Scaling the Wal

Entrepreneur, Jan, 1998 by Karen Axelton

It's the day every small manufacturer dreams of, works for and fantasizes about. Wal-Mart Stores Inc., the nation's largest retailer, has just agreed to carry your product. Welcome to Easy Street!

No, welcome to reality. "I thought I would become a millionaire," says Steve Kendall, whose Cutting Edge Opener System, a device that opens shrink-wrapped CDs, audiotapes and videotapes, is sold in Wal-Mart stores. "I didn't come anywhere close to that."

Just because your product is sitting on Wal-Mart's shelves doesn't mean you can sit back and relax. You need to work just as hard to make your product successful in Wal-Mart as you did to get it there in the first place.

* READY OR NOT?

For many entrepreneurs, Wal-Mart is the Holy Grail of retailing - and the process of winning its business can be as long and arduous as the search for that mythical chalice. You'll need patience, professionalism and persistence for this journey. Begin by asking yourself three key questions: Is Wal-Mart right for your product? Is your product right for Wal-Mart? Is your company ready for Wal-Mart?

"Start by deciding if this type of mass merchandiser is appropriate for you," says Liz Tahir, owner of New Orleans-based retail consulting firm Liz Tahir Consulting. Is the Wal-Mart customer your customer? How does Wal-Mart fit into your overall distribution strategy? "It's very idealistic to think you can sell to Wal-Mart and then turn around and sell the same product to Ia high-end retailer like] Macy's," says Tahir.

Determining whether your product is right for Wal-Mart takes research and legwork. Paul Cantrell, 31, put in plenty of both and was rewarded by landing Wal-Mart as his first retail account. A background in sales and marketing with Procter & Gamble (P&G) helped, including three years working exclusively on P&G's Kmart account. "I gained good insight into what it takes to make a product successful in that retail channel," says the Matthews, North Carolina, entrepreneur.

Offering something unique is important. Cantrell's product, the Utilitote, is an adjustable bed-liner that fits in the back of sport utility vehicles (SUVs), minivans and station wagons. In early 1996, when the Utilitote was ready for mass production, Cantrell started studying Wal-Mart parking lots, where he saw plenty of SUVs and minivans. Assessing Wal-Mart's automotive department, however, he saw a product mix focused on cars and trucks. "The product clearly had an ability to reach consumers they weren't targeting," Cantrell says.

Last but not least, is your company ready for Wal-Mart? "You've got to have production patterns to get the product out the door to meet ship dates," says Steve Wurzel, a Franklin, Tennessee, consultant whose company, Marketforce Inc., specializes in helping businesses sell products to mass retailers. "The little guy working out of his garage isn't going to get in [Wal-Mart] in a billion years."

Steve Kendall, whose homebased SMK Marketing is a one-man company, is a little guy who beat the odds. Even so, he agrees with Wurzel. "The biggest mistake people make is that as soon as they come up with an idea, they try to get it in Wal-Mart," says Kendall, 46, who had 20 years of corporate marketing experience under his belt before approaching the retailer. "Don't even think of selling to Wal-Mart with just a prototype or sample."

Kendall got his break in the spring of 1995, when QVC saw his CD opener during a national search for new products. The shopping channel persuaded him to go ahead with two other ideas, a videotape opener and an audiotape opener, then packaged the three together and put them on the air. The St. Louis entrepreneur gained national exposure, then started wholesaling to distributors, who placed the products in retail music stores. That experience helped when, soon after, he approached Wal-Mart through its Minority and Women-Owned Business Development Program (see "Step By Step" above).

Perhaps the key to getting your product into Wal-Mart - and keeping it there - is a willingness to build a partnership with the company. That attitude paid off for Charles and Patricia Monte, whose Monte Babe line of appliqued clothing for girls has been in Wal-Mart stores for about a year. "It was an open-book situation," says Charles, 49, of the Bay City, Michigan, company's initial meetings with Wal-Mart two years ago. "They wanted to know about certain aspects of our business - our facility, our financials. At the same time, they were open with us as to what they expect from a vendor."

Be ready to meet those expectations - fast. "When Wal-Mart sent us their first order, they wanted 24- or 48-hour turnaround; otherwise they would cancel," says Paul Cantrell. "We had to decipher the purchase order, ship through 17 different distribution centers, get all the invoices done correctly - all in [a short time]. It was quite a challenge, but it was a great feeling of success watching those trucks roll out."

* SELLING POINTS

Savor your success for a moment . . . then get ready for the next challenge: "Just because [your product is] in Wal-Mart doesn't mean it's going to sell," says Cantrell. At least, not without your help.