Selling Commodities to Large Chains

Its All About Cost Containment & Price

Many small companies (not all), are usually looking to grow their businesses by venturing into the big box or mass world. And for many that have invested in a brand & marketing their task is somewhat "easier" & much different from those selling commoditized goods.

As opposed to convincing a retailer that your brand following is strong & media plan solid, those selling commodities must focus on the great differentiator "price".

And the only way you can deliver & compete on price is by squeezing the costs out of the product & usually reducing margins. Many firms are reluctant to lower margins as they attempt to enter this market. Selling in this segment is all about volume & low margins; we called it the "keep the lights on" portion of our business. Cover your overhead, improve your cash flow but continue to grow our other more profitable market segments.

Unlike a good brand, commodity sellers do not have much room for negotiation. There are likely another 3-4 salesmen in the lobby waiting for their turn with the same product. Therefore your price needs to be super competitive & more likely than not your margins will be razor thin.

The mass market is a shark tank for those selling commodity products. You will show top line growth but do not have expectations for huge net earnings.