12 Criteria to be a Supplier
for
the Mass Market Retailers
And Still Making Profits
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When Dancing with an Elephant
Your dancing skill becomes secondary

Each Mass Market Retailer (MMR) has over 10,000 suppliers
and more new comers are adding daily. Some stay with
them years after years, but lots of them stampeded

It won’t matter how excellent your products and your
business systems are. You will be assimilated by the Mass
Retailers

Their objectives are making as many transactions as fast
as possible and taking profit on every transaction
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When Dancing with an Elephant
Watch its feet…

Your strategy is to follow their systems, take advantages,
manage the hidden costs, and then you will make a great
future

Be ready with these 12 Criteria to survive with profits

#1 to #6, 6 Qualifiers. Without these, Mass Retailers won’t
do business with you

#7 to #12, 6 Prescriptions. Keys for you to manage in order
to profit with them
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#1 Healthy Business History

Have you and your contract manufacturers done business
with these MMRs before?

If no, it is a good new start

If yes, then why the business relationships discontinued?

If the supplier (you or your contract manufacturer) has been
in a bad relationship and the issue has not been resolved
favorable to the MMRs, the chance to be qualified as a
supplier is limited.
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#2 Good D&B Rating

These MMRs can only have relationships with financial
healthy companies that rated by Dun & Bradstreet

Don’t have DUNS number yet, apply one*. Even you are
not a U.S. company, you can have one for free

How is your D&B Credit Rating**? What is your PAYDEX
Score? Below 60, Get help!
•
http://www.dnb.com/government/duns-request/duns-request-guide.html
** http://www.businesscreditreports.com/documents/guide-to-d-b-ratings-scores.pdf
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#3 Got TIN?

Doing business within U.S., Uncle Sam always is your 1st
beneficiary. U.S. Federal Taxpayer Identification Number (TIN)
is required

TIN can be your Social Security Number (SSN) or Employer
Identification Number (EIN). To protect your own liability,
apply an EIN. Even a simple Limited Liability Company (LLC)
can have an EIN

Foreign company needs to use W-8 form and may have 30%
withhold.
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#4 Proper Insurances

“Commercial General Liability insurance” is a must.
Depending on products offered, $2M to $10M coverage
from a B+ or better insurance carrier

“Recall insurance” for food, beverage, toy and electronics
products is a must for your own good

“Workers Compensation/Employer’s Liability” and
“Umbrella insurances” depend on your business and
products
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#5 Registered GTIN for Bard Codes

All physical products need labelled with a registered
Global Trade Item Number (GTIN) from GS1*

GS1 will provide you a unique 12 digit Universal Product
Code (UPC) or a company identification number

Don’t just purchase a Barcode number from on-line
source. MMRs need a registered GTIN-12 (UPC) code**
* https://www.gs1us.org/
** https://marketplace.walmart.com/knowledgebase/articles/Article/Frequently-Asked-Questions-Product-Identifiers
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#6 Friendly EDI

Get Purchase Orders, shipments and payments fast with
accuracy, use Electronic Data Interchange (EDI)

It is easy, just contract a 3rd parties vendor who has
already certified with these MMRs

EDI not only saves your costs but also gets more tools and
information from MMRs
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#7 Double-check Product Compliance

Your products need to be complied or exceed all required
safety laws, regulations and industrial standards

Not only the product compliance but also your supply
chain, factory capability and capacity need to pass MMR’s
audit for Direct Import products

Not all the lab reports are recognized by MMRs. Work with
the 3rd party lab that has already qualified by the MMR
you are doing business with
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#8 Adequate Profit Margins

Expect lower margins to sell to MMRs than other
distribution channels

Allow additional 10% possible expenses of your Gross
margin to be taken away from many other costs of doing
business with MMRs. And don’t forget their payment terms
are usually 60 to 90 days or more

Product Gross Margin – 10% = Net Margin. Are you still be
able to profit from it and financially sound? See #12 for
more
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#9 Watch Closely on Manufacturing Facilities

Contract factory’s primary interests are how to reduce the
costs of manufacturing and speed up productions, not the
quality and compliance of making your products

It takes time for MMRs to certify a factory. Therefore,
ideally work with those factories have been qualified to
manufacture for MMRs

MMRs have the right to audit your Supply Chains
unannouncedly. They will recall products anytime,
whenever they found problems with your factory
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#10 Drive Customers to MMRs

MMRs place your products on their shelf, they are still
expecting you to drive customers to their stores

Design an intriguing packaging for your product, so the
customers will stop, pick up your product and place it in
the cart to check out counter

Point all your advertising to the MMRs’ stores
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#11 Dedicated Staff

Have at least one staff administrating all activities per
one MMR

Monitor and track weekly sales rates, stocking rates,
chargebacks, promotional programs and logistics

Provide your market research reports, sales reports and
competitor analysis to your Buyers, they love you do their
homework for them
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#12 Managing Hidden Costs

Prepare to encounter extra 10% cost to do business with
the Mass retailers.

There are Chargebacks*, extra pricing or shipping labels,
special handling fees, exclusive packaging, customer
returns, on/off shelf fees, marketing co-op programs,
possible recalls, A/R insurance, extra lab tests, factory
audit, extra staff, EDI, administration, etc.

There are different margins and risks for selling in the
Directly Import or Domestic Shipping programs. Pick the
right program
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* For not complying with requirements such as 5% of older cost for late shipment, etc.
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Riding on an Elephant
Stampede over your Competition

Ideally, MMRs are great venues sell your products fast!
They squash your competitors for you

However, it take skills and experience to work with MMRs

Find guidance to help you ride with them successfully at
the first time. MMRs may not give you a second chance

Good Luck!
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Appendix A:
ACG Alliance 2017
National Retail Federation 2015 Ranking
Source: https://nrf.com/2015/top100-table
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The BRIDGE for U.S.-China Business
Aiming to Help Both U.S. and Chinese Companies Enhance Possibility and Profitability
We Will Guide You to Profit with MMRs
ACGalliance.com
[email protected]
+1 (949) 329-8120
15615 Alton Pkwy, Suite 450, Irvine, CA 92618, USA
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