How To Successfully Sell to Military Commissaries and Exchanges

Transcription

1 How To Successfully Sell to Military Commissaries and Exchanges 8 Most Common Barriers To Selling Your Products (or Services) In Military Stores, How To Overcome Them and Accelerate Your Revenue September 2014 Presented by the American Logistics Association (ALA)

2 T he average company takes two to four years to successfully navigate the military resale environment. Yet, many of our members do it in six to twelve months. Clearly, there are activities you can perform that will accelerate your understanding of the market and getting your product on shelves. Military resale, which includes commissaries and exchanges, is a $20 billion market supporting more than 13 million shoppers. One military exchange, the Army and Air Force Exchange Service (AAFES) is the 43 rd largest retail organization in the United State and employs 40,600 employees in all fifty states and in more than 30 countries. The Defense Commissary Agency (DeCA) has 245 commissaries (grocery stores) with 178 in the continental United States and 67 in other countries. DeCA is ranked 21 in size for the nation s top food retailers, employ over 17,000 people, and did more than $6 billion in 2013 sales. If you ve done what we ve done, for more than 90 years, you understand military resale and you learn what not only works, but the techniques and strategies that are closely guarded by successful small businesses and utilized by the largest retail vendors in the world. Every company is different. No company penetrates the military market in the same way. But successful companies all follow a common model with a core of similar business strategies. Understanding these strategies is what accelerates your success and the time to get there. This document provides a window into military resale and outlines the eight (8) most common barriers faced by small and large businesses who want to generate revenue through military resale.

3 8 Most Common Barriers To Selling Your Products (or Services) In Military Stores, How To Overcome Them and Accelerate Your Revenue #1 INFORMATION & BUSINESS INTELLIGENCE IS CRITICAL TO SUCCESS Business intelligence and understanding the market is EVERYTHING when selling to military resale. You need to know who the buyers are, how to contact them, what is being purchased, the number of transactions, class codes, customer spending, and the brokers who specialize in what you sell. Then you engage the brokers, distributers, and the military buyers as necessary. The average company takes two to four years to navigate this process. You can fast-track this process in 6 to 12 months by being an active and participating industry members. Did you know that the Defense Commissary Agency(DeCA) has partnered with industry to provide real-time data feeds on what is selling at commissaries? These data feeds support all categories and products across all commissaries around the world. This data feed and the intelligence it provides is exclusive to industry members. Did you know that the military exchanges have partnered with industry to receive transactional data from the military exchanges every 28 days? These tools are critical to understanding what military customers are buying, business trends, and what your competition is doing to ensure you re products are competitive. In addition, if you re new to the military resale channel, don t you want to know what DeCA and the exchanges are looking for? Information and business intelligence is critical to your success. Yes, you can do this on your own, but do you have two to four years to do it? Being an industry partner is the only way to cost-effectively accelerate your sales cycle. #2 UNDERSTAND THE UNIQUE RELATIONSHIPS BETWEEN MANUFACTURERS, BROKERS, AND DISTRIBUTERS The military resale environment is very similar to selling in local, regional, and national retail stores. But the relationships between you and the broker, distributor, and buyer is managed differently depending on whether you want to sell to the commissaries or exchanges. Did you know a broker will cut your time-to-market in half? In the military resale environment, where it may take you years to get your product on the shelves, brokers can fast-track your product. Many companies try to connect the dots by themselves without realizing the value that brokers provide to the military resale industry. There are thousands of examples, but let s say you sell plants. For commissaries, you can t sell your plants directly to the stores. Plants are supported and sold by the produce suppliers. But for military exchanges, you can sell plants directly to the store without going through a supplier. Yes, brokers work for you, for a fee, but this is no different than selling in the commercial market. Underestimating the value of a broker is a common barrier many companies face. Not only will a broker help you get your products on the shelves, they can also facilitate the ecommerce side of selling your products online. They also help you set up the electronic systems for receiving orders, making price changes, and receiving payments.

