Episode 16: Distribution
Would you take the time to write twenty business plans to figure out which industry to disrupt? Sounds like a lot of work but it turned out to be a prime move for the entrepreneur whose story Glenn shares in this episode on channel choice. How you’re going to get your great product or service idea out to your audience is a critical decision – so enter with caution – there could be some heavy homework assigned today!
Transcript
Glenn Suart 0:00
So it’s fascinating understanding your channels for distribution and why people are buying. That’s why it’s so important your product delivers and, I can’t say it enough, you’ve got to understand what the benefits are for the end users, and for the people along the way. And maybe you do it online – I’m not saying you don’t do stuff online… Whatever your product is, you should be thinking about benefits, benefits, benefits, and trying to solve that…
Doug Ross 0:37
Welcome to Conversations on Startups, a podcast brought to you by Douglas Ross, author of the book, Spark Click Go: How to Bring Your Creative Business Idea to Life, and Glenn Suart, of Today’s Great Idea, a radio series featuring over 300 origin stories of businesses, brands and inventions that have changed the culture. Welcome to today’s conversation.
Doug Ross 1:00
Hello, and welcome to Conversations on Startups with Doug and Glenn. I’m Doug Ross, author of Spark Click Go. Glad to be here with you… how ya doing Glenn?
Glenn Suart 1:13
I’m doing great. I’m in Canada today and everything is good up here. Our subject today is one that I find very interesting. You’ve got a great idea. You got a product, How do you get it to market? Do you sell it online? Do you do it through retailers? Do you mail order? You know, mail order’s a term nobody’s ever heard of before, or at least a whole generation probably. But first, before that, let me tell you a story, Doug, and see if you can guess what business I’m talking about. [
Doug Ross 1:45
Okay, sounds good.
Glenn Suart 1:46
All right. So this guy is a computer science and electrical engineer and he decides that he wants to work on Wall Street. And he does. He’s having a good time there. And he expects to spend his whole career in finance. And this is about 20, 25 years ago, the internet is just starting out. And this guy is amazed by the internet. So what he does is he decides he wants to do something with the internet. He’s not sure what to do. So he writes 20 mini business plans looking for industries where the internet might be able to change the dynamics of the industry. So he figures it out. And pretty soon one industry pops to the top that could be really changed. So he and his wife – he tries to pitch it to the finance company he’s working for.. they’re not interested, he quits – …he and his wife jump in the car and they move to Seattle and they write their business plan in more detail on the way. They open up shop in a house with Home Depot doors as the tabletops and within months, they’re selling $20,000 worth of books every week…because it was the book industry they’re thinking about. And within a few years, Time Magazine, Man of the Year. Any idea Jeff, who we’re talking about?
Doug Ross 3:06
You mean, Doug who we’re talking about?
Glenn Suart 3:08
Oh, geez. Who did I say? Oh!
Doug Ross 3:10
You gave away his first name. [Has] this person recently gone to space in a rocket?
Glenn Suart 3:18
Yes. You’re so right, Jeff.
Doug Ross 3:23
Well, you know, when you were starting to talk about Wall Street, and these different business plans, something cued me on to Bezos and Amazon. I was thinking before that, that you might have been going with Bloomberg and Bloomberg as the financial services company. But I don’t think I really knew that he [Bezos] wrote twenty business plans. What did he do with those twenty business plans?
Glenn Suart 3:50
So they were for himself. He was trying to figure out where he could make the most impact. Because if you’re trying to do something with your own business, or your own idea, it’s worth doing the research to figure out where you can make the biggest impact and where the risks are low, etc. And he found that with the book industry, and of course I think most people forget today, that that’s where Amazon started… in the book industry because it was very old school at that point and he basically was able to reinvent it in many ways and change the dynamics of selling. And that’s why I use the story today ’cause I want to talk about the difference between online and retail and what you do with something.
Doug Ross 4:30
Ya, makes sense.
Glenn Suart 4:32
Yeah. So you know, one of the things that I found really interesting is that – we’ve talked about in previous episodes briefly – is we started a company that… in Canada here that sells coolers and drink ware, paddle boards, etc. And we struggled right from the beginning. I was writing the business plan on that one. Do we sell it online? Because you have better margins potentially? Or do you sell it through retailers, but it’s hard to get in through them. And my partner on this one, who’s the guy who had the idea originally, convinced me right off the top that the best way to go was, in this particular case, to… was to go retail…because nobody knows who we are at the beginning… we have no brand. So why don’t we sell directly to retailers, and he found a retailer, he went and pitched them right up front and walked out two hours later with the purchase order and before you know it, you know, we’re in 150 stores across the country, in Canada [and] looking at the States in future, of course, and other countries. But the thing was, by having our initial coolers in these [stores], we developed a brand that we were able to extend into other products – the drink ware, the paddle boards, etc. And it’s given us credibility now so people are actually looking for us online… so that we could sell online. But we wouldn’t have that future if we didn’t have the brand recognition of being in a highly credible series of independent stores across the country. Does that make sense?
