I don’t ever want people sitting around having a meeting to decide, “Eh, nobody’s ever mentioned it being a problem, so let’s just keep doing it the way we’re doing it.” And, on quite a few occasions, my communication of some of the points below has resulted in positive development.
Below is an assortment of information I’ve been sharing piecemeal with suppliers as circumstances dictate. It seemed like a good thing to put it all together into one document that could easily be referenced for the mutual benefit of everyone.
The adhesive on water-activated tape is designed to permanently bond with cardboard, and doesn’t adhere to plastic. This means that if your shipping process involves taping the top or bottom of the box with plastic tape for some reason of convenience prior to the final taping with water-activated tape you are losing out on a substantial portion of the potential strength of the tape.
Shipping Materials at RTG
We reuse as much packaging as we can with an aim of 100% in the interest of conserving resources. What you ship us gets repurposed and shipped to our customers if it is:
- Perforated kraft paper
- Kraft paper
- Starch packing peanuts
- Other paper filler
- Cardboard boxes
We like to work with suppliers who use these types of shipping products.
Fillers: We love and are able to completely reuse vegetable starch packing peanuts. We hate Styrofoam in all its forms, and ask that you minimize its use to the greatest extent possible. Inflatable plastic cell packing material is punctured and discarded into our recycling. Less annoying than Styrofoam. Shredded cardboard is only one step above Styrofoam, since it behaves like glitter, and is impossible to completely remove from any work area where a box utilizing it has been opened.
Boxes & Tape: We peel all the tape off of boxes before repacking them or using them as mulch in our tomato garden beds. The best packing tape is water activated non-reinforced paper tape. The reinforced kind has fiberglass threads in it. Successfully removing all of the fiberglass threads from reinforced packing tape is almost impossible; to remove all-possible is very difficult and time-consuming.
So, if a shipment comes in that uses water-activated non-reinforced paper tape, and perforated kraft paper and/or vegetable starch peanuts as packing material we are able to reuse 100% of the packing materials.
Conversely, if a shipment comes in that uses plastic or reinforced packing tape and non-paper packing material we are generating waste. Sometimes lots of it. In the worst cases we have actively sought alternate sources of supply for products packed in ways that generate too much aggravation and waste.
Did you know that the adhesive on water-activated tape doesn’t adhere to plastic? This means that if your shipping process involves taping the top or bottom of the box with plastic tape for some reason of convenience prior to the final taping with water-activated tape that you’re losing out on a substantial portion of the potential strength of the tape.
All of our orders with you are approximate and we always have the flexibility to add or remove quantities if it means more efficient use of shipping materials and/or if it helps to minimize the shipping cost-per-tin. Please feel free to ask us to add or subtract from any order if it is the sensible thing to do.
Promote Your Products with RTG
Rainbow Tomatoes Garden can do things for your brands that no one else can, and we welcome conversations about promotions we can partner on. We do not discount products. We don’t run sales. We add value and do value-added promotions. Occasionally, we have done limited time lower prices on certain “special purchase” items, but these are rare and very narrowly focused.
RTG has developed a very devoted group of customers who are extremely passionate about what they view as their “hobby”: consuming tinned seafood products. Some of our customers are “superfans”, “hardcore nerds”, and “conservas geeks”.
These are people who would wear t-shirts or hats with a company’s logo on them, they would love to go on a tour of a canning facility, they watch YouTube videos about all aspects of the tinned fish industry, they have goals that involve eating all of this kind of fish or all of their favorite company’s products. They gather in groups to share their knowledge and their opinions.
Here are a few ways you can tap into our network to your advantage:
Flyers: We include package stuffers in every box that we ship out, and you are invited to send us promotional materials you would like seen by our customers, the most narrowly targeted demographic you could want your marketing dollars to impact. We receive phone calls and emails several times a week from customers who want to express their gratitude for their inclusion. Our customers are eager to learn about your brand(s).
We can include flyers in every box we ship, or we can target their inclusion to any degree you wish. For example, maybe you want your flyers to only go in boxes where a customer has ordered products you make, or only in boxes where a customer has ordered a competitor’s product but not yours, or only boxes that are first orders, or only boxes that are not first orders, or only boxes being shipped to the Chicago metro area and are second orders from customers who have ordered any salmon product. If you can specify it, we can do it.
