Is retail sales the same as online sales

Posted by Damian Roberti on

Is retail sales the same as online sales

Is retail sales the same as online sales and online selling versus traditional selling? All right. So in this video, I'm actually going to cover some really important questions that you need to ask when you start to launch your food product, whether or not you really want to be in retail when you first start, and if you're starting and making the product yourself, and you can't make a lot at once, and you're trying to get in front of customers, do you want to be in retail or do you want to be online? I'm going to give you some pros and cons of both of them and share with you some experiences that I've actually gone through myself. When I first started, we were going to dive into the difference between retail selling and online selling. And we're going to get into that right now.

All right. So, welcome back to marketing food online. It is Damien Roberti and I am here to show you some examples today, guys, of what is good and bad about retail or online. When you first start your packaged food product, business, or any type of food business at all, you're probably doing the majority of the work and investment on it. Yourself. A lot of times, companies don't necessarily start off with a million dollars in the bank to get launched, and they don't have about 20 to 30 people to help get it going. So when I first started my candy business quite a few years ago, over 12 years ago, my wife and I actually had a chance to be in multiple retail stores here where I live, and this was actually for New Year's in Atlanta. So we actually had nine stores that we were given to have our candy in.

 

Is retail sales the same as online sales

 

And from what I learned, which I'm gon na go over with on the back here behind me, retail may not actually be something that you want to get into, and I'm gon na give you some reasons why, because when you first start, it's very difficult for you to handle all of and encompass all of the responsibilities of getting into retail stores and mass producing a product, plus the amount of resources from time, money, investments, packaging, and logistics, and everything else that goes along with it. So let's dive into this board back here and let me explain to you what's kind of good and bad about both. Number one. If you want to get into retail, you may end up having to go through it. What's known as a food broker or a corporate buyer? Every company and every grocery chain has different categories within their stores. Those retail stores rely upon a buyer they're known as in a specific category.

Is retail sales the same as online sales

 

So let's just say frozen food. If you had a frozen food product, you would need to go through that category buyer in order to get your product on the shelf. The only thing about that is that the buyer is the one who will determine whether or not you're actually going to get in the store and what flavors or what different products that you already make, that they really just want to try many times if you're a very small food producer. And if you do get into retail and you actually get an opportunity to do that, they're going to give you a very small amount of shelf space. Shelf space is something that is absolutely worth its weight in gold when it comes to retail stores because they only have so much sales floor space available for products. And a lot of times, they're already booked out and have their shelf space planned out.

So, introducing new products into retail is not that easy to begin with. So the buyer will determine whether or not they're going to want to bring your product in. Now let's compare that to being online. I created all of our websites, our Amazon listings, our eBay store, our Etsy store, our store, Shopify, Webi, et cetera. I got us up and running in just a matter of just a couple of weeks, which is a very, very small timeframe for you to launch a product online compared to trying to get it into retail stores. So if you're trying to get into retail stores, it could be months, sometimes six, seven, or even eight months before they even give you a thumbs up or thumbs down. And then the logistics start the actual production of the product and get it into their distribution centers.

Is retail sales the same as online sales

 

And then, from those distribution centers into the retail stores, it is a long road. You can actually get up and running in a matter of a couple of weeks because you control the listings and you can create the store in a matter of just a few days. Okay? Next up, limited customers You rely on the physical location. The thing about retail is, and I'm going to give you an example of what I went through. We actually had nine stores where we supplied our candies.Now you have to understand that my wife and I were the only two people making the candy. We were making it, bagging it, labeling it, printing the labels, and actually bringing it to the stores and filling the shelves with it, taking off any outdated merchandise, giving a refund, and going through that whole process too, which I'll get into in a minute, but everything that we were doing because we were still small, we did it ourselves.

Okay, So the thing about that is, the physical location of those nine stores, we relied on the products sitting on a shelf, waiting for someone to physically come into the store to shop, and whether or not they were even interested in it, we relied on them. And then, on top of that, are they even interested in our candy? So let's just hypothetically say that we had a thousand people go into each store. So out of every store, every week we had a thousand customers. How many of those people were looking for candy? Let's say a hundred, if we're lucky. So out of that hundred, not everybody's obviously looking for candy out of the hundred. They go to the candy aisle and see the candy, along with tons of other candies. How many of those hundred actually bought our bags? Maybe two or three people. Okay, So you see where I'm going with this?