4 Did you know that many product categories in the commissaries are not stocked by DeCA? In fact, they are stocked by vendor stockers who are employed as contract stockers by the broker community. Did you know there are brokers and purchased product brokers who will buy your product direct from you and then do everything else? You get paid by them and they do the selling to the military channel. Another barrier you will face is understanding broker s fees. What s fair? How do you protect your margins and ensure that the fees you are paying are fair and reasonable? You will accelerate your understanding of how this sale s channel works, get your products onto military shelves, and do so at fair prices by being an active and participating industry member. #3 UNDERSTAND HOW TO NAVIGATE A MULTI-CHANNEL RETAIL ENVIRONMENT First, if you ve never sold to military resale, it can be difficult understanding the environment. Just like the commercial market, you have to educate yourself on the acronyms, processes, and regulations of the market. You have to quickly learn the process of how the military buys what you sell. Many business owners and sales professionals roll their eyes and say, This is just too complicated and not worth the effort. Military resale is a $20 billion global opportunity. These companies have good intentions but fail to recognize the value of industry in accelerating their objectives. To successfully convince military resale to stock your products, you will need to register in multiple systems and provide various documentation before and during the process. Whether it s QR codes, UPCs, Global Trade Identification Numbers, or vendor codes, navigating this process on your own... can take years if you don t have someone in the industry coaching you who has already gone through the process. Did you know that the military exchanges utilize kiosks for online electronic fulfillment? AAFES utilizes kiosks to evaluate products and can play a critical role in whether or not the product continues to be sold online and / or put on military shelves. This can be a key strategy for smaller suppliers, manufacturers, and vendors! If you understand the military s vision and strategy for use of kiosks, know who to talk to, and the process for listing your products, this can be an excellent way of getting your foot in the door. In 2013, a small business approached ALA and asked for help selling embroidered military hats to the exchanges. The military was very excited about the product, feeling it would sell well... and asked the company to produce a million units. Whether you re a small or large business, you can imagine the challenge this company faced. The company did not have the production capacity or cash flow to support the request. The company joined ALA, was assigned an account manager, and their hats were selling on military kiosks two months later. Two months. This is why you need to understand the military s multi-channel environment and partnering with those who can coach you through the process. #4 ABILITY TO MAINTAIN PRODUCTION AND FULFILLMENT What s the phrase? Be careful what you wish for. Whether you want to sell to the commissaries or the exchanges, never forget that military resale is a $20 billion market and one of the largest retail organizations in the world. Military resale is heavily invested in supporting small and mid-tier businesses... but you must be capable of increasing production and fulfilling your orders when your sales start to accelerate.

