay. So that is really, really super important. Number three is going to be packaging. If you're going to be to retail stores, you need to have a nutritional analysis ingredient, listing a name of the product on the front net, weight of the product, a barcode, it needs to be retail ready. So in order for a retail store to take that product into inventory, barcodes are necessary for inventory purposes.

So they begin to take in 500 units at a store and they sold a hundred. And then you're starting to get down to a low minimum amount of what they've got on hand. They're going to contact you say, Hey, I need more of the UPC code number, blah, blah, blah, blah, blah, and so on and so on. So make sure you have a bar code, make sure you have a nutritional analysis. And by the way, really quick side note, if you looking to create a nutritional analysis for your food product, you have no idea how to do it below our video. Make sure you check below this video. I have a ton of resources, including where you can actually get. You can actually make your own nutritional analysis. That's FDA approved on recipal.com and that is a website where you simply type in your recipe and it gives you an opportunity to print up a nutritional label.

 

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Okay? Moving on. Number four, do they have add, do you have access to a co-packer? You need to keep this in mind. So if you're producing a food products to maintain the inventory levels for a retail store, then good for you. That's great. If you have a commercial kitchen, you've got the capacity to do that. Then that is a big plus for you. But if you don't that you need to move on to or look into a co-packer to produce a larger quantity of your products. In order for you to stay in the supermarket in the retail store, you need to make sure that you're on top of those orders because when you start to get backlogged or you get backed up, they will move on. Here's why I say that retail store retail, grocery stores have only a finite amount of space on the retail store on the, on the sales floor.

They have only so many shelves and they're going to give it to companies that can fill the product, keep it consistently full. And they're going to also limit you though to the amount of products you're going to have on your shelf. But you want to make sure you stay on top of it and you can replenish when they need it. Okay. So next item number five. How much is your turnaround timeframe? So what is your turnaround time for it? Well, what Damien, I'm new to food, food, entrepreneurship. I don't know what that means. What's the turnaround time. The lag time that the amount of time it takes for you to produce that order when the retailer supermarkets comes to, you says, Hey, Damien, I need you to create 20,000 bags. We've got 20 stores I needed and filled up ASAP. Okay. Mr. Supermarket and Mr.

Retail store, it's going to take me two months to fill that because I know I can produce that much in that period of time. So you need to know your turnaround time. This is not some type of, of a game. It's not something to take lightly because again, if the grocery store places an order and you have a two month turnaround time and you can't fill it, you're out, you're done. And you're not going to continue to do business with you. Most likely. They're not going to do business with you. So know your turnaround time. How many units can I make a week? If I have to have a co-packer, if I'm in my own commercial kitchen, I need to hire X amount of employees to help me produce X amount of product. So you need to know how long it takes. Okay. Number six, case pack pricing.

What is that? Damien I'm new again to food entrepreneurship. What does that mean? So the retail store needs to know if you're going to sell a case pack of 24 units. What is the price to the retail store? Okay. Understand your costs to produce that actual case pack of 24, and then know what your markup is at a wholesale price point for the retail store to buy it in bulk. So they can then turn it around and have a margin for themselves that makes us kind of complicated. What does that exactly mean? So bring it down for you. You have 24 units in a box and let's say they all cost you $2 to make, so you are $48 into that case pack. So how much is that case pack going to be charged? What's the price point for that retailer? How much are you going to charge them?

So then they're going to take that and say, okay, great. If it costs $48 and let's just say, you put a $20 markup on it and you've got now a $68 price point for them. So that makes the retailer take the units out of the box and they'll know individually how much to charge for each unit. And they can retail the price at that point. Okay. So you need to know the case, pack pricing, number seven, the case pack quantity. I'll understand. Also you determined that you need to come up with it. The retailer is not going to say, Hey, Damien, I need 20. I need to fill up that box for 24 units. You need to tell them, Hey, how much is it? Is it in a case pack? Is it 12 units? 24, 36. Normally the increments are about 12 20, 4, 36 at a time. That's kind of a normalcy in the industry.