Din 6:11
You’re listening to Conversations on Startups with Doug and Glenn, thanks for joining us. Let’s get back to the show.
Doug Ross 6:20
Well, it does. And what I’m curious about, and what our listener may be curious about is, What was it that appealed to the retailer in this case do you think? Because the story that you just relayed is one of these, it’s really an amazing story, it sounds like it’s out of a different time, because he walks into a retailer and he has this product and comes out with a purchase order and has all these stores nationally, so quickly. And the reason I say it sounds like it’s from another time is because we have this explosion of products now – there’s a lot to choose from, from a retailer’s perspective. So what do you think was the reason that they jumped on board?
Glenn Suart 7:06
It’s interesting because I would have thought at the beginning… and it was my feeling just as well, like how we’re competing with other major brands, Coleman, etc, who are already established, they’re in these retailers already, you know, why is it that somebody would want to buy and Sean was quite clear, there [were] three reasons. Number one, the quality of the products would be as good or better than the competitors at a slightly lower price point. So premium value, number one. More importantly, these things would sell because we were selling multiple colors of the units, the coolers, instead of just white or gray, and people liked that. And the retailers particularly liked that, and other people weren’t doing that. And the third thing, and probably the most important was, because our clients, even though the end user is the client, our real client is the retailer. And so we were able to give them much better margins they were getting than on other products. So for those three reasons it was almost a no brainer for the retailers to say, “Yeah, I’ll try that and see what happens.” And of course they reordered and they’re very happy and they want the other products because we’re doing the exact same thing over and over again. We could have sold these things on the internet, and we do, but people forget you have to market. What’s happening is we’re essentially paying the retailer to do the marketing for us because they’re giving us prominence in their stores. And it works very well.
Doug Ross 8:34
Yeah, and I think that’s a very good point to raise. If you don’t have a brand, you don’t have a following for example on social media you’ve got enough of a following already, Why are people going to go to your online store or to your website? You’re going to have to put something into that in terms of promotion, and maybe public relations, or paid advertising…all those kinds of things to build that up. It’s not the case that just because you can go on the internet, and I suppose you or I could create an online store – I bet you we could do it in an hour after we record this because we could use a platform like Shopify (which is a tremendous Canadian success story and International success story) – we could create an online store, couldn’t we?
Glenn Suart 9:26
Absolutely. It’s not that complicated. The guy who created – by the way – Shopify is now one of the richest Canadians in the world. Of course, he lived in Ottawa, they had a surfboard shop, I believe… a skateboard shop, can’t remember, either one of those two and they were trying to find an online solution to sell and they couldn’t find any software that would work and they just happened to know how to program, that’s how he started Shopify. The key thing is, if you have a product… is really understanding who your target audience is. Who the buyers are, not just the end user, and solving their problems. Giving them something that they value, not just the product, but the margins or brand recognition or whatever. That’s the way you sort of go about doing it. That’s a really good lesson I’ve learned from this is you can’t just make assumptions about how to do things because everybody else does it that way. Try to think through – because not everybody has huge marketing budgets – how to get your product noticed, because you want the product to move, and the product has to be good enough that it will move. This would all fall apart, if nobody’s buying the product at the end. So…
Doug Ross 10:35
And the way I like to think about that is… it’s easier to get someone to buy your product once, that’s fine. And it’s fine if you’re setting up a shop on the corner on a hot day and you’re selling water. But to get them to come back is the real trick and that’s where the quality has to be built in. So if you can get them to buy once will that experience turn into a repeat purchase perhaps or maybe a recommendation to a friend, something like that. So totally agree, you’ve got to have that quality. I love how you dug into the motivators, the motivation of that retailer in that case, and really figured out what would work for them and their customers and for their bottom line.