Today, because the industry is still very immature, we’re willing to include a wide range of materials. That said, it is our preference that promotional flyers:
- promote only products which are readily available to us
- not serve as an enticement to get our customers to shop elsewhere
- speak positively about your products without speaking negatively about other products
Odd Lots: We have our customer base segmented effectively and are able to promote directly into differently-sized pockets of customers, as the situation warrants, which avoids any need for store-wide discounts. If you have odd lots or items which have been challenging to move for any reason at all, please let us know. We can probably sell it.
Promo Merch: Older promotional materials that are no longer current, but still show the brand how it was, or, prototype packaging that was never approved but shows the brand, or keychains left over from a trade show 5 years ago, or labels that were misprinted, or cans that were sealed with nothing inside, or coasters that were printed for a local pub that sells your products…it can be almost anything, because our customers are collectors of unusual items and experiences.
These are not things we charge anyone for, we give them to people, after the fact, as “rewards” to gently encourage positive posts on social media about your brand.
If you have traditional items like hats and shirts, those are welcome, too, of course, but we realize those items may have too great an expense to be given freely, and what we’re looking for are things that can be given away. Depending on the item and the cost to ship, we might be willing to pay the shipping or split the shipping charges with you if you had a goodly number of something(s) small and light.
Tap Our Knowledge
We are always happy to share information, especially when it pertains to things that we believe will help grow the market.
Because we carry the largest selection of tinned seafood in the world we have knowledge no one else could. Because we have active conversations with practically every customer we have a deep and nuanced understanding of what our customers want. We are happy to share that knowledge if asked. If you are considering adding (or creating) new products, feel free to ask us what we think will move and what won’t. We know.
We’ve run promotions and learned an incredible amount of information about how our customers decide what to buy. For example, we know how each of our products ranks in desirability, which products customers would select if cost were completely removed from the decision-making process. And we’re happy to share that information, and any other information we have, with any interested non-competitors.
If you are an importer interested in bringing in products from producers new to you, let us know. We are constantly identifying companies producing high quality products who have no representation in the US.
We Play Favorites
We work best with companies whose ethos matches ours and we endorse them whenever we can.
Between omakase, gift boxes, combo packs, and the conversations we have with every customer we have significant control over which brands and products are elevated in awareness and which are not.
Because our primary goal is customer satisfaction, we don’t use this power for evil; we would never tell a person not to purchase something we carry. We only carry products we stand behind. But the daily reality is that customers are often asking us to recommend between options which are essentially equal.
When asked “Which would you suggest, A or B?” A ships the day we order, uses 100% reusable packaging, provides package stuffers, and a 50% discount off retail. B ships a week later than promised, uses plastic filler, and cheats on discounts with an SRP that nobody sells at. We do not agonize over the recommendation. That decision makes itself.
All products should include the Latin name for the creature inside on the label. It thrills our customers and educating the customer is key to retaining them.
A Lesson In Pricing for Producers & Wholesalers
…from a 32 year veteran of niche industry production, sales & marketing.
In what follows, please keep these things in mind. I spent 32 years working in niche industries at the manufacturing, wholesale, and retail levels. My thinking is informed by this experience. I have seen what works, and what doesn’t work. This is not idle speculation. While the tinned seafood industry is different from the other industries I was involved in, there are more similarities than differences.
I am definitely not right about everything I think, and if I have achieved any success in life it’s due to the fact that I subscribe to three very effective strategies:
- first make it work, then make it work better;
- continuous incremental improvement; and,
- askin’s free.
Everyone (myself included) could be doing pricing better.
Point 1: Retail is Your Sales Force
A stocking retail store with a true brick-and-mortar location is the most effective sales and marketing force in any niche industry that requires conversation with, and the education of, interested new customers.
Other sales channels do a poor job of growing the market (which should be a primary, even near-exclusive goal of everyone in the industry*), but they do perform a valid function within the entire system. They exist to exert downward pressure on pricing so that the brick and mortars don’t behave like they have a price-gouging monopoly, as they do, say, in the diamond industry.
*In any industry there are two ways to increase sales: grow the market or take market-share from competitors. It is always a better use of resources to attempt to grow the industry for as long as industry growth is possible.
