The Obvi guide for breaking into retail

Hey everyone, 

Welcome back for another bite to chew on. 

You know back when DTC really started to take off about 10 years ago, it was considered a self-contained business plan. 

• One sales channel. 

• Eliminate the middlemen like retail stores. 

• Go direct to the customer. 

• Revolutionize commerce!

And a lot of people made DTC-only work. Some still do. 

But as the industry has matured and competition + costs have gone up, a lot of brands have realized that DTC is just a single sales channel amongst many.  

Over 80% of shopping is still done in real life.

All of your customers still jump in their cars, grab some shopping bags, and spend their time browsing through physical stores. 

So if you’re ambitious and looking to scale, you’re probably going to have to consider mass retail at some point.

That’s what we did a little while ago. It’s not easy and we made a bunch of mistakes. That’s why we have a retail team driving this channel for Obvi now.

So we sat down with our VP of Sales Albert Fayad to put together this retain-expansion deep dive for you. 

He took us through what we’ve learned and how he’d advise other DTC brands looking to break into Walmart and beyond. 

On the Menu

• Appetizer -  Things to consider first

• Main - What to focus on when you get in

• Dessert - Retail KPIs

Before we get going, did you know that retail and Amazon sales can trigger Nexus in certain US states? 

If you didn’t know that (or don’t know what Nexus is)...then you need to consider Kintsugi. 

Imagine if you could have a super-smart tax bot that could solve your business's sales tax compliance challenges tomorrow...

That’s what you get with Kintsugi Intelligence.

Their TaxGPT AI is available 24/7 to answer all of your sales tax questions. 

It’s like having your own dedicated tax consultant (without the $200/hour fees). 

It’s just another way that Kintsugi is helping DTC brands put their tax collection and remittance on auto-pilot. 

Let’s face it - sales tax isn’t a chore that you can ignore. 

It’s a confusing mess of rules, processes, and risks. 

Even if you want to do it (you don’t), most founders and operators don’t have the time, background, or know-how to execute sales tax compliance properly.  

But Kintsugi can take all of that off your plate in 3 minutes. 

They’ll save you 9 hours of headaches per month while lowering your risk of fees and penalties by 99%.

Book a demo before Black Friday to get → 

✅ A walkthrough of the Kintsugi platform

✅ A free Nexus assessment

✅ All of your sales tax compliance questions answered

Things to consider first 

Retail is a different animal than DTC. 

Mass retail, like Walmart, is a big beast of an account. 

So you probably don’t want to be, say, a $2-5M annual brand and try to tackle a national Walmart rollout. 

Your brand will have to have a certain level of maturity and awareness about it before you approach a Walmart → 

• Your finances will need to be able to handle the net 60-to-90-day paying terms they’ll demand. 

• Your supply chain will need enough volume and slack to handle big PO spikes.

• Your level of market penetration will need to be high enough that you’ll be recognizable on the shelf. 

There probably isn’t a clear threshold for a DTC brand to clear before being ready for retail, so we’re not going to say “get to $10M annually and then try for Walmart”. 

But if you can honestly answer yes to questions like “Can my suppliers readily fulfill a 6 or 7-figure PO?” or “Can my finances or cash flow float a net 90-day payment cycle?” 

Then you might be ready to take the next step. 

Things to consider as you prepare for retail → 🤔

• Don’t go straight for mass retailers. Approach smaller, regional stores that align with your product and target audience. Learn things at a smaller scale with them first.

• Look at your margins and pricing. Remember that retailers demand anywhere from 40-55% margin off your retail price. Can your current product sustain that and stay profitable?

• Choose your hero SKUs. You’re not going to want to pitch your whole catalog (unless you’re a single/hero SKU brand.) Pick your best sellers or SKUs that closely match the retailer in question. 

• Find the right brokers or reps. Even if you have a person or team dedicated to retail expansion, you’re going to need to work with brokers who understand the space and have relationships with your target stores.

• It’s very difficult to cold call retailers and get anywhere. 

  • Shelf space is at a premium and buyers are flooded with pitches all the time. Warm introductions and tactical advisory go a long way. 

If none of that scared you away, let’s get into your priorities once you get to retail…

What to focus on when you get in

This section will be a bit more involved, so settle in. We said this was a deep dive, right?

Getting into retail seems like a big win, but it’s only the first step. 

Now your product has to perform, or else. Physical retail is a real estate game, unlike digital commerce. 

If your product isn’t producing a certain rate of return for whatever shelf space it inhabits, then you’ll get dropped pretty quickly. And for some stores, you only really get one shot. 

Let’s get into your retail priorities → 

• Pricing & channel planning

• Packaging & merchandising

Pricing & channel plans

Your channel plan = the SKUs, prices, and seasonal/inventory cycle per retailer.  

You pitched your hero SKUs like we recommended above, right? Or, at the very least, you pitched the SKUs relevant to the retailer?

It’s important to know that store requirements and demands will vary across retailers.

Walmart is going to want the SKU with the broadest appeal at the lowest possible price, while GNC might want something more premium aimed at the gym and workout crowd. 

