Many entrepreneurs dream of breaking into Walmart, the retailing behemoth with more than 4,600 U.S. stores. To do so, you’ll need to separate yourself from the field, of course, and have the logistical capability to replenish the shelves on time. But to convince Walmart’s buyers to make shelf space, you’d better be prepared to talk about the market in depth, and to work with Walmart on price. Here, three entrepreneurs tell their stories of negotiating with the world’s largest store. (For our related piece with advice from a Walmart buyer, see here.)
Ben Rendo, Mighty Good Solutions
For the past four years, Walmart has held an open-call day at its Bentonville, Ark., headquarters where entrepreneurs can pitch their made-in-America products. Ben Rendo made the pitch for his Kansas City-based startup, Mighty Good Solutions, in 2014. At the time, Mighty Good Solutions had just one product, the Mighty Handle, which makes it easier to carry heavy grocery bags. Rendo had come up with the idea in 2006, but didn’t start the business until 2012, emptying his 401(k) retirement plan and downsizing his home to pay the startup costs. He was selling in a local chain called Schnucks, when he heard about the open call from a local company that sells to Sam’s Club, filled out the application and got selected to pitch. “It’s akin to playing in the Super Bowl,” he says.
Mighty Good Solutions’ only product at the time of its pitch: The Mighty Good Handle
To prepare for the meeting, Rendo recalls, he and his business partner, Anita Newton, stayed up late for three weeks and plotted out their marketing and sales strategy. They created a video by going to their local Walmart, and stopping shoppers in the parking lot to talk on camera about the Mighty Handle. “We said, ‘We’ll give you the product for free if we can talk to you on video about using our product,’” says Rendo, 36. The effort paid off. “It’s a brief video, and it really resonated with our buyer.”
Mighty Good Solutions came away from the meeting with a deal for 100 stores – basically just a test, with one case in each store, or a total of just 2,400 units (retail price $3.88 on walmart.com). Pricing stayed the same, Rendo says.
At the time, Mighty Good Solutions was so small that Rendo and his wife would stay up past 3 a.m. packing the product by hand because they couldn’t afford to hire staff or outsource the work. “We used to use these crappy zip ties because they are cheap, and after awhile your hands and fingers started bleeding,” he recalls. With the Walmart deal, he was able to cut a deal with a local manufacturing facility to handle the packing and shipping – a major relief as Mighty Good’s business with Walmart cranked up. “We did well,” he says, “and they put us in 800 stores, and now we’re in every Walmart in the country.”
Today, Mighty Good Solutions is an eight-person company with revenue in the low-millions, and working on new product introductions that it expects will hit the shelves this summer. The Mighty Handle is now available at Kroger, Bed Bath & Beyond and Home Shopping Network as well as Walmart. And as Rendo works to get more distribution, he says, being in Walmart helps to open the door: “Once you’ve got the track record of doing well, it does make it more appealing to other retailers.”
John Goscha, Finally Light Bulb Co.
John Goscha, who founded his first company while an undergraduate at Babson College, started Boston-based Finally Light Bulb Co. about four-and-a-half years ago, to make energy-efficient, long-life light bulbs that look as warm as incandescents. The bulbs are available in Staples, Ace Hardware and as the brand has expanded, he got them on to Walmart.com through an affiliate retailer, LightBulbs.com. Products that don’t make it onto Walmart’s shelves are often available for sale on its website. But what Goscha really wants, and what he’s been talking with Walmart’s lighting buyer about, is to get on the shelves in some of its stores.
It’s been quite a process. Goscha tried to reach out himself, emailing Walmart’s light bulb buyer – whose name he found online – cold. When that didn’t work, he got a broker. There are tons of brokers in consumer products and food who ease the way between entrepreneurs with products to sell and major retailers; many have worked in sales at the major companies, and some have previously worked as buyers at Walmart and remain based in Bentonville. “If you go to a trade show for any product category, you’ll have a dozen brokers approach you and say, ‘Do you want to get into Walmart?’” he says. “The good news is that you don’t pay anything until you sell something.”
