I Rejected A Wholesaler That Wanted To Carry My Product. Here's Why Some CPG Founders Should Too

Founders often dream of selling at Costco – but last year, when Costco offered to carry my beverage product, O2 Hydration, I said no.

It was a painful decision. I love Costco and would love to be carried at Costco, but I also knew the ugly truth: My brand wasn't ready yet. And if you get big before you're right, sales can kill you.

If you have a product you want to sell on the shelves, here are three things you absolutely need before you say yes to a salesperson.

1. Understand Your Market and Prove the Need

Before you can scale as a CPG innovator, you need a deep understanding of your market and you must prove the need for your product.

With my brand O2, we started our one-stop retail efforts with one retailer, Whole Foods. We grew to 10 Whole Foods within a year, then expanded to a full county. This approach allowed us to understand what worked, and then double down on that.

For example, we've found that product samples draw customers in, and they're hooked when they hear our story. That's an amazing insight, but it means we had to measure accordingly. By playing the slow game, we built a loyal customer base and secured more shelf space — and we did it store by store, region by region.

2. Secure the Resources Needed for Replication

O2 was flying off the shelves of Whole Foods, so we thought we were ready for prime time and agreed to launch nationally with Kroger, Publix, and Sprouts the following year.

This is where we learned our first hard lesson about selling.

When we expanded across the country, a lack of geographic focus limited our efforts. We initially had success focusing on the Midwest, where our team was able to support and promote our products. But when we went national, we couldn't hire and train people fast enough to replicate what we were doing at the national level, and we were quickly shut down.

Pro tip: Focusing on locations allows you to manage and support your sales associates more effectively. It also helps in building brand recognition and customer loyalty in certain regions before expanding further. Without the right resources, you cannot support the increase in demand and consumption that comes with the placement of supermarkets. This can lead to out of stock, bad customer experience, and ultimately, reduced sales.

3. Be Sure to Say “Not Yet”

When a vendor offers to manage your product, it can feel like winning the lottery – and founders are often afraid to say no. They worry that it means closing the door.

That's not the case. It's perfectly fair to say, “Not yet.”

Marketers want brands that are set up for success, and they rely on them brands to know if they are ready. Brands must ensure they have the necessary resources locally, in the right regions, before agreeing to store expansion – and they need to know what tools can get your product off the shelf.

Example: How often do you promote your product, and at what price? What off-the-shelf sales do you need to be successful, and how are you going to get them?

Dealers will not do this for you. He is Odysseus and those are sirens. They see something that works, and they want to push it as fast and wide as possible, and they'll dangle six to seven attractive POs in front of you to get what they want. They think you know what works, they've figured out how to measure it, and you've got the resources to do it. So if you say yes, you better know all that!

If you don't, then say “not yet.” The seller will honor you for it. You just saved everyone heartache.

Retail expansion can be incredibly tempting, but it's important to make sure you're really ready before taking the plunge. By understanding your market, finding the necessary resources, and building a geographic focus, you can set your brand up for continued success. Remember, saying no when you're not ready can save your business and turn future opportunities into even bigger leads when you're ready.

Now you understand why I refuse Costco. I know my market well; My product sells well in many regions, with exclusive retailers all over the country. I'm headed for that national, market-driven game – and if I finally agree to Costco, it'll be because I'm confident I can win for both of us.