Mass appeal: a local buying program could be the key to getting your product on the shelves of major merchandisers

Entrepreneur, August, 2005 by Don Debelak

THE ENTREPRENEUR: Kim Babjak, 40, founder of KimCo LLC in Phoenix

PRODUCT DESCRIPTIONS: The Zip-A-Ruffle is a bed skirt that zips on and off for easy cleaning. Sold primarily on OVC, the product sells for $29 to $44, depending on size and material. The Animalid is a toilet-lid cover with 3-D animal graphics designed to help toddlers feel more comfortable during the potty-training process.

STARTUP: Babjak launched the business with $1,000 in 2000. In 2002, she got her first order from QVC for 2,000 Zip-A-Ruffles. That shipment cost $20,000 to produce; Babjak raised the money from family and friends.

SALES: $750,000 in 2004; $1.5 million projected for 2005

THE CHALLENGE: Getting you r product into major mass merchandisers like Walgreens and Wal-Mart, despite being an independent inventor

In the past, big merchants typically resisted products from small inventor companies. But now, many large retailers, including giants like Home Depot, Walgreens and Wal-Mart, have launched local purchasing programs to find innovative products, giving individual stores and regions the option to test-market local products. These stores still have stiff criteria for performance, and inventors won't succeed in local buying programs unless they can prove they have the means to supply nationwide. That's what inventor Kim Babjak has done--and thanks to a local buying program, she has transformed an initial investment of $1,000 into sales of more than $1 million.

Steps to Success

1. PROVE YOU CAN SUPPLY A LARGE NUMBER OF PRODUCTS. Getting into a local buying program isn't easy, but it does help to establish a strong foundation first. Babjak did that by selling her first product, the Zip-A-Ruffle, on QVC, first nationally and then internationally, a process that challenges inventors to have 5,000 units on hand before every airing. "My first shipment for QVC was ready to ship [from China] when a typhoon hit Japan," says Babjak. "When the product arrived, it had mildew and was ruined. I had to fly back to China and find a new supplier who could deliver in eight weeks. The new manufacturer actually delivered in just six weeks."

These trials and tribulations paid off for Babjak when she approached Wal-Mart about her second product. "To get into Wal-Mart's local buying program, I had to be sponsored by the local store manager and the regional manager. I'm sure my experience selling to QVC [and] handling the logistics of bringing in products from China helped me get the managers' support."

2. SHOW YOUR PRODUCT CAN SELL AT RETAIL. Babjak never wanted to introduce the Zip-A-Ruffle in national retailers because she felt "QVC wouldn't want to carry the product anymore, especially if it was available at a lower price from a mass merchandiser." But that wasn't the case with her second product, the Animalid, which she felt had great retail potential. "I approached the Walgreens stores, whose local buying program only needed the local manager's approval," says Babjak. The local manager decided to test the Animalid in six stores, and they "sold approximately 350 Animalids in two weeks," says Babjak. "I was offered a chance at a regional test program. I declined because I was hoping to get into Wal-Mart's local buying program." The decision to pull her product from Walgreens paid off, as Wal-Mart soon accepted the Animalid in its local buying program. Babjak's test run with Walgreens made a strong case that the product would sell at both Walgreens and Wal-Mart for a retail price of $9.99. In April, Wal-Mart began selling the product in some Phoenix stores.

3. RESEARCH YOUR CATEGORY. After talking to Wal-Mart store and district managers and conducting internet research, Babjak learned that Wal-Mart sold 1.5 million of a single brand of toilet-lid covers for potty training per year. Says Babjak, "If I could capture 5 [percent] to 10 percent of that, I would be very happy."

4. APPROACH YOUR LOCAL STORE MANAGER. Wal-Mart's store managers have the power to initiate a lo cal buying program once they get approval from the regional manager. Not all store managers will do it, but many will if you are persistent.

"I phoned the manager for one whole year," says Babjak of her attack plan. "Every time I would talk to him on the phone, he was always telling me they were in the middle of inventory, or that they were extremely busy, that I should call him in a week or two. So that is exactly what I did. Finally, I made an appointment, and he loved the product from the start." Getting approval from the district manager wasn't a problem for Babjak: "I didn't have to make a presentation to the district manager;, the store manager did it himself."

Lessons Learned

1. KUDOS GOES TO MANAGERS WHO FIND SUCCESSFUL PRODUCTS. The local buying program is a way for big retailers to find innovative products, and store managers like to introduce new products if you can get them to listen to you. You must be persistent, though.

2. SUPPLY IS NEVER EASY. For many inventors, supply is an afterthought. Big retailers, however, never think that way. They know supply can always present problems in terms of quality, delivery and cash flow. Inventors rarely realize that it takes $200,000 or more in operating cash to support $1 million in sales, and they're rarely aware of how much inspection they (or their hired agents) will have to do to ensure the quality of a product manufactured overseas.