Is retail sales the same as online sales

You're relying on the physical location, the traffic going to those stores, and then doodling it down by how many people are actually looking for your product. Okay? It's not necessarily candy, but if you're making hot sauces, salsa, or potato chips or a snack, how many people are going to buy your product, right? So you're limiting yourself because you're only getting a certain number of people walking through the store. Now contrast that with unlimited customers online. Literally, we have stores on Amazon, eBay, and Etsy. As I mentioned, Amazon alone gets a few hundred million, I guess a couple hundred million actually, every single month, right on their website. So the potential for us to sell our product statistically is actually much better. Walmart.com I think it was like 200 or 220 million monthly visitors going to Walmart.com. How many of those customers can we potentially have as our customers selling our candy? This is obviously much better than the retail location that has about a thousand people who are actually walking into the stores.

Is retail sales the same as online sales

 

Do you understand the difference between the two? So if you've gone on Amazon, if you're on Walmart, and you spread yourself out, even on eBay, Etsy, and you go to all the platforms and you have the same product that you're selling, you're in front of hundreds of millions of potential customers, right? Excuse me. So you've got a lot of customers who are coming online to look at a product that you could potentially be selling to. Okay? I'm not relying on just a couple thousand. So, statistically, you have a better chance of selling products online. But again, this has been your small life. If you've got the money to have an entire co-packing company manufacturer handle the logistics, you have a marketing agency behind you. You have all of that. That's a totally different ballgame. That is not what we're talking about here. And the majority of the people who watch my videos are starting a few businesses or they're family-run businesses that are small.

They might have a limited budget.a huge co-packing company, and behind them, they don't have a marketing agency. So realistically, you're starting with something small. You could be up and running in a matter of a very short period of time. You could be in front of hundreds of millions of people without having a big ad agency behind you. This is even before you begin to create a social media presence on Facebook, Instagram, and all the social media. That's totally separate. And we'll get to that in a minute, but this is simply by creating a listing and being in a category. You've already exposed yourself to a lot of customers. Next up, good old net, 30 net, 60 net, and net 90. Now, if you don't know what that means, it means that a retail store will say, "Hey, Damien, I love your candy." I'll go ahead and take a thousand bags.

But guess what? I can't pay you. I'll give you the net in the next 30 days. Some stores say, you know what? I'll do a net 60. Those are terms that you have to agree to when you want to be in retail. They're not going to pay you, by the way, for 60 days. That's two months as a small food producer and a small family business. Guess what? You are probably not in a position to front out the money to produce a product, bag it, package it, ship it, or bring it to the location, put it on a shelf, and then sit back and wait and wait and wait for 60 days until you get paid, right? Guess what? Some of them go as far as 90 days. Yes. There was a company that we approached that was interested in our product, but we literally were not in a position at that time to take net 90-day terms. That was not going to work.

That means for three months, your product sits on a shelf without you being paid. Guess what? You don't have to do that over here online. There's no other, no one, but Amazon's that saying, "Hey, you know what? Go ahead and create a listing, but we're going to charge you for it. And we're not going to pay you for another 90 days after you sell it. Not going to happen, right? because you instantly get paid when you sell the product. Okay? Next up, what's really unique? Also included are the replacements, refunds, replenishments, and refunds. Some retailers will actually tell you that. Guess what? The product that you're selling, which is a food product, has a best-before date. Pretty much every food product does. Right? So if it doesn't sell in a certain period of time, dam, I, you have to get a refund from me. You must dispose of them in the trash and replenish it.

I was actually having to bring more products to the store and then give them at the end of each month. I'd have to send them a refund or replenishment check, giving them back the money that they actually funded us for selling the product that didn't sell. Right? So if a hundred units went to the store and they sold 50, and if you went to the trash, but they already paid us within net 30, we have to give them back. The difference Some stores will actually do that. Okay, Next, they control what flavor items come in. So let's say you have a product in their signature seasoned nuts. And you had a line of nuts, right? Different nuts or snacks And you had five Ds and flavors. Well, guess what the buyer's going to say? You know what, Damien, I've only got room for one right now.