Point 2: Keystone Pricing is Critical
A stocking retail store has significantly higher overhead costs than resellers with other business models. This requires a higher profit margin if that business is to remain viable. (I am happy to elucidate all of the reasons why a brick and mortar store needs 100% mark-up, if this number seems off to you).
It used to be so commonly understood that a retail store requires 100% mark-up that the term “keystone” was widely used as a shorthand for, “We can’t tell you our actual pricing until you have demonstrated that you meet our wholesale qualifications, but we can assure you that your wholesale price will be 50% of the retail price.”
Keystone pricing is rarer and rarer these days, but it remains the goal. I don’t get 100% mark-up on many products. But I do get it on some, and it remains the number against which I measure all others. It is also what motivates me to seek out ways to achieve that mark-up in other ways to offset the lack of it with core products that must be carried regardless of margin.
When I can’t get keystone pricing, I become motivated to seek better pricing from alternate suppliers who may have better purchasing terms, lower shipping rates, faster turnaround times, and/or greater levels of marketing support.
For example, I have a sub-optimal margin on the Gulf of Maine Conservas Bluefin Tuna. But, I can order today and have the product the day after tomorrow. And I have an excellent working relationship with Keper Connell, who catches every fish himself. He and I are very closely philosophically aligned. We’ve become friends, and I know his true costs and am willing to accept a less-than-ideal margin on his products because I see my purchases and promotion as a form of advocacy for a business model I want to support. He answers any questions I have instantly, is open to having conversations about producing some custom products for me, was willing to give me an exclusive* on his first, small, test batch of “tinkers” (mackerel fillets) because I was willing to purchase the entire run, and he provides me with a general package stuffer to go in every box and a nicer recipe card that I include with each tin sold.
*In broad, general terms I am against exclusive arrangements, as I believe they are bad for the growth of the industry, and they de-motivate the kind of active promotion which grows the industry. But I am also, as a practical matter, involved in some non-trivial local and national competition with some other retailers and saw an opportunity for an advantage. Exclusives offer advantages and disadvantages unique to each instance, and after carefully weighing this situation I decided the negative impact on the industry as a whole would be minimal and the positive impact for me would be large.
Point 3: Good Pricing Policy
Güeyu Mar has done for the tinned fish industry what Dale Chihuly did for the blown glass art industry in the 1980s…made it possible for everyone to charge more for their products. Now that there’s a $66 can of tuna the ceiling for what’s acceptable has been lifted industry-wide.
This happened for a few reasons. 1) it’s a unique product, 2) of high quality, 3) with great design, 4) a great story, 5) an importer who has established SRP, MAP, and offers a discount structure that rewards stocking retailers for taking an inventory position.
In my conversations with suppliers there seems to be a basic misunderstanding about how pricing structures should be constructed in a tiered industry.
This is how pricing structures should be constructed in a tiered industry if growth of the whole industry is the goal:
- The producer should set the MSRP and the MAP.
- The wholesale distributor should enforce the MAP.
- The retailers should honor MAP.
The MAP should be 10-20 percent lower than MSRP (I prefer 10%, or in a perfect world, for MAP to = MSRP, but I know I’m in the minority there).
If a producer is selling direct-to-consumers, the producer should only sell at full MSRP (or higher), and never discount from MSRP. Ever. Discounting the core product is bad for the brand and bad for the best sales and marketing force any producer can hope to have: hundreds of stocking brick and mortar retail stores. And if it’s bad for the stocking brick and mortar retail store it’s bad for the growth of the industry.
If a wholesale distributor is selling direct to consumers (and whether they should or shouldn’t is yet another conversation), they should also be selling at full MSRP (or higher), but can occasionally do promotions as low as MAP (though, as I’ve mentioned above, they shouldn’t).
Anyone and everyone selling on Amazon or other third party sites should be selling above MSRP. It improves margins by recouping the fees associated with those platforms, and it keeps the brick and mortars happy. If you’re worried you’ll lose sales on those platforms, you won’t. I can tell you from experience that people don’t leave those ecosystems. They’re not using them because of price, they’re using them because of convenience. And, if you’re worried you’ll lose sales on those platforms, you can’t credibly claim you’re on those platforms for any reason other than the retail sales.
