Smaller companies finding access to Wal-Mart is getting a little easier

CHICAGO (Reuters.com) -- Getting product on Wal-Mart's shelves has long been the top goal for consumer product-focused businesses, even if it felt like running a marathon to get there. Yet some say, it's become a little easier as Wal-Mart becomes more accessible.

According to the company's own data, Wal-Mart Stores Inc. buys from nearly 61,000 U.S. suppliers, spending some $200 billion on merchandise in 2006 alone.    

Wal-Mart has a proprietary Web-based system called Retail Link, where suppliers can access critical information on orders they have in process and see how well their products are performing in the retailer's stores.

There are also sites that offer insight on the company's buying philosophies, such as Check Out , a blog created by some of Wal-Mart's own buyers to discuss in-store trends, as well as their likes and dislikes of products in categories such as electronic gadgets and games. The company also has programs that support supplier diversity, as well a broad commitment to sustainability initiatives unveiled in 2005.

Consultants such as Warady can also make the selling process easier, helping vendors put their best foot forward during that all-important half-hour presentation to buyers at Wal-Mart's Bentonville, Arkansas office.

There are other partners available, such as fulfillment houses to manage shipping and logistics and ease the burden of Wal-Mart's demands for tight turn-around and strict packaging specifications.

Hurdles still remain

Getting in still requires a track record, tons of preparation and the proven ability to deliver. Wal-Mart will not coddle smaller companies, entrepreneurs say, and one can easily lose a chance at an opening if management is unprepared or misses a deadline.

Wal-Mart didn't respond to a request for comment, but we talked to three smaller manufacturers about their experiences getting in the door and keeping their products on the shelves.

            Company: Peak Enterprises, Sarasota, Florida

            Product: Tung Brush and Tung Gel, oral-care products aimed at the hip, young-adult consumer.

            The story: Tom Oechslin began selling his tongue-cleaning brushes in 1999. Positioned primarily as a clinical product sold to dentists and hygienists, he wanted a shot at the retail market and worked to secure shelf space with drugstore chains such as Rite Aid.

            In 2001, he began pitching the brushes to Wal-Mart but was rejected for several years. Finally, in 2005, after working with a consultant to rebrand the product away from the clinical market toward a younger, retail buyer, the Tung Brush was given a trial in about 800 Wal-Mart stores.

            There were some difficult roadblocks. While the buyer liked the product, the packaging was too wide to fit in the allotted shelf space; due to merchandise planning deadlines, Oechslin had only 48 hours to come up with a new prototype. He also had difficulties meeting initial production deadlines, as configuring manufacturing for the revised packaging required a special part from Germany.

            Wal-Mart typically reviews product every six months, he says. At one point, the buyer told Oeschlin his numbers weren't living up to expectations, and he was prepared to get the boot. Instead, several months later, he received an email that distribution was going to be expanded.

            Advice: "When you go into Wal-Mart, you have to have all your ducks in a row," Oeschslin says. "That means raising capital, finding the right manufacturer. Have the map in place, the whole program in place. It's a tremendous amount of preparation across the board.�

            Today: Tung products are sold in some 3,500 Wal-Mart stores.

            Company: ECOSmart Technologies, Atlanta, Georgia

            Product: Botanical pesticides

            The story: Former lawyer Steven Bessette founded ECOSmart in 1992. Initially the non-toxic pesticides were sold primarily though commercial channels such as professional exterminators and the agricultural industry. After making its commitment to sustainability, Wal-Mart called in Bessette in 2006 to talk about his product line.

            Within two weeks of that initial meeting, he found himself in a room with a buyer. In 2007, three products designed for consumer use were tested in 80 stores throughout seven cities during a 10-week period.

            Advice: Bessette says 15 years of credibility with the commercial and agricultural industries worked to his advantage. He was fulfilling a niche that no other large manufacturer had taken.

            " think it really gave the buyer some confidence that we knew what we were talking about," he says. "ECOSmart is the only product on the shelf that has a safety claim. If we didn't have that story to tell, how would they be able to tell the difference between that product and other conventional products on the shelf?"

            Today: This year, ECOSmart products have been slated for distribution in more than 600 Wal-Mart stores throughout the United States. In order to meet increased demand, Bessette's team is partnering with a fulfillment house to handle logistics, a move he expects will save some 3 to 5 percentage points on shipping costs. 

            Company: Hyper Products, Wayzata, Minnesota.

            Product: Pet toys and treats

            The story: Ward Myers started Hyper Products in 2003. His background in the pet industry gave him the insight to get a patent on a slingshot device called the Hyper Dog. The product allowed pet owners to play fetch with large dogs without having to touch a slimy tennis ball. Soon after, he had secured shelf space in PETCO, as well as regional farm-and-feed chains.

            In 2005, Myers decided to pitch the Wal-Mart account; industry connections helped him locate the buyer. Wal-Mart showed interest but had reservations about the product's clam-shell style packaging; it took up too much room and couldn't easily be stacked on shelves.

          Myers came back with a prototype package - a box adorned with four-color photographs; he was able to secure a commitment to get the product in several thousand Wal-Mart stores.

            Advice: Don't pursue Wal-Mart straight out of gate, he says. Instead, reach for low-hanging fruit such as regional retailers that will help you learn the ins and outs of production and shipping deadlines.

            "Really, if it's a smaller, newer company, do business with some smaller and regional chains," he says.

            Once you do get in the door, give yourself wiggle room on pricing. "I kind of went in there a bit higher," he says. "I knew they would try to beat me up on price."

            Today: Hyper Products' business has grown along with Wal-Mart; the company now manufactures some 80 pet products, including Woodys, Doggie Driver and Hyper Retriever.

Deborah Cohen covers small business for Reuters.com. She can be reached at smallbusinessbigissues@yahoo.com.