Where to Sell?

Small business have a lot of decisions to make when deciding how to deliver their product. Should they have a store front, a place where customers visit to buy products? Do you make a deal with an existing retailer (Walmart, Target, etc.) to sell your products in their store? Are online markets a viable option? All these options should be considered.

Store Front
Having a store is a great way to have a public appearance for your potential customers. You can control what products are sold, the atmosphere that customers experience, the staff that people meet, and the layout of the building. Stores are great, but usually only appeal to a local audience. Store owners that want to expand their reach either need to have an online market place or have multiple stores across a wide area. A store needs to be able to bring in customers to pay for staff, fixed costs rent or utilities), and promotions.

Deals With Retailers
Having your product sold with a popular retailer like Target can be a great way to capitalize on their success. Large retailers already have devoted customers who like the products and convenience they can offer. Selling in one of these stores has its own unique drawbacks.  These stores of full of potential customers, but even more potential competition. Unlike an individually owned store, you will be forced to compete with the other products that retailer stocks. Also, many of these large retailers have to approve your product. Walmart has an online submission process where suppliers can get their products approved to be sold in stores. However, they require a lot of information about your business including:

• Federal Taxpayer Identification Number (TIN)
• GTIN/UPC Membership Number
• Dun & Bradstreet Number
• Company Information
• Ethnic Origin
• Company Contacts
• Company Manufacturing
• Company Accounts
• Company Promotions
• Company References
• Company Sales

Understandably, those large stores need to protect their assets, but making a deal with them opens the door to a lot of regulation. 

Online Markets

Amazon. Etsy. Ebay. You probably recognize these sites. Online stores are becoming popular as the number of active internet users continues to grow. Most stores have an online website as a way of convenient shopping. With an online store, people can shop for your products whenever they please. You can customize exactly how your page looks and operates if you choose to host your own website. However, online stores need to be maintained. Payment options need to work, servers need to be able to host the traffic, and the design needs to be intuitive. People need to know how to find the products they want, how to buy them, and how they receive them. Owners need to have options to deliver their products. Mailing and shipping costs can be expensive. Having an online marketplace can be a great supplement to an existing store but may not be a viable standalone option. It is difficult to create a presence with customers using only a web page. 

Opportunities for Promotion

Amazon Launchpad
Amazon Launchpad is a service to help start-up companies reach new user bases. Users also gain access to many of the the delivery options that Amazon Prime uses every day. It is estimated that 54 million people are active Prime members. On average, Prime users spend $1,100 a year with Amazon, not including the subscription fee. Though it is not guaranteed all of those people with be interested in your product, using Launchpad may help your company find its audience and build your brand.

Facebook Ads
Facebook is one of the more popular websites in the world. It is the most popular social network on the internet with an estimate 1.7 billion monthly active users. Companies can set a budget to run Facebook ads, and Facebook with automatically find people they think will be interested in your product. Alternatively, you can select a target audience. Those with many competitors may need to spend more on Facebook ads to reach the most people. Having a Facebook presence like a page also helps.

YouTube Ads
Similar to Facebook, YouTube has an advertising service. I am sure you have seen an ad before being able to watch your favorite YouTube channel's content. YouTube lets companies pick how much they want to spend and select several different aspects of their target audience like age, sex, interests, and location. YouTube can be a great way for businesses to engage younger audiences. Another popular practice on YouTube is to sponsor specific channels to try your product and have them make a video about them. This doubles as selecting an audience and having a face for your product. YouTube also has a built in analytic system so you can see who views and interacts with your ads.

Google Analytics
Google is the most popular search engine by far. Though this does make it difficult to stand out from your competitors, it is possible to improve your search rank and engagement. With Google Analytics, users can see how keywords on their site are ranked, how many people see their site based on those keywords, and how many clicks those words get. Smart businesses know how to work around important keywords to their business. The video below gives a few examples:

The Old Fashioned Way
Though businesses should absolutely have an online presence, it is possible to partner with local businesses to advertise your product or service. Simply having brochures in various locations around town can help you earn some local customers. The downside is that it is not as easy to see engagement with those brochures. This is not a very good solution for reaching new markets, but it can be a way to get some customers in a fairly inexpensive way.

Domestic Production

Do you care where your products are made? Do you even think about it? For many Americans, there is a trend of nationalism that drives the want for U.S. made products. According to Consumer Reports, 80% of Americans would rather buy domestic products. 6 in 10 of those same people would be willing to pay a 10% premium for domestic products.

Break down of consumers by Consumer Reports.

So what does this mean exactly? Should we charge American consumers 10% more just because they might be willing to pay for it? No. However, it can be used to decide if the cost of domestic manufacturing is worth it. A little extra money spent "in house" could yield some large profits. Being a domestic company can be a selling point to the majority of your potential clients. This is a trend that many large companies are catching on to:

"Walmart, the nation's largest retailer, earlier this year announced it will boost sourcing of U.S. products by $50 billion during the next 10 years.General Electric is investing $1 billion through 2014 to revitalize its U.S. appliances business and create more than 1,500 U.S. jobs."

While I do believe that international trade is necessary and beneficial, I believe it is a civic duty to buy domestic when possible to support the American economy. However, just because it is an American company does not mean their products are manufactured domestically. When you pay for the next iPhone, be mindful that many of Apple's products are made in China. 

Cost Per Unit

One of the most important things for a companies success is making a profit on whatever they produce. To make a profit, a company has to consider many of the costs for operation and production. Companies must take an honest look at:

Fixed Costs: expenses that do not respond to change in production output like building rent, depreciation, mortgages, and interest payments. Fixed costs should be pretty constant.

Variable Costs: expenses that changes often depending on production. These include the cost of materials, labor, and shipping for each product.

Determine Unit Costs: (total amount of fixed cost + variable costs) divided by (total number of units produced).
Knowing the unit costs helps companies determine when they will make a profit. Keeping an eye on the numbers and how they affect profit are important to avoid waste.

This video is great at showing cost calculations: