Test new products online before stocking at retail stores

by | May 17, 2017

With the current retail market as it is, now is a great time to test new products to see if consumers like it and how to get the items to the right market.

For decades, the process of getting a new product on to store shelves was fraught with risk. Retailers didn’t want to take a gamble on something that was unproven, because if they did, they could end up with inventory that would need to be marked down at a loss to move. The items could have even ended up in the trash.

Even if the item was great, and would surely become a hit once it was discovered, if the retailers wouldn’t stock it, all the research, development and production costs of making the items would be a hit to the manufacturer. Sometimes the dream wonder-product died before it even made it to the stores.

Test new products online first

Now, though, we have this handy, dandy e-commerce model that has made launching new products so much easier. Manufacturers, vendors and even retailers can test how new products sell by first making them available on their e-commerce sites or marketplace sites (like Amazon). The information gathered from these online sales can help determine whether the item should be stocked on retailers’ shelves, and which stores they should be stocked.

What’s more, vendors who are very confident about their products can take the risk out of the retailer’s hands altogether, making it more likely for retailers to test the product out on their e-commerce sites.

For example, say a vendor has a new cosmetic they’d like to get into stores, but none of the retailers want to take a chance at buying an unproven product, only for it to languish on the shelf, get marked down, and sold at a loss.

If the vendor can successfully negotiate to have the new product on the retailer’s websites, but the vendor agrees to takes responsibility for inventory and drop shipping, it eliminates much of the retailer’s risk to take on the new product, and they’re more likely to agree to a short trial.

Then, if the product is a success and it appeals to the retailer’s customers, the retailer is more likely to order the product and put it on the shelf, because it was proven online first.

Piloting the product to store shelves

Once the product has been proven online, the vendor and retailer can also negotiate a pilot program, determine what it will look like and its timeline, and decide if every store should have the products, or only certain stores.

It’s even possible to split up products based on customer preference, such as sending certain popular colors to the stores, while less popular ones go online. You can determine if every store should receive the products, or only certain stores, or should most of the products go to the distribution center.

Finally, the vendor can prove their success and get the retailer to pick up all their items as part of the general inventory. Of course, this means the vendor needs to know the point-of-sale analytics to know this. It will also be important to have the POS data feed for both in-store and online sales.

Retail community helps test new products

Retailers who want to test how well new products or suppliers will perform in their stores or online can use SPS Commerce’s assortment solution — part of our Retail Community network — to find and test new products.

Retailers can search for different products and suppliers that fit their requirements (such as drop ship capabilities), onboard them quickly into their EDI system, and begin offering those products at a few test stores or even an ecommerce store.

Similarly, vendors can find retailers who might be interested in those new products, based on their product focus or proximity. So Retail Community can be a way for vendors to get their products into the hands of the consumers to see how well they’re liked.

If you would like to learn more about using our Retail Community to find new vendors or retailers, and to learn how to test products before they’re full placed on shelves., please visit the SPS Commerce website for more information. You can read more about our analytics solution, contact an SPS representative, or see an Analytics demo with one of our retail supply chain professionals.

Scott Bolduc

Director of Supply Chain Strategy at SPS Commerce
Scott Bolduc is a multi-time winner of the Supply & Demand Chain Executive Pros to Know. He has worked with e-commerce retailers on their growth strategies and helped retailers transform their freight spending strategies to maximize efficiencies.
Scott Bolduc

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