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Turning a Hobby into a Business
Jen Scott developed an interest in being a herbalist as she entered college and learned how to utilize plants into salves around 2010. Her sister Jodi was premed and worked with Jen to understand the science behind the herbal remedies. Together they developed some formulas that they started selling under their Sierra Sage name at farmer’s markets. After a few ups and downs the company rebranded its products under the Green Goo name in 2016 and today they are in over 25,000 stores, including over 14,000 Walmart stores.
Jumping the Business to a Small Start-up
Jen Scott was on a mission trip with her husband Chris Sparks who is an EMT (Emergency Medical Technician) in the Philippines when she observed just how many different treatments Sparks needed to carry to treat a variety of conditions. Scott felt that an all in one first aid cream was the solution. Jodi and Jen evolved their existing salve formulas they developed a loyal following. Then a break came. Jodi Scott recalls “in 2011, Natural Grocers, at the time a chain of 50 stores, expressed interest in carrying the line. That’s when Jen and I mad the decision that we they could turn our hobby into a business.”
Overcoming the Hurdles
During the early stages of the company the sisters were producing the product in a small warehouse with commercial kitchen equipment and selling the product as a cosmetic. To expand the business they needed to produce their product in a FDA approved facility, and they needed to have all their vendors provide certified organic products. This turned out to be tougher than expected. Jodi remembers “the first seven or eight manufacturers we approached just told us no. One reason was that not many manufacturers were making herbal creams and salves and they didn’t really have the right equipment.” Manufacturers are always reluctant to invest in production for a small company when future sales are uncertain. The sisters were stymied till organic production became more common and finally as Jodi tells it, “one company took a giant leap of faith and agreed to start production for us”.
Finding a manufacturer wasn’t the only challenge. Sierra Sage’s formulas were a key to future success. Extracting medicinal properties from plants is not like mixing chemicals, and upscaling production from a commercial kitchen to a manufacturing facility called for careful testing. Finalizing the manufacturing process took four years to put everything together with production ready in 2014.
As they were working out manufacturing bugs the sisters knew they had to increase sales. Jodi had now taken on the sales role and her first big sale was to AAFES (Army Air Force Exchange Services), which runs the PXs (Post Exchanges) at military installations around the country. Jodi explains: “AAFES was committed to adding organic products and they were very interested in Sierra Sage’s products. They started a small market launch in 2012-2013 in 30 PXs. The products were selling and AAFES kept expanding sales. But in 2015 the bad news came when AAFES reported that Sierra Sage’s products weren’t selling as well as competitive products and they were considering dropping the line. “It was a giant wakeup call to us” Jodi explains, “we needed to go back and rebrand the product and create sales velocity.” The company looked at the sales over the years and they realized that customers were not calling the product Sierra Sage, but rather Green Goo. The company went to a rebranding strategy, with new packaging, logos and graphics and committed to a product relaunch in April 2016.. AAFES committed to the relaunch which was great.
Big Time Sales
The sales growth for Sierra Sage went into overdrive when in the fall of 2015 Walmart agreed to a 100 stores test when the product relaunch happened in April 2016. Things have escalated from that point on. The company is sold in 14,000 Walmart stores, online by Target, and is carried in major chains like Safeway, Albertsons, Roundy’s, HEB, Natural Foods and a host of smaller chains and individual stores.
Jodi Scott did up till 2017 all the sales for the company. They considered using brokers and sales reps but found that their sales volume was just too low to entice distributors to take on their product. 2017 was the first year that sales reps produced any orders for the company, and the company is considering adding brokers now but is not committed to that strategy. Besides a heavy retail store presence Green Goo First Aid Salve, and a variety of other creams and salves from the company are available on line at the company’s website and at a wide variety of other online retailers.