 

Is retail sales the same as online sales

 

I know you have four. Go ahead and sit on those four flavors until we have an opportunity to bring him in. Because, again, retail locations have only so much physical shelf space to put products on. And again, they're not going to just bring an entire line of products that they don't even know if they're going to sell. They have to have a roof concept. You gotta have proof that it's actually selling. So if you have an idea for five or six different flavors of a product, guess what? They're not going to take it all at the same time. It's highly unlikely that a very small percentage of food and beverage companies that create food products that will bring in almost instantly five or six new flavors that they've never tested before. It isn't going to happen.Now, the other good thing about being online is that you can sell 24 hours a day, even on holidays.

What does that mean, Damian? Well, guess what being online means: while you're sleeping, this is actually how we run our business. While we sleep, we wake up the next day to find a ton of new orders. We are open 24 hours a day, seven days a week, and you can actually get away with doing this for the holidays. Why does that take me to my next one? You could do auto order fulfillment through FBA, Amazon FBA, or if you're selling on Walmart and you're not even dealing with Amazon, right fulfillment by Amazon, by the way, is the ability for you to sell a product on Amazon. They're going to warehouse it. They're going to pull it, pack it, and ship it to a customer. When it sells you the product, ship it to them. But during the holiday season, you're probably going to take off for two weeks and spend time with your family.

 

Is retail sales the same as online sales

You could send that product away. Your store could be operating still, right? And they'll do the fulfillment because they're going to be open 24 hours a day. Now Amazon, eBay, Etsy, and even Walmart can do the fulfillment without tapping into BA. There are facilities known as fulfillment centers all over the United States. Actually, they're all over the world, but in the US, they have fulfillment centers. These are centers that are dedicated to shipping your product for you. They'll handle the logistics. So you produce the product and give it to them. And then you simply replenish the inventory and maintain your business from day to day or week to week, right? That's a way that you could do it. But the thing is, here in retail, guess what you're going to be selling during retail hours, being that I worked in retail for 24 years, plus I'm very familiar with that.

There is an opening time and a closing time. So, if your product is brand new and sits on a shelf, there are hours between when you change your clothes and when you open the next day, which is probably nine to ten hours that your product is not being exposed to anyone.But guess what? Online selling doesn't happen that way. It's 24 hours a day, seven days a week, that encourages more people to buy it. That gives you an opportunity to sell more products. It's a no-brainer retail, eh, they've got to close the doors. Everybody's got to go home. We don't. We're not open 24 hours a day. Granted, there are some stores like Walmart, supercenters, and things of that sort throughout the country. Some stores are open 24 hours, such as convenience stores. I got that, but in all retail stores, they're not all low. Okay, So next up, when you're dealing with retail specific order quantity, that's going to be the buyer telling you, "Hey, Hey Damien, I need 2000 bags because our store is sold out of your product."

So I need to have 2000 bags produced as soon as possible. Now you tell them that there's a turnaround time for you to produce it because maybe you are making it by hand, from scratch, but you have to meet those quantities because that's what the retailer wants. When you run your online store, you can sell what you have and sell however much you need as you make it or as you have it. If you're producing a product that you bake and you're producing 500 units and you have it in your warehouse, and then you're waiting to sell 500 units, then you're going to produce more. And then you're going to sell 500 more units. That's different. That gives you control over how much you sell. The retailer says, "Hey, I need 2000 units." You can fulfill it or you don't. If it is not working well, then what we can do is find another product to put in that spot.

Is retail sales the same as online sales

 

Because again, retail shelf space is how retail makes money, okay? specific order coin, next ship, and make on their timetableis one thing, but also fulfilling the order within a certain period of time is another. So having the ability to produce the product, if you're not working with a co-packer and you're having to make the product and ship it to them, means they have to have it within a certain timeframe too, in order to get it back on the shelf. Let's go back over to online marketing online. How many would you be willing to sell?So you also control the marketing aspect. This is really fantastic because no one knows your product better than you. No one knows your demographic or the type of people who buy your product better than you. If you're making chewing gum and you have a specific type of chewing gum and you know who buys it, then you can control marketing through Facebook ads, Google ads, or even YouTube, and create video content and promote the video itself on the YouTube platform to sell your actual gum product or whatever it is that you might be selling.

So this gives you full control over the marketing, and guess what? You don't have to be a marketing ad agency genius in order to promote your product. All marketing involves simply getting eyeballs on a product or service and turning those people into buyers of your product or service. That's it. That's marketing in a nutshell. It doesn't have to be rocket science. I actually have a degree in marketing. I can tell you for a fact, it doesn't have to be that difficult. Simple ads, simple videos, simple Google ads can attract the people you need. As long as you take a look at what the information that you're getting back from the actual ad is, then you can zone in on those specific demographics and people who buy it. So you don't have to have a bunch of people behind you to do this, especially when you're first starting.

