But here’s the challenge with selling new products to Wal-Mart. One order from Wal-Mart can be a wonderful opportunity; however it can also be detrimental to any start-up business trying to keep up with the volume that Wal-Mart can buy!
If your product sells well in their stores, Wal-Mart buyers expect to be able to buy huge quantities from you. This may sound obvious, but guess who has to pay for the goods first prior to working with Wal-Mart? You do! You have to ‘front’ the money to manufacture and ship your products to Wal-Mart and then ultimately wait until you get paid from them. And the truth is that getting paid from Wal-Mart can take a few months…
So you really have to decide what kind of volume you can handle in your product business. This will ultimately help you determine whether or not it makes sense to sell to Wal-Mart as a new product company.
How much quantity will a Wal-Mart buyer buy? Well, it really depends on your product and how much they believe in the success of your product in their stores. But one purchase order can be a million dollars easy.
Here’s something else to think about. Wal-Mart buyers are equally concerned with new product companies being able to handle their purchase orders as well. The last thing a Wal-Mart buyer wants to do is to take a new product company out of business. That is why Wal-Mart buyer’s will ask you about your ability to sell your products in mass to them. And if a Wal-Mart buyer does not believe that you can handle their quantities, they will not buy.
So…would I approach Wal-Mart with a new product first or sell to other chain stores prior to approaching them?
Personally, I would sell products to other chain stores first and then sell to Wal-Mart. By selling to other chain stores first, I gain traction in the marketplace and develop my brand. I also help increase revenue for my new product business which will ultimately help me get funding for my huge Wal-Mart purchase order!
To your success,