010-mike-hill

GET YOUR PRODUCT ON THE COUNTER OF 5,000 CONVENIENCE STORES

A discussion with Mike Hill

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John:Greetings everyone, and welcome to another serving of Business Soup talk radio. If it’s in business, it’s Business Soup.

John:I’m your host John Debovoise. Today, we’re going to talk about how you can get your product onto the shelves from 200 to 2000 convenience stores with our good friend Mike Hill from Checkstand Programs. Mike, welcome to the program.

Mike:Oh hi. Thank you for having me.

John:Mike, let’s talk briefly about just what is Checkstand Program, and how does it work?

Mike:Well, Check Stand was developed a number of years ago by the owner who actually developed a product, and he was trying to get it into the marketplace. And for years and years he did everything he could to try to get in line with distributors, with the convenience stores, and everything else, and he just figured, there’s got to be an easier way to go about this. And in the process, through his trials and tribulations, he came up with a concept for Checkstand. So what he did is he eventually created alliances with distributors all over the country, and that’s basically how Checkstand was formed.

John:Our guest here on Business Soup is Mike Hill. For more information on the five points of getting your product to market, go to bizsoup.com. So let’s start with the beginning on testing the market. I’ve got a product that I think is just fabulous, and I want to get it into convenience stores. How do I go about doing that? How do I test the market?

Mike:Well, one of the biggest things is you have to remember, if you’re truly trying to get a product into the convenience store space, you need to have the proper product. The convenience store basis, we’re talking $10 and less for a convenience store. They’re not looking for higher ticket items. So you need to make sure that your pricing model, your pricing point is correct.

Mike:And within that pricing point, you need to make sure that everybody is getting their piece of the pie because it is a business. In the end, everybody has expectations. So typically, you need to remember the percentages that everybody’s seeking. The retailer’s typically going to want 40%. A distributor’s going to want 15 to 20%, so in your pricing you need to account for that when you go to shop a product around.

Mike:The other thing that I would factor in, is a lot of people forget that, yes, they have a product that they haven’t taken into consideration the marketing of the product. I know that when we place a product it goes, if it’s not a beverage, it goes right to the front counter, and you need to basically think of your product and the packaging as a marketing piece in and of itself.

Mike:And that’s one of the things that I see people fail with all the time. Yes, they have a product. Yes, it’s priced well, but their packaging is terrible, and the store owners don’t want this package that doesn’t fit into their store sticking out like a sore thumb. Yes, they want it to attract attention. Yes, they want a new product, but sometimes people haven’t taken that into consideration.

John:In that packaging and having it on the counter, how quickly that inventory turnover?

Mike:Basically, if they request a reorder? Is that what you’re referring to?

John:Yes. If I’ve got my widget sitting on the counter there, how many of these packaging items should be there? And what is the expectation of that turnover of the items? Is it a monthly, every two weeks? How is it restocked?

Mike:I would account for every two weeks to a month, to be honest with you because they really have no patience. These C-store owners, they have products that they already know work in their system, if you will, and they don’t really have a ton of patience. So if you’re introducing a new product, and they bit so to speak, you need to make sure to be able to replenish that product.

Mike:And that’s another thing that I see often times, is that people have just enough, just enough product to introduce into the market, and then should there be a reorder, they don’t know what to do. They’re scrambling. I don’t have enough product, we don’t have any inventory. What am I going to do? And that just doesn’t work.

Mike:And so I think that, what that comes down to, is people fail to do their due diligence. They don’t plan ahead, and you need to plan ahead because if in fact you have a product that you think is going to sell, you need to account for that, and you need to have the inventory.

Mike:So I would say at least a two week inventory when you’re placing a product in the store, if not a month above and beyond what you’ve already placed.

John:And as far as the ability to resupply, how much inventory should you have on hand for the resupply and for any contingencies? Maybe it’s a big hit, but as I was talking about earlier, and as I’ve discussed on other servings of Business Soup, we’re talking about a product that’s already on the market, and you want bigger distribution. How much do I need in inventory in order to satisfy the restocking?

Mike:At least a three to six months supply, at least.

John:All right, so you’re talking about, it’s a big investment for these companies, but they’re rolling this inventory over. You’re replacing money with money, and you have your margins to help pay for new product from the manufacturing to the packaging, and also the delivery aspect of it. So, three to six months of the product based upon whether it’s a two week or 30 day turnover.

Mike:Depending upon the budget, you should always, always have more than enough supply. Anybody who has just enough supply really shouldn’t be introducing a new product into the marketplace. That’s just a big mistake.

John:And I would agree. For the five points on how to get a product to market, go to bizsoup.com, and log in, and get the five points to a successful business model. If you take any one of them out, your business will fail.

