Wednesday, December 19, 2012

More Business Wisdom (And Being Right) From Chef Gordon Ramsay

Somewhere in my past blogs or articles I’ve sung the praises of a TV show both on Fox and BBC America called Kitchen Nightmares with Chef Gordon Ramsay. Well he’s come through again, this time focusing on the rather questionable business practice of suing your way to wealth and riches, or attempting to. Kitchen Nightmares (KN for short) is a reality show that presents the viewers with dysfunctional restaurants where the owners have asked Chef Ramsay to come in for several days to help turn the situation around. As I’ve said before, it could teach many other business owners a thing or two. Complicated menus, poorly managed kitchens, lousy service and marketing skills can translate into trying to do too much (and badly), improper inventory control, and lousy service and marketing in other businesses too. Ramsay’s solutions are often very transferrable to any other business. The other night featured a restaurant in Baltimore called Café Hon. “Hon” is apparently a local expression used by and for middle aged Maryland women as a term of pseudo-endearment I guess…something similar to “darlin’” in Texas or “love” in the UK. Somewhere along the line it seems the owner got to talking to a legal firm about copywriting the term “hon” and the effects were disastrous for her restaurant. One might wonder how the sleazy legal firm profited on this, but that issue wasn’t covered. Other businesses using the expression in their ad campaigns or marketing were sent “cease and desist” letters. Their outrage over being told not to use a word that certainly pre-dated the restaurant itself spilled over to their customers. In effect, a boycott of sorts was on. Remember Donald Trump’s attempt to commandeer the phrase “You’re Fired” a few years ago? Just because it was a catch-phrase of his TV show The Apprentice, does anyone other than himself think he had any right to it? And that he’s entitled to compensation for it? Wonder if this has anything to do with his somewhat spotty public image in recent years… America has a lawyer for every 50 citizens or something like that. Whatever the figure, it far outpaces the rest of the world…and I do hope this is something the rest of the world avoids copying. The nature of our litigious society has been one of the many major reasons it has become more difficult to do business in what was once the largest, freest market in the world. Having a Congress and Government Bureaucracy made up overwhelmingly of lawyers and legal grads doesn’t help. How does this affect the independent sales rep? Well, it’s something you have to be aware of at all times. When you pick up a new line ask the vendor if all his/her legal “I”s are dotted and “t”s are crossed. Form an LLC for yourself so that you don’t become the subject of a lawsuit targeting you personally. On the other hand, what to do about protecting your own interests? We can’t go into too much detail here because situations will change in each case. But if it could be boiled down to the essence, I’d say here is the rule of thumb: If you genuinely created a product or intellectually unique ‘thing’, get it protected. If you are working with a lawyer to try to find something you can take over the “rights” to and just sit back and make money by suing people or settling out of court, then you are not a businessman. You are a slug who’s not worthy of the name and title of being a businessman. Making money selling your goods or services, is the right thing to do. And come Judgment Day something tells me “right” will be favored over “legal”. It’ll be seen below that Café Hon learned that “right” wound up being better for their business than “legal”. In one of the industries I serve, there is a major manufacturer who’s taken the “lawsuits to riches” route. This company tried to sue half their respective industry a few years ago, claiming copyright infringement pertaining to the appearance of other products in the industry. The decision came down that since the founder of the company did not take the time to copyright this aspect some decades ago, they had no case. The rest of the industry breathed a sigh of relief. But there is still one part of the products this company makes that ARE protected. And that enables their legal team to work full time looking for things like art, t-shirts, posters, figurines, etc. where they can threaten and bully those companies or individuals trying to use such art or design. The art need not even have the familiar company logo anywhere to be found—the product can be identified and claimed as theirs if one small part of the item in question matches their design. Think of the familiar Coke bottle logo shape and you get the idea. One result of this is the discontinuation of several products in a line that I sold into a chain of 100 stores. My vendor could have altered their design a little bit to comply. I offered to get them in touch with the attorney that successfully defended the industry-at-large against this corporation, but they just did not want the hassle. This decision meant less work for workers, fewer products for consumers, fewer profits for the retailer…and less sales for the sales force, me included. Hopefully with a generation raised on the internet, the whole idea of open source design will be more conducive for future competition and economic growth. The monster that they must counter is the trend toward companies, and more scary, legal firms, buying up patent rights just so they can quash anyone who comes along with a better idea—even if the products don’t look or act anything like each other! In most of these situations, the company or legal firm had nothing to do with building or creating the product to which they have legal title…indeed, they usually have no intention of ever doing so! This development is perfectly legal—it’s something the legal profession thought up after all. But that doesn’t make it right. Back to Café Hon and their story on KN: The owner, alongside Gordon Ramsay, appeared on local radio in Baltimore to apologize, to drop all suits, and to promise not to pursue any other suits by relinquishing her claim to the word/phrase “Hon”. The restaurant started to rebound and hopefully all will end happily ever after. It’s only lawyers who get work issuing “cease and desist” letters to manufacturers and budding entrepreneurs. Their work, while sometimes just and worthy, is instead becoming increasingly a barrier to an economy that cannot take much more blows. And, it takes work wealth away from others who can build on it. Lawyers don’t build or create wealth. They confiscate and retard it. I’m sure Café Hon would now rather have their customers go home on full stomachs while their cash registers are full, than be proud of a claim to some phrase legally all their own. There’s something right about full stomachs and full cash registers, don’t you think?