For example, at Obvi we recently started selling to Sprouts Farmers Market. 

They are very strict when it comes to what ingredients they allow in their store. 

When we pitched them, they flagged some of our existing products as not meeting their standards. So we went back to the drawing board and re-formulated our products based on their requirements.

We now have a Sprouts-specific product line that is offered at a higher price point. 

It was the only way we were going to land the account. 

Speaking of price, you’ll need to understand how to set and enforce a minimum advertised pricing (MAP).

A race to the bottom when it comes to pricing doesn’t help anyone, and you don’t want to compromise relationships because one reseller is constantly undercutting everyone else.

Also if you’re selling on Amazon - they will crawl the web and could suspend your listing or take away the buy box if they find cheaper online prices elsewhere. 

So if you sell something at Walmart for $19.95 and they put it online for that price, you better be prepared to sell it for $19.95 on Amazon too.   

Sum it up → As you add sales channels beyond your DTC store, channel planning becomes a must. You’ll have different SKU mixes, with different buy cycles, at different margins and price points. 

Packaging & merchandising

In DTC, your packaging just has to look good in product shots and be able to survive shipping. Your marketing, UX, and PDPs do most of the selling. 

In real life, your packaging and merchandising have to do the heavy lifting. 

You have a few seconds to catch someone’s eye as they scan the shelves. And then you’ll have a few seconds more if they pick up your product to get a closer look. 

Your packaging callout checklist → When you pick up your product, how easy is it for the consumer to know…

• What the product does? ✅

• What are the key benefits? ✅

• What are the highlighted ingredients (if consumable) or features? ✅

• What’s in the box / what is included? ✅

In most cases, if a shopper has to put on their reading glasses or comb through a wall of text to understand your product, you’ve already lost. 

Next up, things like store placement, POP (point of purchase), planograms and in-store displays are vital for getting eyeballs on your product. 

You can have the best packaging in the world, but if it sits at foot level in a back corner of the store, nobody is going to see it. 

This is where you’ll learn the importance of “trade spend” → 

These are marketing or merchandising initiatives most retailers will pitch to give you better displays or more exposure. 

And, yes, it’s going to cost you.

This can come in the form of free product for sampling or the costs to secure and design end-caps. And a bunch of stuff in between. 

Trade spend is a must. 

Do what you can to get prime real estate in-store. Get that foot traffic, ensure your product is at eye level, and give the retailer a reason to promote you. 

As mentioned, if your product doesn’t sell, you get bounced. 

You need to do whatever you can to make sure that doesn’t happen.

Retail KPIs 

You’re in DTC so you probably love measuring stuff. At least, we sure hope you do.  

Here are the retail metrics Albert keeps his eye on for Obvi:

1. Revenue Week-Over-Week

This metric helps them understand the overall health of the business in each retail store as well as how things are trending. 

2. Units Per Store Per Week

• This is a direct indicator of how well the product is moving off the shelves and whether the retail strategy is working. Maintaining a certain velocity is essential to avoid being delisted.

3. Store Sell-Through Rates

• Sell-through rates are used to track how many stores are actively selling products versus how many are not. This shows how well the product is distributed and stocked throughout the chain. 

• Monitoring which stores are underperforming can help identify areas for improvement or where intervention might be needed.

4. Store Compliance (Audit)

• The goal here is to make sure products are properly planogrammed and displayed on the shelves.

• Store compliance audits ensure that the products are where they need to be, which impacts sales velocity.

5. Category Performance

• It’s important to compare your product performance to the overall category. This means understanding how their products are performing relative to similar items in the same section. 

• Comparing to the category helps them understand if any challenges are unique to your products or part of broader market trends.

Summary of Key KPIs

1. Revenue Week-Over-Week: Tracking whether weekly revenue is growing or declining.

2. Units Per Store Per Week: Measuring product movement in each store weekly, ensuring sufficient velocity.

3. Store Sell-Through Rates: Monitoring how many stores are actively selling versus not selling.

4. Store Compliance (Audit): Ensuring products are properly placed and displayed in stores.

5. Category Performance: Comparing product sales to the overall category to understand competitive positioning.

These KPIs are crucial for ensuring that products are performing well at retail, identifying underperforming stores, and making data-driven decisions to maximize sales and maintain good relationships with retail partners.

Sum it up

Retail can be a massive unlock for a DTC brand. 

It can take you to a new level of distribution, sales, and credibility that is hard to achieve otherwise. 

But retail comes with a different set of challenges and complexity. It’s important not to approach retail too soon because it can become an overwhelming distraction if you’re not ready. 

However, if you think you’re ready to take the plunge, hopefully our experience and learnings will help get you in the door and on the shelf. 

Before you go…Are you a CPG brand?

If you’re still looking for last-minute help with your Black Friday planning check out this BFCM marketing guide from Supliful. 

In it you’ll find CPG-specific → 

🎁Bundling ideas 

📊Marketing tips 

🏷️Pricing strategies 

All designed to help you achieve not just high sales - but killer profits during the holiday shopping season. 

Grab your free copy here. 

All the best,

Ron and Ash