So you need to know how much are you actually putting in the case pack? So the quantity is very important. Number eight minimum order. So are you going to set that as a, to the retailer, you're going to set a minimum or to them that means, Hey, you know what? We make this, it's going to be at least 200 units at a time. That's our minimum. Okay. You need to determine to figure out what is your profit margin for all those cases and what do you want to sell them at? Now, you need to keep this in mind too. This is ultra retail stores have only, like I mentioned before, only so much space on the shelf that impacts greatly as to how many units they're going to take into each individual store. So Damien, if I sell 24 units in a case pack and the store says, you know what?

I got 10 stores. I'll take one case for each store and we'll try it out. Give me 24 units for each store. And then that way they can put a few on the shelf and have a few in the back room and the stock room. And then as it sells, they'll replenish it. Okay. They just know this it's a new product, your new food, food entrepreneur. You're a new business. They're not going to order a thousand units on every store. Okay. If it starts to sell out and it's a a huge pro profitable product and that they begin to sell like crazy then fantastic. Then that means that they're going to probably order two or three cases per store, but just know that when you start, they're not going to ask for a lot of units up front, okay, they're going to test it out, just like with every product.

Okay. Unless you're a huge brand, then that's totally different. So next up number nine, you need to create a sell sheet. Okay. Damien, what exactly is a sell sheet? Well, a sell sheet is a salesman for you. When you give them a piece of paper that has all of the information about who your business is, your case, pack, your case, pack, quantity, the pricing, who to contact and email pictures of your product, recommended retail, price, point, the wholesale pricing and so on and so on. They sell sheet. By the way, I'll have down below this. I actually did a video, but we're not on sell sheets. I'll have it in the description. You can click on it when you're done listening to this completely. And that way you can take a look at what a sell sheet is and what else goes into it. But a sell sheet is like that salesman.

It's that person, it's a, it's a piece of paper. That's going to be on the desk of the buyer potentially, or in an email. Even you can email it. And that's going to be the, the thing that's going to sell them after you've actually met with them now, really quick side note and a little tip. If you're just starting out and you want to be at retail store, retail, grocery stores with your food product, highly recommended. You do not try to approach a national chain. If you're small and you're producing a small amount, don't go to the Kroger. The public's the big stores that are from east to west coast. Why? Because you don't have the capacity to fill the order. Let's just be honest. You don't. When you first start, they're going to ask you. Let's just say, hypothetically, they love the idea of your product and they want the 5,000 cases.

Are you going to be able to produce 5,000 cases with 24 units in each one? Probably not. That's highly unlikely. So stay away from that. Go to local mom and pop grocery stores. These are independently owned, grocery chains, grocery stores. They may have four or five, four or five units in the, your community or your city or county. Go to them first, meet with them, shake the hand of either the manager or the buyer. Whoever's the owner, whatever it may be. Who's in charge of bringing new products in, go there, bring a sample of your product and bring your sell sheet. That's the whole purpose. While I'm telling you this, by the way, is that you need to bring this sell sheet, leave that with the buyer, leave a sample and say, Hey, contact me when you get a chance to try it out. Here's our sell sheet.

If you have any of your, any information questions about it, let us know, go to these stores because getting in those stores are way, way easier than it is for you to get into some national chain and get into their you know, their, their facilities and into the logistical system and their distribution warehouses and all that other stuff that goes along with national rollouts of a food product. It's very, very challenging to do that. So getting into local stores first is going to give you some momentum cashflow and obviously circulation of your product. Then when you get to that and you say, look, Hey, I'm, you know the buyer for Kroger, let's say republics, Hey, that's great. Guess what they're going to say. Well, are you in a Damian? Are you in any stores right now? Well, yeah, you know, in the Florida area, we've got like 30 different independent groceries that carry us.