Thursday, February 2, 2012

Eight Things You Need To Know & Do To Sell To Web Retailers

Sales for the future will depend largely on how you as a rep, or your vendors as companies, are able to comply with the demands of the online retailer. Whether it’s an account that is strictly online, without brick and mortar stores (like or if it is an older brick and mortar/mail order institution that has a healthy online presence (L.L.Bean or Wal-Mart), there are certain things that you have to be prepared to do in order to get their business.

Think of your own experiences in shopping at the local mall, strip center, downtown, or mass market discount store. How many times have you been looking for something specific like a battery for a slightly aged digital device only to be told by the sales clerk “You have to buy that online, either our own website or the manufacturer’s”?

This fact ought to drive the point home to you as a sales rep, and by extension, your vendors. More and more of what we buy is only available online. If it is difficult to put your stuff into a retailer’s online system, you are not going to make the sale. Add that all up, and you are going to go out of business.

Personal experience recently has me amazed that when I have asked for some of these things we’re about to share, some vendors claim, “None of our existing accounts ask for this kind of data”. The point is, if this kind of vendor wants to grow in the future, they had best prepare for doing business with new accounts because the odds of their existing contacts lasting long without any sort of web-savvy techniques is pretty grim. Many new accounts will be online retailers that are going to demand all or at least some of this kind of data. Accounts that want to move forward will surely be demanding this data as well.

So, here are eight things you should have ready to provide any sort of online retailer:

· UPC codes. This is gone over in detail in my book, The Independent Sales Rep. And it is still amazing there are whole industries out there that haven’t jumped on board (apparel is one of them). Each time you come up with a new sku, a new line of goods, whatever…assign UPC codes to them! Find me a brick and mortar store that does not have a UPC-scanning cash register, and I’ll show you a store that will likely close in a few years if not sooner.

Likewise, there are many online retailers that simply have to have this identifying code and while it may be possible for the account to assign one of their own codes to your product, it’s better if you show you’re playing ball by having your own already assigned. While it may not be a requirement for every web retailer, bigger accounts will want EDI capability too, and that’s heavily reliant on UPC codes. To learn more about EDI see my book…

You can go on about how sterile & commercial the UPC makes the product, but they probably said the same thing about price tags centuries ago. Get with the program. UPCs do far more than identify an item. They enable tracking of sales results without fudging data, can locate the item in a warehouse, tell you the pricing, and more. Prepare for QR codes too—those square looking barcodes that you scan with your smartphone. Think of the QR as a UPC code on steroids. The QR can include pictures, testimonials, all kinds of extra data on a product that used to go on a paper brochure—maybe. But now with the QR code, “brochuring” any product for the consumer is possible.

· Web-Friendly Images. An online retailer will want to show your product on his or her own website. Don’t expect them to order first, take a picture of the item in their showroom, and post it on their site. They want to be able to show the item in the best possible image, and if you or your vendor can’t do that, I have to wonder what kind of pride, if any, you have in your own product. Besides, don’t you want that kind of control over your product as much as possible?

Make individual images available on your site to be easily “copy>paste-able”. If you have a PDF catalog as the sole means of showing product images on your site and the best one can do is right click and “copy” a whole page…with that page containing images of 15 skus, it’s impossible for the online retailer to segregate that one sku they want. Besides, the online retailer may not be carrying some of the other images on that page.

