Costco has become a popular option for consumers looking for discounted, high-quality products. Jeremy Smith, the president and founder of LaunchPad, a food brand strategy business, will discuss best practices for specialty food businesses to enter Costco wholesale clubs in the SFA Maker Prep webinar, “Channel Strategy: Selling to Costco.”
SFA News Daily spoke with Smith about what to expect during the session.
What specialty food business types do you tend to see thrive at Costco?
Costco can be a little more challenging than grocery for specialty food brands but pasta is one of the stronger categories. Chili crisps and Japanese and Korean sauces also tend to do well.
How is a sales strategy for Costco different from other retailers?
Costco is an operational-driven organization. Traditional selling does not work well there. It’s not just about the brand and your product, you must be able to move quickly in pallet quantities. This can be a challenge for many specialty brands that are not sold in large formats. For example, teas, spices, and jams can be a poor fit for Costco.
At what business stage should a maker consider working with Costco?
First, you need to make sure your supply chain is running like a Swiss watch. Then, you need to make sure that the low-margin nature of Costco makes sense for your business. Then, you need to consider how your product will fit into the category. You have to be honest with yourself about what a fit would look like for your brand.
What mistakes do you see specialty food businesses make when selling to big box retailers or wholesale clubs?
They usually do not take into account whether a large format packaging size is something consumers will embrace, they just believe in their gut it will. It’s important to tour a Costco Warehouse and review the category you are in and see what Costco currently carries. Do your homework and don’t rely on your retail data to guide your decision because what sells well at a specialty retailer may not sell at Costco.
What would you like attendees to get out of the session?
I would like attendees to gain a deeper understanding of how Costco works, what value at cost is, and why some products sell at Costco and why some do not.
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