Ready for Target & Wal-Mart? EDI and Liability Insurance Are a Must!
Hi Tamara!
How do I find someone to help me set up the business processes I will need for a large retailer... processes like EDI, liability insurance, etc. I'm negotiating with Target in the fall. Thanks! -Amy
For those of you new to the term, Electronic Data Interchange (EDI) is the structured, electronic transmission of data between organizations. You would use it to transfer documents from one computer system to another, and it's more than simple e-mail: businesses might replace bills of lading and even checks with EDI messages. (Learn more on Wikipedia.)
If you've ever tried to set up EDI by yourself, you'll quickly learn that it's a terrible idea unless your background is in technology. By hiring a third party to manage it, you'll avoid costly mistakes. For example, big box stores like Target and Wal-Mart will charge you "compliance charge backs" if you make any mistakes when shipping or invoicing them for products delivered.
I'm sure there are other excellent resources out there, but I have had personal experience with EZCOM, a third-party service provider and will manage the EDI process. Their pricing is fair and well worth it!
Large retailers will also ask you to provide proof of liability insurance with very specific levels of coverage required. To locate an insurance broker, contact your local chamber of commerce or use the old-fashioned Yellow Pages. When you call, ask them if they sell product liability insurance.
Do you have a question for Tamara? Send it to her or leave it in the comments.
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I have general commercial liability insurance which covers products.....I was wondering what kind of specifics of liability coverage Tamara was talking about ...such as? thank you so much, victoria
Hi Friends,
I wanted to join this great conversation.
I am skeptical of formal focus groups as often performed by big companies. However, I have found feedback from informal focus groups to be invaluable! Often the most valuable things I have learned was not what I thought I would find out. I have received specific improvements for products and packaging that would have cost thousands of dollars to "fix" later after production.
I'm often surprised by what people say. I think there is a risk that if not done with a real awareness, the focus group can be constructed in a way that faulty decisions or beliefs are simply reinforced. Therefore, questions must be shaped in a way that attendees real views, including negative, are encouraged. While this should not be the only source of validation for going forward, in my experience, I have always found them to be useful and glad that I didn't go into production without incorporating the valuable feedback from others.
Warmest,
Tamara
Thanks Tamara! What are you thoughts about interviewing your target market say at, Toys-R-Us? What other kinds of groups or studies (free) do you recommend with with no protection? I have 3D renderings of my product that's it.
Sincerely,
Amy
I know it's not likely for somebody to steal you unproven idea/invention. However mine is extremely simple, but it is still costly for me to manufacture go through all the testing ect... I want to do the informal focus groups and interviews to start getting feedback about the product. I have patent searches, marketability reports, but I just want mom's/my target markets honest feedback. I have a home made prototype and 3D renderings completed (almost). I still have manufacturing to tackle, but I don't want to go to manufacturing until I find out if there is a demand for my product and how people would improve it, all the likes and dislilkes, ect.... I don't have any kind of patent protection. I would rather put the money towards marketing, testing (children's product), which those 2 alone are going to be quite costly. I want to make sure people will buy it, I want them to see it, I want to know what they would pay for it. What if I do these informal focus groups and people have connections to have this product made? If they have the cash flow to go have them made? What would you do?
As always, thank you for your advice!!
Re: focus groups.
I'm very old school and there has been a lot of discussion of the efficacy of focus groups which is to say, research proves they're not very good. It costs nothing to voice an opinion and people vote for nice products by buying them. Also, it matters more what actual customers say about your product rather than prospective ones. What I recommend is for people to sell their products to consumers directly for most effective feedback.
I used to do a 3 day long Manufactuing 101 Boot Camp seminar, held in a factory. We put designers through all stages of design, sales and production. All hands on, they cut, sewed on machines etc. It was a lot of fun but hard work too. One session was product reviews where me and two other colleagues would give feedback about a product's weaknesses and strengths with all the designers looking on. Well, we figured out very quickly we needed to change the structure of the class because as soon as we started discussing the short comings, one or more of the designers in the audience would pipe up to say "I'd buy that". What they were doing was trying to assuage some of the pain, it was an act of support but it wasn't genuine. After I told them I would start giving out a purchase order to anyone saying that, the comments stopped. Completely.