If your vendor has an image FTP site or is able to pop a CDRom or thumbdrive with individual images in snail mail, that is a workable solution too. Keep in mind; many online retailers may want to post some of your product on their site first before they actually order it. They get the orders from their customers, then they will order from you. This leads to the next thing you need to be able to do:

· Fast(er) Turn Time. The web retailer is going to want to receive your goods and turn them around fast. True, with the best sellers from your company, he/she will likely keep some stock on hand…but those items that do not fall into the “80/20” rule (80% of sales come from the top 20% of skus) are going to be ordered and reshipped in rapid fashion.

If you and your vendor can’t get the product to the account within whatever your industry standard is, or better, this web retailer will not bother ordering from you. In my particular industries, average turn time used to be 2-3 weeks. It has now become 10 days to 2 weeks, or less! Guess which vendors I seem to be getting more orders from, especially when it comes to online retailers?

· E-invoices and Tracking Data. When that order ships, hopefully in the time window just described, the smart vendor is now providing all accounts, especially web retailers, an email invoice and tracking information so that the account will know the whereabouts of their goods.

This was something only large accounts demanded a few years ago (EDI does it automatically with ASNs-advanced shipping notices). The web retailer wants the comfort of knowing he/she will be able to satisfy their customers with your goods in a timely fashion.

Vendors that need to be reminded of this, by by being called and asked for the info, are fast falling out of favor. This is a process that should be automatic with all vendors. There are numerous systems a vendor can use for this purpose, but one line I sell uses simple text documents with the tracking on the invoice—a program that looks to have been created in house. Insist that your vendors comply with automatic e-invoices and tracking.

· A Web Description. Even though you’ve provided a really good photo image, it helps to have a good verbal description of the item for the web retailer to post. Things like weight and dimensions, texture, color, what materials the product is made of and so on, help the ultimate customer get a better idea of what it is they are about to buy, or not buy. When assigning UPC codes to a product, an official web descriptive text—one or two short sentences, is a really good idea. Think of it as the “30 second elevator pitch” for the item.

· Weight and dimensions. If not included in the web description, knowing these is still a good idea. Some web retailers need to know these and have separate columns on a product setup form just for this type of information. It also helps the web retailer determine how much shipping this item will cost them, so they can make a decision as to what costs will occur and how profitable the item will be for them should they pitch it on their site.

· Legal, Ethical and Safety Issues. Is the product you are trying to sell the web retailer made in a sweatshop in Samoa? You may have to provide country of origin in every step of your manufacturing process and those countries better have a good reputation. Can you provide a certificate of liability insurance for your vendor that removes any risk to the web retailer should anything go wrong whether some consumer files a lawsuit, frivolous or not?

It’s not a good idea to try to slip something over on your web customer, because if word gets out, he or she will be the one who takes the flak from advocacy groups, the press and eventually the public at large. Don’t make your customer look bad. Be prepared with this info.

· Can You Drop-Ship? What if the web retailer gets an order for your product and asks you to ship it to the consumer direct? Can/will your vendor comply? This has been a contentious issue with some of my own vendors in the past. They reason “Why should we be doing this when we have our own retail site, and now we’re basically supplying our competition?” Well, if that "competition" (ie, prospective web retailing customer) gets more hits than your site does or gets a few more hits yours doesn't, that’s reason enough to take up the drop shipping option. Increasing possibility of hits online is not a bad idea!

I would compare this drop-ship scenario more to a cross promotion in brick and mortar retail, where one retailer puts some goods on consignment with another retailer across town, who has a market Retailer A would like to crack but can’t because of his location or clientele type. Your vendor may not be used to selling B2C (business to consumer), but if they take up this challenge, and thoroughly research how much it will cost per item (smaller boxes, labor costs, paperwork, etc.) it could be a winning situation.

Most web retailers will have the vendors use the retailers shipping account (UPS, Fed Ex, whatever) and ask that the packing slip be not priced (so consumer is unaware of costs). Consumer often pays the web retailer before retailer pays the vendor for the goods since they may have Net payment terms with the vendor.

In conclusion, if you as a rep are prepared for these eight things and can find vendors who are willing and able to do all, or most of them, you will find more and more business in the future…simply because: more and more future business will be on the web.

NOTE: Because of recent feedback from some followers of this blog, I got motivated enough to add 10 pages to my book that concern agreement letters and contracts—some of the same material you see in the two prior blog posts. Many thanks. The new edition of The Independent Sales Rep containing this info should be ready by mid Feb ’12…and expect a Kindle version of the new edition shortly after that.