Doug Ross 11:24
Hey podcast listeners, we’re gonna take a short break now. If you’re enjoying the show, feel free to invite your friends, remember to subscribe, and if you want to help spread the word leave us a review on Apple Podcasts or your favorite podcast app. Each episode of Conversations on Startups focuses on a single topic. If you want to comment on something you’ve heard on the podcast, or suggest a topic for us to cover in a future episode, send an email to: go@todaysgreatidea.com or douglas@sparkclickgo.com. Glenn and I appreciate you and hope you find our uncut and unrehearsed stories, perspectives, and tips helpful. Speaking of helpful stuff-let’s pick up where we left off.
Glenn Suart 12:09
What’s interesting about this particular retailer – and we’re talking majority of our clients, not all them, is Canadian Tire, which is one of the most successful retailers and growing… they’re already one of the longest… oldest companies in Canada successfully as a retailer, but… their revenues have just gone through the roof in the last two years with COVID, because they know how to merchandise, they know how to do things. And it was good to deal with them because we’re not dealing with head office. Here’s the other thing, we’re dealing with an individual sort of franchisee – they have a dealer network, which is sort of like a franchisee model – so the franchisees are the ones who’d be buying, not every store buys. And that solved a lot of problems, you would think going to head office would make good sense. In this case, if we had done that, we would probably still not even be selling anything, because the head office people, they would say “We already have the coolers.” They’re not the ones on the floor like these dealers are, knowing exactly what the end user wants. So we were fortunate that Canadian Tire worked out well for us, but other retailers, we haven’t… we tried to get into a couple other ones… hasn’t been successful, because they just don’t see us yet as being a legitimate brand. So that certainly the Canadian Tire thing gives us clout with other brands, ’cause [they know] that Canadian Tire doesn’t take products that aren’t successful.
Doug Ross 13:41
Now that you’re in there, others might become interested, is what you’re saying.
Glenn Suart 13:46
That’s exactly right.
Doug Ross 13:47
I’m curious though, how the… if this is a sort of a decentralized purchasing decision that you’re describing, How is it that the other retailers jumped on this bandwagon?
Glenn Suart 14:00
Well, because each of the stores, they have to take of course the full line at Canadian Tire, whatever Canadian Tire chooses, and they own lots of their own brands. Now, they also have… the dealers have the freedom to do things that are a bit more local because, again, the company is geared towards the customers. Stores in Cranbrook BC would have… their customers would have different demands than a store, for sake of argument, in Quebec. So we sold a lot of coolers, specifically to the Cranbrook Canadian Tire store. They’re one of our top clients because of the makeup of the clients for Canadian Tire in that area. That’s one of the reasons they… they have that flexibility and of course once that dealer started talking to other dealers it just becomes a bit of a snowball because they know they’re they’ve got a product… and they’re all talking to each other all the time because they want to find good products to sell to the customer. So it’s fascinating understanding your channels for distribution and why people are buying. That’s why it’s so important your product delivers, and I can’t say it enough, you’ve got to understand what the benefits are for the end users, and for the people along the way. And maybe you do it online – I’m not saying you don’t do stuff online. But in this particular case, for this kind of product going retail worked, and Canadian Tire was the right group for that. Whatever your product is, you should be thinking about benefits, benefits, benefits, and trying to solve that… problem for people.
Doug Ross 15:27
Yeah, totally agree, that cuts across widely. What do you do if there’s… nobody has gone there before, let’s say, What would lead you to creating a completely new distribution method, because we all know what exists now, the retailers are out there, that’s great and… we’re talking about a physical good, let’s say, right, so you can go with a retailer, or you can sell it online but you’ve got to fulfill that somehow. So maybe you’re looking for a fulfillment partner, or a platform that can both be the digital store and the fulfillment all in one place. But there [are] opportunities to do something completely different and create, really, in a sense, it’s a new market, if you go a completely different way, which is going back to the example you had before…. going digital. Are there any spaces out there now that have not gone digital [yet]? They’re totally… only in the physical realm. I wonder if there actually are any and how you innovate in this area.
Bridget 16:31
You’re listening to Conversations on Startups with Doug and, Glenn thanks for joining us. Let’s get back to the show.