The bad news is that there are so many brokers that, as Goscha says, “there are a lot of not-good brokers out there.” To find the broker he used, Goscha got a recommendation from a friend of a friend who was selling to Walmart in a different category. Having that recommendation, even though it was indirect, helped Goscha feel comfortable he’d found a good broker and avoided a bad one. “If you go in with someone who has a relationship, you can have a conversation and get a lot of feedback,” Goscha says.
To date, Goscha, 33, has had three meetings at Walmart – two with the broker and one since hiring a sales chief from major lighting company Osram Sylvania – and feels like he’s made progress. “You may get a no the first time, but listen very carefully to why it is not right right now and work on it, and once you have that accomplishment come back and share it,” he says.
At the first meeting, he recalls, Finally Light Bulb had only one bulb, the equivalent of a 60-watt bulb, to show. “They said, ‘You need more bulbs,’” he says. “They’ll give you feedback, ‘here’s what I like, and what I don’t.’ There are usually a lot of things on that don’t list. It gives you a road map of what works.” Since then, Finally Light Bulb, which expects revenue of a few million dollars this year, has introduced light bulbs in the equivalent of 75 watts and 100 watts. Walmart’s push for made-in-America products – which helped Mighty Good – was a sticking point for Goscha, whose bulbs are not currently made here. The buyer, he says, also asked him to work on costs.
While Finally light bulbs are still online-only at Walmart, Goscha is hopeful that he’ll get a deal for shelf space in 2018. Now that the company is a little larger, and the bulbs are selling well in other stores, he feels more ready. As he says: “The goal is to get a Walmart deal at the point when enough people know the product that it will fly off the shelves.”
Ahmed Rahim, Numi Organic Tea
The first time Numi Organic Tea had the opportunity to sell to Walmart, CEO Ahmed Rahim recalls, the company opted against it. It was eight or nine years ago, he says, when he heard through a broker that Walmart was interested in Numi’s gift products, especially its line of flowering teas. But the retailing behemoth wanted the items to sell at a lower price than they sold elsewhere – and Rahim worried about upsetting his existing customers. “We didn’t really want this product at such a low price that Walmart was offering,” he recalls. He also didn’t know if the brand was ready to scale to Walmart size yet. “You’ve got to be ready for Walmart on multiple levels,” he says. “You don’t want your brand sitting on the shelf and then six months later or a year later it is discontinued. You want to make sure when you get it on the shelf, it sticks and stays.”
As the brand grew – Numi now has revenue between $30 million and $50 million and is sold at Target, Safeway and Whole Foods – he began to feel ready. Last year, when a food broker approached Numi and said there was interest at Walmart because the chain had seen Numi’s growth in the food sales data, Rahim, 48, pursued it. The Oakland, Calif.-based company’s sales team flew to Bentonville to talk with the broker, who was also based there. Then they waited for the “reset” when some existing products would be booted off the shelves and new products brought on toward the end of summer.
Rahim flew to Bentonville for the fourth meeting to seal the deal. “I went to introduce myself, and to share the Numi story,” he says. This time, Walmart was interested in a broader assortment of Numi’s teas – organic and fair-trade products like Numi’s have garnered increasing interest at retail – rather than the gift items that Rahim had discussed with it years earlier. He launched simultaneously in 4,000 Walmart stores and 300 Sam’s Club locations.
Now Rahim is preparing for the next reset, when Numi and Walmart will look at the numbers for the year, and decide which of Walmart’s stores are big sellers of Numi’s teas and which have been disappointing. He expects to scale back distribution to perhaps 2,000 stores, or around half of the current number. “The everyday shopper might not be the Numi shopper, but more of those shoppers are coming to their stores,” Rahim says. At its other big retailers, such as Safeway and Target, he notes, Numi is not available at every store, but at 60% to 70%.
Organic, fair-trade tea, after all, is more expensive: On Walmart.com, a box of 18 assorted Numi organic tea bags sells for $5.48, far higher than a mainstream brand like Lipton, which sells there for $3.28 for a box of 100. Both sides, in their way, are testing what it means to sell a premium, organic product – with that correspondingly higher price tag – to the masses. As Rahim says: “For Numi, Whole Foods is important, but we have to do a lot for Walmart, too.”