Small Businesses Dream of Selling Products at Major Stores

Walmart Stores
Source: Walmart
Walmart Stores

For minor league baseball players, the dream is to make it to the big leagues.

For culinary students, a goal is to be executive chef at a Michelin-starred restaurant.

And for many entrepreneurs, the aspiration is to get their product sold at a major retailer. They want their treats at Starbucks, their pet products at Walmart or their clothing designs at Macy's.

It takes work to pry that distribution door open, but once in, it's a thrilling feeling, says Lucy Gibney, who once sold her Lucy's gluten-free cookies in about 6,000 U.S. and Canadian Starbucks.

"This authority in the food industry had picked us," she says. "It's like getting a note home from the teacher that you're an awesome student."

Gibney — a former emergency room doctor who first baked the gluten-free cookies for her food-allergy-prone son — seized the opportunity when Starbucks came calling. Yet, reality soon hit. "Once you get in, it's almost the best and the worst thing," she says. "It was really scary figuring out how to meet demand."

She quadrupled her production and warehouse facilities as she strove to make about 375,000 cookies per week, up from about 30,000.

But then Starbucks' need dwindled. Lucy's didn't have a long-term contract with Starbucks, so there was always a bit of "uncertainty," says Gibney, but the loss was still tough. "We had to take a deep breath, cinch in our waistline a bit and regroup," she says.

Despite the Starbucks cookie order crumbling, they survived. Even while focusing on the coffee chain's order, Gibney and her husband, Paul, kept other retail options open, so there were sales prospects in the pipeline.

"We never stopped working (other) segments of the customer base," she says. In the last couple of years, they increased their supermarket and health food store distribution to about 6,000 from around 2,000.

Not relying on one major retail outlet — no matter how alluring or time-consuming it may be — is one major lesson for entrepreneurs trying to edge into large retail outlets.

Among other tips for those small businesses that want to land big distribution deals:

Tap into trade shows. The Gibneys researched what shows would be good for them, but before spending on an exhibition booth, they first attended as individuals. In 2006, they checked out the National Association for the Specialty Food Trade show and, in 2008, they exhibited there. That was where a Starbucks representative found them. While the business prospecting can be robust, Gibney says she also has made new friends in the small-business community who can offer advice.

Scour the Internet. Small-business owners can tap into the Web to research potential brokers and distributors, check out trade show options and see where their competitors are making retail inroads. Entrepreneur-oriented sites such as offer expert advice, showcase success stories and provide a forum for entrepreneurs to interact.

And some big companies — such as Wal-Mart — provide online product submission forms that businesses can fill out for consideration. In the case of Wal-Mart, it will forward completed forms to a store buyer who "will review your product and provide you with either an e-mail outlining the next steps or an explanation of why it's being rejected."

Be hands on. Many small businesses use brokers or outside distributors to get their products into stores. But sometimes those middlemen don't have a small firm's goals or best interests at heart. Tobi Skovron, founder of an indoor pet potty device called The Pet Loo, found that one of his distributors was selling the product via the Web and not servicing stores. While Skovron still was making money, that didn't suit his strategy of reaching U.S. pet stores such as PetCo. Skovron, who was living in Australia at the time, moved to the U.S. to develop his own pet store contacts and ended up persuading PetCo to sell his product. He says that he remains in constant contact with PetCo — as well as smaller sellers — to make sure they remain satisfied. "I'm not looking to be a supplier to these guys, but I'm looking to be a partner," he says.

Look for unusual retail programs. Wal-Mart is conducting a contest in which entrepreneurs send videos of their product inventions in the hopes of selling their product on or in Walmart stores.

Macy's offers a course that helps small minority- and female-owned firms break into big retailers. In the inaugural program last spring, 22 businesses learned about topics such as marketing, financial management, assortment planning. Six of those will sell their products at Macy's, says Shawn Outler, group vice president of multicultural merchandising and vendor development. "They learn the expectations of doing business with a major retailer — (which is) different than doing business online or with small boutiques," Outler says. Macy's is reviewing applications for this year's workshop, which begins in May.