Glenn Suart 16:37
That’s a good question. I don’t know. I know that… I’ve talked to other people who have ideas or products that they’re testing and one way is to go to local craft fairs, for example, it’s an easy thing to do, doesn’t cost you very much money, but you get to get some people to look at your product, look at your marketing, and see whether they like it or not and if you’re getting interest, that can be very powerful. It gives you really good ammunition to go and do something more. You know, if you’ve got a screwdriver, for example, and I had this example happen to me before. People say, Oh, I’ve got this great idea for a blue screwdriver, or a blue widget or whatever, and they’ll say I’ve come up with it and I want to sell it to Stanley I don’t want to do it myself. And it’s well, I think Stanley has figured out how to sell screwdrivers, and they probably looked at the blue screwdriver before so the chances of you actually getting any interest from them is probably limited. Now, if you went to say some craft fairs, and you were selling your blue screwdriver for $200 each, and you sold out of the 100 of them that you made, well, Stanley would be very interested at that point. So you need to understand not only your product, but all these different channels where it works. I guess to come back to your question, there’s different channels for different things, and they don’t all have to be digital. Craft fair is not digital. But it gives you the kind of stuff you need and evidence to prove that maybe you could sell it online at that point. But another guy who was very successful, you know, ten, fifteen years ago – not particularly a nice guy, apparently – but the guy… the ShamWow guy, right, Vince, you know, selling the shammy [chamois leather] on television using infomercials. Made lots of money and it was unusual the way he used the power of the infomercial to get people to call. Lots of people could do that. There’s lots of other products you could sell that way. But… maybe doesn’t work for things. In this particular case, people were buying the shammy and they were buying Vince at the end of the day. And so again, there’s lots of different channels beyond Amazon, beyond retail. Just understanding where your target market is and what you’re giving to them is really important.
Doug Ross 18:57
Well, and sometimes if you do it in a new way, people will start to do that. So for example, if I started to deliver pizza by drone [Ya] low and behold, in a short period of time, people might be really liking that method, and they… they buy all their pizza by drone. So yeah, you can always go by well, people are buying there now it’s… to me, it’s the do I join them or beat them kind of decision. Join them is I’m going in an existing way. It’s proven. There are sort of pathways there that are already known. I can talk to people who’ve done that and maybe learn from them, that kind of thing. Beat them would be I’m going to do something in a different way. You know, a new distribution way a drone or something like that, which we’re going to see I think things are going to explode in this way in future. Obviously autonomous vehicles is going to be another one. You can already get almost anything delivered to your home. So lots of fascinating things here. I think it’s an important question when you’re creating your business? How am I going to get this out to people? And if I can sort of sum up a few of the things that were mentioned here today, one, always [be] thinking about who your customer is, if you’ve got a buyer involved, you got to think about them as being your primary customer, and yes, they have customers too. The second one is to really ensure that you’re wise to whether you have a brand and whether opening something up online is going to be sufficient without promotion or do you tap into something that already exists and get your brand noticed out there and then build from there? So those are a couple things that came up. Great discussion today around this distribution methodology. Was there anything else that you wanted to add, Glenn?
Glenn 19:32
No, Doug, I think you summarized it pretty well. This is a very interesting space and you have to challenge your assumptions, that’s about the only thing I ever think about, and do it dispassionately a little bit sort of like Jeff did with… doing the 20 different business plans, because there’s always opportunity. And as you pointed out, industries… it’s not static. There’s all these different things that keep evolving over time. Twenty years ago, there wasn’t an Amazon, twenty years from now it’ll be something that nobody else has thought of yet, either. So keeping those thought processes working is very important.
Doug Ross 21:23
Yeah, and the amazing thing on that story is he created a new way to sell books but then ultimately created something that a lot of people just feel they need to have, and it’s a… a lot more than books now. It’s really an empire… that it’s become, and people are willing to pay this fee to get these, you know, these free things. It’s incredible. It’s become a lot more than just about how to sell books.
Glenn Suart 21:51
Very much so and in fact we could probably do three episodes alone, on the impact Amazon has had on different industries itself. Because for example, Netflix…Netflix is one of the most successful streaming services worldwide. Do you think Netflix delivers the actual content? No, Amazon does. Amazon.
Doug Ross 22:14
Oh you mean on the back end.
Glenn Suart 22:16
They’re the back bone, the back end for Netflix. They’re actually the pipeline to get the stuff from Netflix to your house. People don’t understand that Amazon… this is where they make a lot of their money, in all these different areas not just in selling stuff, or an offer, you know, in terms of Prime channel itself. With the content. They are doing a whole host of things and they’re creating new distribution platforms all the time.
Doug Ross 22:52
Conversations on Startups is a production of Glenn Suart and Douglas Ross. We hope you’re having fun listening but mostly that you take action on your business idea. For more inspiration visit our websites: todaysgreatidea.com and sparkclickgo.com. Another episode of Conversations on Startups will drop soon, or is already available to binge. Thanks for joining us, and remember to subscribe and invite your friends. See ya next time!
Transcribed by https://otter.ai