Raiser's edge: are your attempts at selling to retail stores going nowhere? Maybe your product needs a good fund-raiser

Entrepreneur, August, 2002 by Don Debelak

IF YOU'RE HOPING TO INTRODUCE A LOW-cost product to the marketplace, you're in for quite a challenge. You may have already discovered that regular sales channels are especially hard to break into--products that sell at very low prices just don't generate enough profit to cover all the costs retailers face when adding a single-line product to the mix. Although the experience frustrates many inventors, there is another option you may not have considered: selling through fund-raising.

It's a channel that worked out quite well for Ken Joyner. Back in the early days of his business, Joyner was convinced he had a fabulous idea--he just needed a way to make it succeed.

After noticing customers struggling to carry awkward plastic grocery bags, he decided to develop an inexpensive device that made it easy for people to carry several bags in each hand. What he invented was the Bag Grabber, a plastic holder that can hold up to five bags at once. But while Joyner was ready for the market, the market wasn't ready for him. Says Joyner, 38, "I had very limited success and was only able to get the product into a few 99-cent stores in California."

A Resourceful Solution

Joyner wasn't sure what to do next when someone who saw his product contacted him to see if she could sell it as a fund-raiser for the PTA. "The contact told me about a regional PTA show in San Diego, where fund-raising product suppliers set up tables with product displays," he remembers. "I was able to pick up a few groups [that] agreed to sell the Bag Grabber. More importantly, I learned about the Web sites [that] fund-raising groups [use]."

Joyner found success with two sites in particular: www.fundraisingbazaar.com and www.fundraising-ideas.com. "These sites are really directories where all types of groups come to look for products to sell," he explains. "We [received] orders from all over the country." Typically, groups looking for products to use in fund-raising include sports teams, churches, PTAs and scouting organizations.

Joyner found the fund-raising route a successful one for his business. This year, his Long Beach, California, company, Fundraising With Inventions.com, expects to sell more than 100,000 Bag Grabbers at $1 apiece as well as more than 50,000 Bag Holders, stand-up frames that convert plastic grocery bags into garbage bags. And Joyner expects business to get even better in the future. "[Up until now,] I've been limited by only having a single-cavity mold, [which only produces one product at a time]," he says. "With my success, I've been able to switch to a six-cavity mold, so I'll have six times as many products to sell."

Tricks of the Trade

Fund-raising groups take two different approaches. The first is to buy upfront, where the group purchases a quantity of products and then goes out and sells them. The second is what Joyner calls "order takers"--groups that take orders first, place orders for products and then deliver them. "You need to be prepared to sell both ways, as groups typically only buy one way or the other," Joyner says. "For the order takers, you need to have an easy-to-use sales flier with an order form on the back." That order form should have room for 15 to 20 orders.

When pricing your product, there are two main considerations. Typically fund-raisers will want to triple your price. But at the same time, while people are willing to pay a fund-raising group more than the product is worth, there is a limit to how much more. Usually, 50 percent more is about the limit. That means you have to balance your price to the groups so that tripling the price doesn't make your retail price too high.

The product's price point also affects which groups you will attract. According to Joyner, "PTAs, sporting [groups] and scout groups prefer a cheaper product, typically less than five dollars, so most people will buy them. Charitable groups that don't have the benefit of a youth sales force prefer more expensive items to justify the effort to sell each item."

What kinds of benefits can one expect from selling through fund-raising groups? "The biggest advantage is that you have lots of people selling only your product," Joyner explains. That is a big advantage over having your product sit on a store shelf and hoping someone will see it. But this sales channel offers other significant benefits as well. Joyner works from his home, because he generates almost all his sales over the Internet. Plus, according to Joyner, "You don't need as sophisticated packaging as you do in a store, and you don't need to worry about bar codes or in-store displays."

One last important benefit worth mentioning is that Joyner offers his product for $1 apiece, so he doesn't have to worry about working with a tough purchasing agent over difficult terms, discounts, advertising allowances or other demands. People either like your product or they don't--and if they like it, they buy. And even better, fund-raising sales are not seasonal, as Joyner initially thought. "Groups that do fund-raising pretty much do it all year long," Joyner says. "There really isn't a slow season."