John:And we’re talking with Mike Hill from Checkstand Program and checkstandprogram.com about getting your product to market, whether it’s 200 stores or 5,000 stores, Checkstand Program can get the distribution of your product, but be prepared for sales. We’ve talked about testing the market, the packaging, the importance of packaging, price setting and the turnover.

John:So much about the grocery store and the sale of products is the placement. How is that game, of what I often refer to as the store-front Jenga, how important is that product placement? And how do you get up in the food chain?

Mike:I think placement is huge, depending upon the space. Obviously, in the C-store space, that’s why we go and we see all these brightly colored packages and these shiny packages. There’s a reason for that. We’re trying to attract attention.

Mike:I know with us, that granted, it’s not a beverage, which is a completely different animal itself, but we always push the product right to the front counter because we know that’s where all the impulse purchases are made. They’re going to see it when they come in, and they’re going to see it as they leave.

Mike:So placement is huge, and you need to account for that in your packaging. You know, your packaging needs to be able to sit at the front counter, but not take up so much space that it becomes cumbersome, but it needs to attract attention at the same time. So, while yes, we are only involved in the placement, we always encourage people to really pay attention to their packaging, the dimensions, how many items go into the packaging, et cetera because that is a big motivator for a lot of the shoppers.

John:We’re talking with Mike Hill of Checkstand Program here on Business Soup about product placement, getting distribution, after all, that is the most important part.

John:Now when you talk about distribution strategy, what would that mean to a person who’s meeting with you and saying, I want my product sold in these convenience stores? What is product distribution strategy?

Mike:Distribution strategy could go all the way down to maybe a geographic location. We deal mostly with midsize distributors. We have the alliances. We have the relationships with existing distributors. We act more as the liaison where we have a guarantee of 200 to 5,000 stores, and we’ve basically garnered these relationships over a 15 year period. So, they understand us, we understand them, but it’s very rare for somebody to be able to get their item into a store within a two week period within so many stores.

Mike:So, I think you just need to know what type of products you have, and if there’s a specific region that you know your product is going to do well in, we need to know that. But oftentimes what happens, is we’ve dealt with so many distributors over the years, we know what products they’re good with, and we know what products are not so good with as well.

Mike:So oftentimes what we’ll do, is we’ll take into account the product, and we already have distributors in mind. We already have placement in mind. Not to say that people can’t specifically cherry pick a geographic location, but not all distributors are good with all products. And so, I think people need to keep that in mind.

Mike:And so those are the kind of questions they need to field, the kind of questions they need to ask. Well, what products do you typically sell? What are you good with? What comes through your doors every day? And they need to be cognizant of that because maybe their product doesn’t fit into that model. So, you might need to go through more than one distributor, if you will, which is a benefit of using us because we’re dealing with multiple distributors all over the country all the time.

John:We’re talking with Mike Hill from Checkstand Program on the distribution part of your business model. If you’ve got any questions, just visit us on bizsoup.com, and we will get them out too.

John:If you have something that you would like to get into the market, well just send us a heads up to bizsoup.com. Just log in, and we’ll get it on over to Mike and Checkstand Program.

John:Mike, is the development of product, are there any new whizz-bang reinventions of the wheel? Or are people just painting the spokes on an existing wheel differently with bright colors and shipping them out?

Mike:I think there are new and innovative products. Often times, yes, a product is just repackaged, maybe they’re changing a sugar content, or maybe it’s moister than it used to be. Maybe it was dry. Maybe it smells better than the prior model, et cetera.

Mike:But, there are still new products coming across our desk all the time. There’s always something that can be created, always something new. Like oftentimes, what we’re finding now is that, everybody’s enthralled with health. Everybody wants to be healthy. So what we’re seeing is, we’re seeing even in the C store space, a lot of health-oriented products, whether that be supplements, or just beverages, or even your general snack items, people are always focused on health.

Mike:So, I think it really what happens is, is you just change focus as time goes by. And above and beyond the health, we’re seeing a lot of tech-savvy gadgets or maybe organization gadgets. I know with cell phone accessories, we see products that are able to organize, all the wires and the charging stations and things of that nature, and phone covers, and phone cleaners.

Mike:So, there’s always something that can be introduced into the market. I just think it’s the way you go about it. You really have to do your research and figure out what people are looking for to find that sweet spot. And then you just attack. Then you introduce it.

John:Interesting that you say, do your due diligence and your research. If I have a product that is in the distribution model for you, and I’ve never done something like this, I just came up with it, so to say. How do you recommend the steps that I would take to do my due diligence? Do I go door to door asking questions? What are some of the best ways to do the due diligence to get product through the distribution model of say, Checkstand Program?

Mike:The internet is an amazing thing. It really is. If you have something, I would go online and see, does it exist? Are you recreating the wheel? Have people done this before? I would go to trade shows. I would walk the trade shows, and I would look at all the booths and what’s being introduced. Do you have something that people have an appetite for? I would also ask around, ask your inner circle, is this something that they would be interested in? Do you guys have need for this? Do you see a need for this?

Mike:People just need to ask questions. They need to get out and about. I would start online, I would go to trade shows and then word of mouth. You just need to ask the question. You need to ask people in your inner circle, is this something that they see as a viable product?

John:We are talking with Mike Hill of Checkstand Program, and we’ve talked about not only testing the market packaging, your price setting and the importance of product placement, but also the distribution strategy, and going out into the marketplace and finding out does your product work, and it’s likely that there’s already somebody out there, but are you improving the wheel or inventing a new one?

John:Mike, you were talking about trade shows, and the importance of that, and the products, and how they fit into the marketplace. What about legislation and things that come up in the place, like the vaping scene? That started off as the Wild West. Now there’s a lot of restrictions coming into play. Do you keep up on that and inform your product suppliers, your manufacturers, they need to take notice of what’s coming in line with their products?

Mike:It’s kind of funny that you say that because it’s actually the other way around. Because we’re so immersed in placement of the product and coordinating that throughout the country, we actually get that feedback because they hear it first. Yes, we hear it, and we’ll pass that on to our clients oftentimes and say, Hey, are you aware of this? I know that you’re introducing this.

Mike:Like, people wanted to introduce a filled vape cartridge into the marketplace, and we’ll say, well, you can’t do this just anywhere. You need to remember that there are certain states that they’re not comfortable with this, and there’s other states where they have no issue with this. And then there comes into play licensing. Sometimes you need a license. Most of the time you don’t.

Mike:So yeah, we will help people with that. But really, when it comes to that, that’s part of that due diligence factor again, because we don’t do a lot of consulting or market segmentation even, if you will. We’re really just involved with a placement. We’re assuming that anybody who comes to us has done their due diligence, and they simply want to get that product into the marketplace. They want to immerse their product. They want eyes. They want foot traffic, and that’s what we’re trying to get them as quickly as possible, is that exposure.

John:And lastly, I wanted to ask you, I mean this is Mike Hill from Checkstand Programs here on Business Soup talk radio. Mike, what is the definition of an impulse-buy product?

Mike:We’ve all been there in the grocery store, right when you get to the register, you’re surrounded by all these packages, and these gums, and these mints, and these shiny bright-colored energy drink cans. Well, that’s where the impulse purchases are made. People have last-second thoughts of what they want, and maybe they weren’t necessarily thinking about that before they got to the register, but now all these things are attracting their attention.

Mike:Those are impulse buys. An impulse buy is just something you make, I don’t want to say haphazardly, but you weren’t pre-planning to buy that certain item. But oftentimes, these are when these decisions, these snap judgments if you will, are made, and that’s why we call them impulse purchases, and that’s why you are inundated, right when you get to the register with all of these items because they know that that’s how the human psyche works.

John:Well, and of course if you want to shut the kid up after they’ve tortured you through the cereal aisle, and there is that spinning Blow-Pop or something-

Mike:After they ask you for the candy and the flavored gum, oh yeah.

John:That’s right. And you know, you can shut them up by sticking that thing in their mouth. Oh yeah, that’s a wise buy.

Mike:it’s just like when you get off the ride at Disneyland, and conveniently you exit right through the gift shop. It’s the same thing. They understand that. They understand that they’ve got you smiling the brightest, you’ve smiled all day, and you’re not thinking about price restrictions, and you just want to make the kids happy or your spouse happy, and you’re going to buy whatever. It doesn’t matter the price. It doesn’t matter if you need it or not, but you’re just going to go ahead and make that purchase.

John:Except for the picture of me under four Gs of force with my chin down on my lap. That’s not a keeper for me.

Mike:Yeah, I hear you. I’m famous for that. My wife never takes my photo. She’s like, Oh, well we’ll skip dad. We’ll just take us.

John:Yes, we’ve been speaking with Mike Hill from the Checkstand Program. You can find out more information about getting your product onto the shelves throughout the country. Whether it be 200 or 5,000 stores, we can put you in touch with Checkstand Program and Mike Hill for the distribution. Without it, you’ve got nothing.

John:Mike, thanks for joining us here on this serving of Business Soup. Mike Hill, from Checkstand Program.

Mike:Thanks for having me.