Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.
Robert Farb, founder and president of San Diego-based Biomax Health Products, recently got a green light from Walmart to sell Penetrex, an anti-inflammatory cream, in 3,800 stores. What’s unusual about this placement is that Farb didn’t get in by attending an Open Call. The retail giant called him.
Penetrex is already a top selling topical anti-inflammatory cream on Amazon.com garnering a near 5-star rating by the online retailer and grossing roughly $500,000 in monthly sales. Farb, who founded Biomax Health in 1998, said the company was founded in part because he went looking for a solution for his wife’s pain from carpal tunnel syndrome. In his search for anti-inflammatory cream, Farb said the choices were limited so he set out in another direction.
Farb, an IT marketing professional at the time, connected with a chemist in Torrence, Calif., who was working in this area. Together they developed Penetrex, which is made in an FDA-certified laboratory in southern California under the chemist’s supervision and bears the made in the U.S. label.
Biomax also contracts with The Arc of San Diego, a large provider of services to children and adults with disabilities. Adult clients of The Arc do the labeling, packing and assembly for the Penetrex product sold at retail. This program gives persons with disabilities a chance to perform a needed service for income.
“I could not run this business without The Arc and the quality work these adults do in preparing my product for shipment. I am a small company with just one other full-time employee and several others that work part-time,” Farb said.“The services provided by The Arc workers are crucial to my small business and I couldn’t ask for a better partner.”
He said The Arc workers prepare between 8,000 and 9,000 units per week when they are preparing to ship to retail.
Farb said when the head of Walmart’s over-the-counter health and beauty division phoned him last year about getting Penetrex into Walmart, he was surprised, but excited about the prospects of going from online to brick and mortar. He said it took about six months to complete the paperwork to be a Walmart supplier but then he quickly got word from his buyer that the retailer wanted the product in nearly all of its supercenters. Penetrex hit shelves in September 2015 and Farb along with his director of operations Zak Goodman were recently in Bentonville to meet with their buyer for their annual line review.
“Our meeting couldn’t have gone any better and we are excited to work with our buyer who wants to help us step up our game,” Farb said. “This is my first time in brick and mortar and Walmart is the biggest so there have been some challenges in the supply chain that we are trying to fix,” he said during a recent meeting with Talk Business & Politics in Bentonville.
The biggest concern facing Farb and his team is figuring out how to make sure product shipped from California gets on the shelves in stores. He said in at least 25% of the stores customers are reporting the product is not on the shelf as if the product has been sold out, but the stores show they have some in-stock.
Retail expert Jami Dennis of Vendor Masters says this is known as phantom inventory and one of the issues some suppliers are having with the Walmart’s new Global Replenish System. Typically the phantom inventory could be related to theft or more likely it could be sitting in the backroom having not made it out on the floor.
Dennis said because Farb’s product was new and had no sales history by store, the reorder cycle might need to be tweaked which is not that uncommon. Farb said he is working with his merchant team which includes a replenishment manager to try and remedy the issue. One interesting component in Farb’s situation is that he didn’t tiptoe in with 100 test stores like many first time suppliers to brick and mortar. He got the whole nine yards – 3,800 stores to start with which is a little more challenging when there’s an issue with replenishment.
He said Penetrex’s weekly sales at Walmart are roughly 10% of those at Amazon.com where the product has already garnered more than 14,000 reviews. But he’s confident that when the replenishment issues are fixed and more marketing is finished on his end those sales will pick up.
“We are extremely happy to be in Walmart and see tons of opportunity with this retailer. I have never sold in brick and mortar and it’s a more complicated process than purely online but we are up to the challenge and look forward to hopefully getting into Sam’s Club and Neighborhood Markets once we get up to speed in the supercenters,” Farb said.