Okay, next up, create a new item and simply add it to your store. It's kind of back to what I briefly made shit back at retail. If you came up with an item, it was a new flavor, maybe a new package size, maybe a new logo, maybe a different bundle pack. Maybe you're doing mixed nuts and you have five flavors, and you want to create a five-pound bag flavor and put it in your store. You can instantly get it directly in front of millions of people without having to go back to a retail buyer and then kind of beg to say, "Hey, I got this brand new combination, I got a new flavor." I got a new bag size. They're not going to instantly bring it into the retail stores. It could take months, or even weeks, or even a year for it to actually get into retail and trickle into their logistics and then back into their stores.

So, having the ability to come up with some creative, new food products and introduce them instantly to your store is something that you could do yourself. You do not have to go through a buyer or get permission, or have a food broker broker some type of deal on your behalf. Brokers, by the way, are ridiculously expensive. I have never used a food broker. And unless you truly want to use them, they are extremely expensive. You have to pay them up front as a retainer in most cases, before they even work for you. So that's something to think about. You can introduce a food product instantaneously online. You control the store and you control the listing for that product. You can scale online faster within literally a matter of days, months, or even weeks. When you have a product that's beginning to sell and you have the ability to produce even more of it, or you have the ability to tap into a co-hacker,

You could scale that business online extremely fast. Why? Because you don't have to go through all the red tape of trying to get more sales to a retail location, By the way, there is a significant time lapse.From the logistical standpoint, when you create a product and you want to scale it, it has to go into their shipping shipping system. It has to get into their warehouse, into ours, and into the logistics shoe. Then it has to actually be physically shipped from the location to the retail stores. Then it has to be taken out of the box at the retail store and put on the store shelves. It has to be stocked with all of that stuff. There's a huge gap of time from the time that actually begins to renew a product to getting it onto the store shelf. All of that time, you could be in front of millions of customers already, instantly, and be selling your product, shipping the product, and making money.

Okay? So again, you can scale much faster. So the last two, as we were talking about, are going to wrap it up here, scaling in the retailer space. That's what I was just mentioning. You have to kind of scale your business based upon how that retailer is performing with your particular product. By the way, if you see that a product's not performing very well, You can just delete the listing. You can take it off your website, take it off Amazon. That's in your, that's in your corner, the ball's in your corner. You can do whatever you want to with it because you are in control of the actual store itself online. So if that's the product that you try to BA, I could tell you just from my own experience, we had a whole bunch of cookies that weren't selling. When we closed down our Italian bakery and moved into our commercial kitchen, we put out a bunch of different cookies and I was hoping that they would sell. Guess what?

There are a lot of them that didn't do very well online. So what do I care? I just hit delete and I'll sell a different product. And that's what we did. And that's what we continued to do today. So you can create any product that you were looking to do to sell, and you can literally put it online and market it and do all of that yourself in a matter of just days or even just a couple weeks, not months now. Don't get me wrong. There have been some brands that have launched in retail that have done ridiculously well. Okay, Justin's duck butter is one of them. A gentleman by the name of Justin, you may have seen the nut butter that's in stores all over the place. He sold his company for, I think, 200 million dollars. He worked locally and sold it at a farmer's market.

And he filled his little jars and such at a friend's restaurant when he was in college on the weekends. And it was a great idea, a great concept. And he worked, and he worked himself very hard to get to where he was, and then he took his brand and someone bought it. Okay, So, long story short, don't get me wrong. Retail can be successful, but there's a very small number, a small percentage of people who really make it successful in retail without having an army of people behind them. That's not who I'm talking to. I'm talking to people who are just starting and want to get themselves up and running and have proof of concept before they get launched into retail. It's going to be online. So if this helps you out, gives you some tips and pointers on how to sell a food product online as opposed to retail, give your thumbs up on this. If you have any questions about what I just talked about or any comments, let me know down below, and we'll try to get to that question as soon as possible. So keep in mind that retail selling is not the same as online sales. It's basically the same thing at the end of the day. Yes, selling something is selling something, but the avenue that you take can make you profitable or can make your company go under. So I'll see you guys on our next video.


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