I appreciate your reply Kathleen. I'm not willing to go into production without knowing if there's a viable market for my product and improvements that would be suggested. ect... It's not just the costs of manufacturing. One of the biggest costs is going to be R&D, CPSC accredited safety lab is required for every children's product. I'm looking at least 10K for the testing alone. I thought my product was going to be so inexpensive in comparison to others, but I'm finding that's not the case.
Thanks again for you feeback! Does anybody else have any suggestions?
Sincerely,
Amy
Hi Amy,
As you know, bringing a product to market is A LOT of work. It is highly unlikely that the other moms you reach out to for feedback will put all the time and effort that you are doing to bring your product to market successfully.
As I mentioned, the time to start worrying about your idea being stolen is when you have been successful. It's at that point that people want to "take" some of your market share.
My advice to you is to definitely move forward getting that critical feedback from women that would actually purchase your product. In the end you will have created a much more evolved product that you can bring to market. It is to your benefit to do this. The main reason to have at least a verbal consent to confidentiality at this stage is that, should you elect to file a patent in the future, you will not want to have disclosed your invention outside of confidentiality. Once you do so, the clock starts ticking on your patentability -expires immediately overseas -- and you have 12 months in the US.
Warmest wishes,
Tamara
Hi Tamara-
Are you suggesting I do the informal focus groups, for example have a friend bring somebody I don't know? Would I have every person sign the NDA? Would I still do the store interviews? I'm not sure how to go about that. How many stores are going to let you stand infront of them to interview/bother their customers? Would I have every single person sign an NDA I interview? I don't see how that would work, people like to know exactly what they're signing. I guess I'm a little confused on how to get all this feedback and how to go about doing it? Also having every person sign an NDA??
I'm also going to be posting questions once I find out a little more about all the product safety testing that is required for childrens products. This alone I've been told will be more costly than having my product manufactured w/ tooling ect. Don't get me wrong, there's no price on a child's ensured safety.
I hope to hear from you Tamara. Thank you so much! I do have your book & you have my product submission for review. Sincerely, Amy
Yes, EDI is a complex implementation and most people should hire someone to take them there. However, there is a lot you can do to prepare yourself before you ever hire anyone. In fact, doing so can dramatically lower the cost of EDI implementation because the consultant won't need to undo or redo some of your internal processes that get in the way. Here are some entries that will explain what you can do to prepare yourself beforehand:
What are SKUs?
What are UPC codes?
How to assign SKUs and UPCs
Why you need your own barcodes
It would also be a good idea to look up "vendor compliance" guidelines and manuals. Most big box stores have links to the compliance standards somewhere on their corporate sites (not the commercial side). There's also a book you can buy that I really like. It's not perfect but it's pretty good, especially for sewn type products. I'd leave more links but then this would look entirely too spammy. Good luck!
hey there, your book has helped me so much :) thank you again. :)
In working my own setup I can recommend my husband to help advise. He has been in the EDI field for 15 years as an employee of mid size and large vendors selling to hundreds of retailers including Target and Wal-Mart as well as an independent consultant for almost 5 years and currently manages the North America EDI Operations for a major global company.
He said Tamara is spot on but personally does not endorse EZCOM. He added there are a lot of IT "guru's" out there that will tell you they are EDI savvy to sell you their services but be very weary as most have no real clue about EDI or meeting the complex compliance metrics REQUIRED by the likes of Wal-Mart (some of the most difficult in the industry). And to not fall for the “we set up eCommerce for clients all the time” line either. Although the technology is very similar, the compliance issues are not even in the same ball park and is what will make or break you as a Wal-Mart vendor. He said they (Wal-Mart) do not care what technology you use to communicate with them... but they do care if you cannot meet their requirements which determines HOW WELL you communicate with them.
He (my husband) is not looking for new clients to take on for running their complete EDI process but said he can help you select a good solution for your situation. Drop him a note at EDI.US.SC@Gmail.com telling him you are the one I (Tara) spoke to him (his name is Dan) about.
Have a look at Babelabout - http://www.babelabout.com/ ;-)