It’s a Family Affair
Five members of the family now work fulltime for Sierra Sage
Jodi Scott – CEO
Jen Scott – Herbalist, Formulator
Kathy Scott – Jen and Jodi’s mother – Webmaster and Social Media Marketing
Chris Spark’s – Jen’s husband – Warehouse manager
Kelly Hoyt – Jodi’s husband – Software Development and EDI interface
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Steps for Selling to Target
The Road to Become a Target Vendor
Mike Eaton of Hero Clean, Inc. has branded his product line with the tag line Cleaning Products Made for Men. Starting in August 2015 Hero Clean’s product line was on the endcaps of 16 Target stores in California and soon he will be going into select stores on Long Island. Eaton took three and a half years to go from conceiving his idea to getting onto Target shelves, and the journey was more complicated than he expected but there a lessons to be learned in the story that I believe will benefit every inventor.
Eaton’s story started out when he would open laundry detergents to see just what detergents had the least offensive odors. He couldn’t take the heavy fragrances of many of the brands, and the cover-up fragrance idea really wasn’t what he was looking for. Eaton came to the inspiration that every cleaning in the store was made for women, fragrances were added for women, and that there weren’t products geared for men. A little checking on the Internet and Eaton found some pretty powerful statistics, 47% of US adult men (18 and over) are single. The average age of a male getting married today is 29, and still 47 % of first marriages fail and 42 % of second marriages fail. The result is that 42-43% of purchases made by men. Eaton figures that 70 to 100 million men are buying cleaning products.
Eaton study men habits and needs for cleaning products. One aspect was to look into cleaning products that better fit men’s sweat pH and bacteria that are more associated with men than women. The other aspect was the number and type of cleaning products men prefer. He found men like easy to use products, and all-purpose products that can do many tasks. From his evaluations, Eaton determined he needed different
Lesson 1. Have a clearly define target market that comes complete with an interesting story.
Defining the Product
Eaton study men habits and needs for cleaning products. One aspect was to look into cleaning products that better fit men’s sweat pH and bacteria that are more associated with men than women. Men also need stronger surfactants (the chemical group that gets out stains and perspiration in clothing, and loosens food from dishes) and longer lasting much milder smelling fragrances (to deal with lingering bacteria odor without an overpowering scent). The other aspect Eaton considered was the number and type of cleaning products men prefer. He found men like easy to use products, and all-purpose products that can do many tasks. From his evaluations, Eaton determined men needed four different products:
All-purpose spray cleaner
Lesson 2. Understand your target customer needs
Creating the Product
Eaton identified a great market but the question is how to develop the product. The answer for Eaton was not to try and do everything himself, but rather to turn first to the suppliers, in case the ingredients industry
Manufacturers in the ingredients industry are always working to trying to get more business. They do this by developing new formulations, including their products of course, that address some of the market issues their customers face. Eaton was able to get ingredients companies to supply him with new formulations that he was able to evaluate. Since Eaton is a marketing person, specializing in brand building, he wasn’t comfortable dealing with all the technical aspects of the proposed brand so he hired a chemist familiar with the cleaning industry to help in the final formulation.
Many of the major ingredient customers weren’t willing to help out as they didn’t see Eaton as major customer. Eaton had to find smaller companies. Trade shows were a tool Eaton use to find those smaller companies. The show he attended that were most helpful were International Cleaning Experts EXPO, https://iceexpo.org and the ACI (American Cleaning Institute) show, www.cleaninginstitute.org/about/aci_convention.aspx where ingredients companies exhibited.
Lesson 3. Take advantage of the supply network for product design, concentrate on smaller companies who are more likely to help a new inventor-led company.
Eaton’s used a rather large network of single friends to do performance testing. He gave them samples and told them to go to town on seeing if the product worked. These tests went well. This was not unexpected though as Eaton’s earlier work with ingredients manufacturers allowed him to use formulations where there was a substantial body of data indicating the formulations would be effective.
Eaton’s products used different formulation and the cleaning chemicals can react in unexpected ways over time. Eaton needed to tests the shelf life of the product to ensure he had a long shelf life. Big retailers like Target also require cleaning vendors to be Wercs Smart Vendor https://secure.supplierwercs.com/ which is an organization that helps retailer participants select quality products with chemical formulations. Eaton wasn’t really in a position to do this testing on his own. Instead he used testing capabilities as one of is criteria in selecting a contract manufacturer. Rather than doing the testing on his own, the contract manufacturer did most of the testing. This testing revealed that Eaton’s laundry soap had some issues which caused the product to be reformulated which caused about a one year delay in the market.
