Selling To Sam’s Club May Open Other Doors

Editor’s note: This article was written by Kim Souza and Michael Tilley of The City Wire.

Getting product into a Sam’s Club is no easy feat for most small volume suppliers, but those who do make a connection say it has launched other successes.

Blake Pointer, CEO of Rogers-based My Brothers Salsa, and Ron Embree, president of Fort Smith-based River Bend Industries, said Sam’s Club connections gave them new possibilities.

A typical Sam’s Club has less than 10,000 stock keeping units or SKUs. This compares to 100,000 or more SKUs inside a big box retailer like Wal-Mart Stores Inc.

Finding the right product mix is key to the success of club economics as members do pay for the privilege of shopping, according to Salah Khalaf, Sam’s Club senior manager for supplier diversity.

Khalaf conducts numerous workshops around the country each year trying to attract and educate smaller and women-owned businesses into the fold of Sam’s Club. He works with Showcase Events and Shopper Events, third-party service providers who carry out product tastings and other in-club events on behalf of potential suppliers.

Khalaf said this is just one way smaller suppliers can test their product inside a Sam’s Club.

SHOWCASE EVENTS
Using Showcase Events, formerly known as “Road Shows,” was the perfect way Blake Pointer and partner Helen Lampkin got their My Brothers Salsa product into Sam’s Club and later on the shelf at more than 100 Walmart Stores and Neighborhood Markets across Arkansas and Oklahoma.

Pointer said a few years ago Lampkin – also his mother-in-law – was making salsa in her Bentonville kitchen and giving it away to friends and family. In 2003, she launched the company My Brothers Salsa and began distributing the product to small local retailers like Richard’s Meat Market and specialty grocers like Whole Foods in Little Rock and Tulsa.

But three years ago the company ramped up production after it partnered with Shopper Events with taste demos in the Sam’s Clubs in Fayetteville and Bentonville.

“We did very well with the product, conducting about 10 or 12 weekend ‘Road Shows’ that first year,” Pointer said. “It’s important that the demo weekends are done in areas where consumers can buy the product elsewhere after you are gone. For that reason we stuck to areas where we had product for sale in Whole Foods and later Fresh Markets to get the maximum benefit from the Road Show.”

He explained the Shopper Events or Road Show was a partnership done on a consignment basis, where they set up in a Sam’s Club on a Thursday evening and offered the product all weekend and then split the sales.

Pointer said Shopper Events provided their firm with real sales data that caught the eye of a Sam’s Club buyer and led to inline club space for one of their products.

“We worked with our product manufacturers, one in Rogers and one in Alma, to make a larger jar that fit the Sam’s Club packaging criteria,” he said.

SAM’S & MORE
The connections Pointer made doing business with Sam’s Club proved to be invaluable for getting broader distribution.

He said between the sales at Sam’s Club and the Shopper Events’ data he was able to get a meeting with a Wal-Mart buyer and got 84 stores to start, or all the Wal-Mart and Neighborhood Markets in Arkansas.

“It was important for us to start fairly small. We outsource our manufacturing and had them to consider and the one thing we never want to do is compromise the quality of our product. We are true foodies,” Pointer said.

Khalaf said My Brothers Salsa is a good example of a local company that started small, learned their business inside and out and then connected with Sam’s Club through Shopper Events for the added exposure they needed to become a supplier. He said the worst mistake a potential supplier can make is taking on too many stores or clubs and then failing to meet the requirements.

Pointer said during their last meeting with Wal-Mart they got all the stores in Missouri and Oklahoma added to their business. He said Wal-Mart saying, “no” is not a cause for worry. It’s when they say “yes” that the worry level rises.

Since My Brothers Salsa has performed well at Sam’s Club and Wal-Mart, Pointer said the firm was recently contacted by Costco for a meeting. They also just signed a deal to expand the product into Fresh Markets on a national scale. He credits much of the company’s emerging success to the partners they made during the early Showcase Events that first year he joined the company.

Khalaf stressed the importance for potential suppliers to do their homework before they ask for a meeting with Sam’s Club or Wal-Mart.

Pointer said his background in marketing at Saatchi and Saatchi X and his work on the Proctor & Gamble account gave him a solid background for his role at My Brothers Salsa.

“We did our homework long before we sought out a meeting with a buyer and it paid off,” he said.

SAM’S TRIAL
River Bend Industries turned to producing a retail product when it became clear that Whirlpool would close its Fort Smith manufacturing operation. River Bend is a plastics molding company.

President Ron Embree learned of a cooler variant from Northwest Arkansas entrepreneurs Tim Mika and Stephen Bowman. It’s a unique and simple design that places a cooler on the top of an adjustable tripod leg configuration that raises the cooler above the floor/ground for more convenient use. The tripod legs fold into the sides of the cooler.

The “Kosmo Cooler” was born, and by 2011 a few pallets of the coolers were being sold at a few Sam’s Club locations.

Embree did not have the usual struggle to get a Sam’s Club buyer to see the product and begin the process to get it in a store. One of the people affiliated with the Kosmo had a connection within Sam’s Club.

“Fortunately, one of the guys working with us on this, he knew someone already selling to Sam’s. … He knew the people to contact and to go see. He already had that relationship with them,” Embree said.

It took about six weeks to get the product tested, and about two months before it was sold in a Sam’s Club store. The cooler sold for about a year. Sam’s Club did not renew sales.

“Sam’s is about sales dollars per square foot and I think there were other products that they could sell better per square foot,” Embree explained. “This (Kosmo) unit has to be displayed and set up so people can tell the difference between it and the competition. In six of the 10 stores I went to, it was not set up.”

However, Embree is grateful for the experience with Sam’s. He learned, for example, that the coolers sold best in Sam’s Club stores near the border with Mexico. With that knowledge, he is trying to get the cooler sold in Wal-Mart’s Mexico division.

VALUED BLUEPRINT
Embree said the experience at Sam’s Club gave him a blueprint of how to work with Wal-Mart and other large retailers.

“The first thing you have to have a contact and a way to get in front of the right people. Everybody’s got the next best thing, the next best deal, and so those guys (buyers for retailers) are swamped,” Embree said.

Selling to large retailers also requires a vendor to be flexible and understand the retailer’s process. One of Embree’s initial lessons in working with Sam’s Club is the speed at which retail moves.

“It’s not difficult for someone who comes from the retail world, but for me it was difficult to grasp that (quick turnaround),” Embree said, adding that he missed a deadline on a few early Sam’s Club orders.

And when dealing with Wal-Mart or any of the retailer’s divisions, knowledge of Retail Link is a must, according to Embree. Retail Link is Wal-Mart’s proprietary computer network that connects Wal-Mart suppliers to sales and other data about the product or products they provide to the retailer.

“You have to know the computer system, and their system is Retail Link. You want to take advantage of that. There is a lot of information there, but you have to know how to use it,” Embree said.

RIVER BEND PRODUCTS
In early 2011, Embree employed about 120 at his Fort Smith operation when Whirlpool was still a large part of his business. Today, he employs about 85 in Fort Smith. River Bend also has plastics molding plants in Iowa, and the company has about 365 employees.

Embree has developed variants – three-spicket cooler, camo cooler, etc. – of the Kosmo, and is selling them at Sutherland’s, CV’s and Marvin’s IGA. River Bend recently hired a marketing company that specializes in the hunting-shooting-fishing retail segment.

“They are trying to stir up an interest, so that my online sales pick up and the other big box guys will want to sell them,” Embree said.

River Bend is also producing 12-gallon and 18-gallon “survival storage containers.” The containers, which have to be cut open once they are locked down, are included in the 2014 Grainger Supply catalog.