Wow. That's amazing. That's that? That's very impressive. That is also a benefit for them to make a decision as to whether or not to carry your product. Okay. Now next that number 10 delivery. How do you plan on delivering the products? This is a question that's very important because if you're producing it in a commercial kitchen, are you going to rent that commercial space to fill orders specifically as the purchase orders come in? So the grocery chain down the street says, Hey, guess what? Damien, I need 2020 cases of the product. Fantastic. Next week, I'm going to rent my commercial space due the 25th. Am I delivering it? Or am I going to ship it? Or how's that going to work? You need to understand. You also need to convey that to the grocery chain, to let them know what type of delivery, where is this coming from?

So understand your delivery. Number 11 payments. Oh, this is a fun one. When I was in fresh market, we had a net 60 terms with them. Now, if you're not familiar with how this works, you actually have to produce, let's say 200 bags. We did 200 bags of candy. They did not pay us for 60 days. They said, Damian, great. Bring it to the store, put it on our shelves, take out the old stuff whatever's there. What if it's expired? Whatever the case may be. I need you to demo it. All of this work upfront. And they do not give you money for 60 days, retailers will work like that. They will tell you, look, we're going to give you net 30 net 60, or even net 90. Some of them go out three months out before they even pay you. So you need to be aware of this.

You know, the idea that dream and the goal for you to be into retail sounds like a great idea. But if you're doing this on your own, you're starting small. You don't have a huge financial backer, or you don't have the logistics. You don't have the capacity. And all of that on a big scale, you're doing this yourself. This is going to be a big challenge for you because you have to front the money for the product, for everything about the bags, the label, the labor, all of that upfront, Damien, you're not going to get paid for 90 days. Thank you so much. Have a nice day, take care. So payment, make sure you understand how that works. Number 12 credit or refund. So here's the other side, the flip side to payment and product that expires. So you want to be in retail.

That sounds great. So guess what I gave you five stores, Damien, we have a hundred units in each store and every store has got about 25 units had expired or they're damaged or they're broke or whatever it is or even stolen. I mean, you got also account for theft. So guess what? Most of those retailers rather asked for a credit meaning that you're going to bring in a bag in place of the bag that you've already made and spend time making and delivering and dropping off and setting up that bag. Now goes into the trash. You give them a new one. You've lost money on the other one and you have to credit them, okay. Or you refund them. Hey, guess what? At the end of the quarter, after three months, we had over $3,000. You need to send us a check back because that is product that we paid for.

But then we didn't sell because it expired. Yes. That's how that works, by the way. Number 13, business licenses and insurance. So this is the next thing that's ultra important. If you're going to do this, you have to be a legitimate business. You need to get an EIN number, which is an employer identification number with the IRS, of course, because as you have income, you need to account for that on your taxes. Now next up you have to have a business license. You need to make sure you have a business license and any permits or licenses that the city and county, not the state, but the city and county also have that they recommend, or they, they require you to have next up insurance. You need to have a food business insurance policy. And when you go to a retail store and you want to get a product into those stores, they are going to ask you to add their store onto your insurance policy.

That covers any type of potential legal liabilities or issues that will arise from that store, selling your product and then having some legal issues with it. So that's going to cover in the policy. You need to make sure you have an insurance policy as well. Number 14, variety. The quickest way to kill a concept for a food product is to be very limited with what you offer. That's the quickest way. It's okay. If you start with one, but to be honest with you on a minimum, you have to have three to four. I highly recommend you three to four flavors, three to four variations, whatever you want to call it, to offer the retailer. Some variety. You notice that brands do this. There's not a single brand that I've ever heard of. That manufacturers one product, and they make multi-million dollars from just one product.

Now there may be a few out there, but I highly rec I have no idea which companies would be that they have to have a huge lineup of products, a huge product lineup. So retailers have a lot to choose from when you go to Walmart and you go onto the aisle where there's ketchup, is there just one ketchup? No, there's not. Is there just one mustard now? Yeah, they're, they're all relatively the same. Maybe a variation of flavor. But again, variation of flavor. They have to give the customer something to choose from doing it with one product is extremely difficult and making multimillion dollar business from it is even more difficult than that. So variety think about it. So if you're starting with a product, come up with some variations, number 15, of course, very important. You need to know your costs. So what exactly are your costs?