Lesson 4. Don’t try to do technical steps on your own. Use vendor support.
Financing the Development Phase
Eaton’s path seemed fairly straightforward. But there was a catch –money. To the ingredient supplies and the contract manufacturers Eaton’s venture was a long shot. And even if he was successful, it might take him two years or more to introduce his product. In fact it took Eaton three and half years to land on Target’s shelves. So suppliers weren’t willing to fund Eaton’s efforts, and he had to pay for everything. Sometimes felt that the suppliers were trying to make all their money off of him in the development phase. The result was that Eaton had to invest to get through this development phase.
Inventors do have options with companies which Eaton didn’t pursue. They could offer royalties to the suppliers to cover expenses, or offer a share of the company to the suppliers in return for their financial support. These tactics work only if an inventor can make a strong case that their product could succeed. In Eaton’s case, he was pioneering a new product category and that is an inventor’s hardest sell. Vendors and possible investors tend to be conservative and supporting a new product category is a risky venture.
Lesson 5. Expect companies to charge you for their support.
Eaton is a marketing professional who had branded his product into concept, Hero Clean, Cleaning Products Made for Men. He knew that he did not want to just go into and talk to buyers. He had a concept for a market and he wanted to go to an executive who was involved in merchandising cleaning products. In a retail organization merchandising managers are responsible for the entire selection of products available, and or how those products are grouped together, or differentiate to appeal to customers. This is a much function than buyers who are selecting existing product lines and working with vendors of issues such as packaging, price and quality.
Eaton had done a lot of work with sponsorship of events before starting Hero Clean and one of his contacts knew a sponsorship at Target. That Target contact gave Eaton the name of the Director of Merchandising for Cleaning Products at Target. Eaton talked to him on the phone and the response was immediate and positive. It turns out that Target studies had shown that there were a tremendous number of men walking through their store alone or with other men. Target wanted to do things to entice these men to buy more products. Hero Clean and Target it turned out was match. Definitely a concept that Target wanted to try out. Phase one of the sale was made.
Lesson 6. A big message is what gets in front of someone who can push your product through.
Sales Details Take Time and Effort
Target of course like all big retailers is conservative about what products they put in their stores. They worry about quality, the vendor’s ability to deliver and support returns, and just how well the product is received. Target’s starting point is on-line sales. But to even do that the starting point is the vendor site on Target.com. Vendor’s need to post a tremendous amount of information before getting started regarding specifications, packaging requirements, and details on steps vendors need to take to receive approval for product changes. This information is not shared with customers, but is required before you go on line. The site also requires a vendor to agree to Target policies such as payment terms and returns. This process took several months. Target, as well as all other big retailers, will return products to you for the smallest deviation in a product or package from the agreed upon specifications.
Lesson 7. You need all you details lined up with the retailers requirements before you’ll make sale one.
The first test was Target.com where the Hero Clean line did well. But Target.com was also the testing ground for invoicing, Target and most other retailers have EDI requirements. EDI is electronic data exchange where retailers send orders to vendors and receive invoices back. Retailers also use EDI for other communication. www.edibasics.com/edi-by-industry/the-retail-industry. EDI is tough for an inventor to do on their own, but there are many EDI contract services you can use. Selling on Target.com allows Target to run orders through you, receive invoices and generally ensure that a company is ready to sell to Target stores.
Putting Hero Clean on the endcaps of 16 Target stores in Southern California in August 2015 was step two in market testing. Now in the summer of 2016 Target is expanding the test to additional stores in Long Island.
Lesson 8. Expect major retailers to test new concepts carefully before making a major commitment.
Expanding Sales to New Retailers
Eaton reports that other retailers including Fleet and Farm type retailers, as well as Lowes, Home Depot and Wegman are talking to him now based on his success at Target. He hopes to launch sales and some of these stores by the end of 2016.
Lesson 9. Success leads to additional success. Momentum counts.
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