This piece by Cory Doctorow is required reading for anyone who is now or is considering selling on Amazon: https://pluralistic.net/2022/02/27/not-an-ad/#shakedowns
Point 4: The Math of MSRP & MAP
MSRP is a number that should be calculated from the bottom up, not from the top down. It is a Very Bad Idea for the producer to decide how much the product will sell for at retail and then try to “find” the margins that will make the product attractive to wholesalers and retailers. You can’t find margins, you have to build them in from the start.
It is especially bad for a producer who is selling at full retail to decide the retail price. And the problem further compounds when a distributor who is also selling at retail is involved in the setting of both MSRP and MAP. This is because the producer and/or wholesaler who is also selling at full retail has a distorted understanding of the true margin a retail-only operation will see at the end of their day.
The way MSRP (and thus MAP) should be calculated by the producer is this:
- Ask a group of successful retail-only stores how much margin they would need to make on a product so that they would go out of their way to recommend it to their customers. For the sake of conversation, let’s say I’m right and the answer will tend to be 100% markup, or, MSRP -50%.
- Next, ask a group of successful wholesale-only businesses how much margin they would need to make on a product so that they would go out of their way to actively promote it to their retail stores. For the sake of conversation, let’s say that’s probably around 25%.
- The producer knows its own costs to produce the product. And knows what they would like their own profit margin to be. They should set that profit margin number high enough that they have the revenue to do all the things they want to do in support of the product.
The money you spend on promotion comes back to you in sales, not the other way around. If you base your promotional budget on past sales you’re in a downward spiral. Decide how much sales you want and set your promotion budget as a percentage of those future sales goals.
MSRP & MAP Pricing Math Example
Cost of production $3.00 = $3.00
Producer margin +30% = $3.90
Distributor margin +25% = $4.88
Retailer margin +100% = $9.76
MAP $8.00 – 9.00
Let’s say the cost to produce the tin of fish we’re looking to set MSRP and MAP on is $3.
The producer needs to make a 30% margin. So the producer sets the distributor price at $3.90
The importer/distributor needs to make 25%. So they need to sell that for $4.88
The brick and mortar retailer needs to make 100%. So MSRP needs to be at least $9.76
I would look at these numbers, and as long as the costs of similar products in the marketplace didn’t wildly contradict it, set the MSRP at $10, and MAP at $9 (though a case can be made for a MAP of $8 or $8.50).
From decades of experience, I understand what it means to be a producer, wholesaler and retailer. I also understand what it means to be a producer who sells at retail, a producer who sells at both wholesale and retail, and what it means to be a wholesaler who also sells at retail.
What I’m sharing in this lesson is what is best for the overall growth of the industry, and the success of everyone in it. This is not from the point of view of a retailer, though I do strongly believe that what’s good for the stocking brick and mortar retailer is what’s good for the industry.
If a retail store can be profitable selling your products then every store that carries your products becomes an addition to your sales force. An addition who pays you, rather than you pay them.
If enough producers are offering enough products that a retail store can be profitable selling tinned fish then new retail stores will begin to appear all over the place. Which means more and more and more salespeople that you don’t need to pay.
A Short Rant on Marketing and Product Launches
New product roll-outs are being done in a fashion that favors top-of-the-chain gains at the expense of industry growth. It’s the worst way to launch a product.
The industry is shooting itself in the foot when new products are being sold first at retail by the producer, then being shipped to wholesalers, with the brick and mortar retailer the last to receive the product.
The result of this top-down flow is that by the time the businesses taking stocking inventory positions on the product finally receive their inventory, the initial burst of sales from launching is exhausted. Buzz. Killed. Minimal sales.
The correct way to do a new product roll-out is to coordinate product release with every layer of the distribution chain so that brick and mortars–the largest sales force your product has–are able to participate in the initial wave of promotion.
Get the product in stores before you unleash the main launch promotion. Tease consumers with a launch date and whet their appetite. Give resellers (at all levels in the chain) a chance to excite their customers.
Coordinated marketing and sales work in the same way that timed-charges – orchestrated arrays of tiny explosions – accomplish more than larger single blasts. When all of the players are acting in concert, consumer interest attains momentum, enthusiasm grows, and the Rule of Seven does the rest.
The Rule of Seven tells us that it takes at least seven “touches” before a lead is ready to buy. More purchases will result–for everyone–if every retailer in the country is promoting the new product at the same time, along with the producer.
It is the difference between the sound of one voice and the sound of a thousand voices.