You need to understand your costs, labor, packaging, ingredients, shipping, transit, whatever it may be storage, and then commercial kitchen use anything that goes into the production of your finalized product is going to cost you money. No matter where you are at home, it's going to be your electric bill, your water, bill, your mortgage, or your rent. I mean, all of that is falls into the line of what it costs to produce the product commercial kitchen, renting the commercial kitchen storage for the commercial kitchen. Long-Term storage. If you have something just overnight or two months anything that acquires and goes with that too. Remember know your costs. Number 16, more than one supplier. This will be the last, last little tip I could go on for a couple of hours, but I'm not. Last one is number 16 more one supplier. You need to have a backup for your backup.

I personally have between three and even four different suppliers for everything I use and buy. If it's a package, if it's a bag that I buy for my trail mixes, the snacks and nuts, I've got about three or four of them I can buy from why? Well, because there's going to come a time when one of them are going to be out of a product and you need to fill an order. And the grocery store is, the store is not going to wait and sit on their hands and say, okay, just take your time. They're going to need their product. So have a backup to your backup. I recommend at least two to three on a minimum of everything. If you have spices, then you need to find two to three suppliers for your spices. Those bags that the spices go into two to three suppliers for that as well.

Where do I get my labels from? Doesn't matter that company could be out of that label. So you need to have two to three different variations. Okay. That is 16 ultra quick tips for let's see how much are we into about 10 minutes or so? Oh yes. 20 minutes. All right. So these are ultra important tips. Okay. So lastly, what I mentioned in the introduction, I'm going to go over this really quickly. I'm going to give you a scenario. You like to be in retail. You want to do it. I was in retail and here's what I learned. E-Commerce offers you the ability to be in front of millions of people. Literally instantaneously. If I open an eBay store right now, I could literally create a store with my eyes behind my back or my eyes closed and my hands behind my back and create a store and it create a listing and have my food product in front of millions of eBay customers.

Now switch out and switch that up a load. Look at the other side of the coin, you're in a retail store and you supply five local stores. They only have so much shelf of this space. So let's just say, let's just say that you have 10 bags of your product on their shelf. That store gets 500 people a week coming in. They're walking in, they're physically coming into the store. How many of those people are looking for your candy? Let's just say my, as an example of my candy business. So for candy, I would say out of 500, maybe a hundred people might buy candy. Now out of that hundred, they're looking for candy. How many of them will buy my candy, which is on the shelf in front of a whole bunch of other people, let's say 10. So I sell 10 bags at that one store a week.

Okay. That doesn't sound like a lucrative business. I'll give you an example. Now go to eBay, go to Etsy. You go to walmart.com. Even if you want it to start off with which I don't recommend. But if you just start off with, on Amazon and you get your store open and you don't know anything about e-commerce, you really need to be careful with that one. But you go into Amazon Walmart and you open four stores and you can do this in a matter of a month, maybe even less. You've got on Amazon millions upon millions of people a week that a potential customers for your product. Does that sound better than having just a couple of hundred people walk into a physical store and you sell 10 bags. You have the potential to sell thousands of units. Okay. This is what I'm talking about. Well, I don't want to say being in retail sounds great.

It may sound like a great idea, but beat online e-commerce is even a better idea. Okay? You're going to be in front of millions of people. The potential to sell more is staggering above and beyond retail stores. Again, this is his, this is experience from somebody who just started if you're just getting into it. Okay. Again, you've got the logistics. You've got millions of dollars behind you. You can roll out a big nation nationwide rollout, then yes, you could be potentially very profitable. Don't get me wrong, but starting out small, not going to happen, not gonna happen. So anyways, that's a real quick tips. If you guys have questions about this, please do let me know down below. And I'll see you guys on our YouTube channel and I hope you guys enjoy this on our podcast. Definitely check our podcast down below. Take care.

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