5 Recently, a company that sells camera straps approached ALA and asked for assistance in accelerating their entry into the military resale channel. From the military exchange perspective, the buyer asked the company why someone would buy a customized camera strap when every camera comes with a strap? For more than a year, this company was unable to convince the exchange to carry their product. They joined ALA and their products were being carried months later. However - within a short period of time, the exchange stopped selling their camera straps. Why? Because this company failed to take advantage of broker relationships and could not fulfill production requests. Imagine all that hard work and then failing to plan for the future! Did you know that by being an active industry partner you gain access to companies that started with the same production challenges? More important, you get to network and obtain recommendations from those who have already learned these lessons and are willing to share them with you. Did you know that there are financial institutions that will lend you money on receipt of a government contract to provide you with the money you need to increase your production - prior to being paid by the government? There are many companies that have had to solve this issue and did so successfully. Production is often an issue of cash-flow and the physical ability to increase production. This is a common issue. So what can you do? You can become an active industry member in order to accelerate your education and understanding from both buyers and companies just like yours. #5 UNDERSTANDING U.S. CODE TITLE 10 AND THE VALUE OF EDUCATING YOURSELF ON THE MARKET Did you know that the United States Government purchased more than $92 billion in products and services from small businesses last year? For example, if you re a grocery merchant, you re classified as small business as long as you have less than 100 employees... even if your annual revenue is $100 million. If you want to sell your product(s) to the military exchanges, your qualification as a small business will be based on revenue or number of employees. The Department of Defense (DoD) and military resale is focused on supporting small business. But when you decide to actively pursue military resale, you need to ensure that you understand USC Title 10 as it pertains to brand name commercial items and ensure that you meet the requirements. In order to sell to commissaries, your products must be regularly sold commercially, on a regional or national basis, by commercial grocery or other retail operations consisting of two or more stores / locations. However, if you have successfully sold your products to two or more stores in your local region, there are ways to coordinate for military resale in your region to directly carry your products without going through the headquarters. Did you know that the same Title 10 provisions do not apply to military exchanges? Exchanges are allowed to sell brand name, private label... even products that have never been sold commercially. Bottom line, Title 10 requires commissary vendors to have prior success selling their products on a regional or national level with some exceptions for sales at the local level. If this is a challenge for your company, don t stop reading! Selling to military resale is as much about education as it is the process of putting your products on the shelves. If you re an active, participating industry member, a year from now when you ve successfully met Title 10 requirements, you won t be spending another six months to a year understanding how to accelerate into the market. Successful businesses educate themselves, network with other industry members, and set a foundation while working to meet these requirements. This is how businesses generate multiple revenue streams in a short period of time.

6 #6 UNDERSTAND HOW PARNTERSHIPS ENHANCE CREDIBILITY Your credibility is important. You ve worked hard to build your business. You take pride in the quality of your products (or services) and your brand succeeds or fails as a result. However, credibility is also a key objective by military resale. Don t lose sight of the fact that military resale has strong congressional oversight. The commissaries and military exchanges make decisions on the products and services they provide to customers based on value. Not necessarily price but value. If you simply walk into military resale with the sole objective of making money, you ve already failed. Did you know that military resale funds more than $330 million to military Morale, Welfare, and Recreation (MWR) programs every year? MWR programs provide a complete range of community support and quality of life programs for service members, retirees, and their families at more than 2,000 facilities on U.S. military installations throughout the world. This means the sale of your products directly support our military and their families beyond just the use of your product! As a result, military resale s decision to carry your product or service is not just based on price. It s based on sales potential. It s based on whether or not military families will perceive strong value in your product. This brings us to how military resale evaluates your products or services. For example, the Defense Commissary Agency reviews Nielsen ratings and compares your company to similar industry vendors. For the larger and more established companies, this is obviously less an issue. But for millions of small and mid-tier businesses (ranging from entrepreneurial to hundreds of millions of dollars), how do you mitigate this challenge and accelerate into the marketplace? The answer is being an industry member, building relationships, getting introduced to the right brokers, and selling direct to local military resale. Did you know that a broker will make you 50% more likely to succeed? Most companies take years to understand the market and to figure out how to best position for sales. The same educational process is completed in several months... if you are an industry member. It s no different than selling commercially. It s the power of education, relationships, techniques, and strategies. #7 HOW TO GET MILITARY BUYERS TO CALL YOU BACK It s not unique to military resale. In fact, it s not unique to the military. It s a challenge every small and large company faces, regardless of industry or market. Remember, the military buyer is not only interested in the features and capabilities of your product. They are interested in the value it provides to the military and their families. We ve worked with thousands of companies and the most common complaint is, They won t call me back. If you understand what drives military resale decisions, not only will you correctly position your products, but military resale will return your calls. You need to understand the importance and perception of credibility as it pertains specifically to military resale. There is a high level of oversight by the Department of Defense (DoD) and Congress, and military resale needs to ensure that their products and services provide real and substantial value to service members and their families. This oversight and buyer perception is critical to military resale decisions on what to sell. Understanding these complexities will ensure you get called back. Did you know that being an industry member helps you position your products and services to ensure that you have taken perception and credibility into account? Better yet, what if someone helped facilitate and coach you through this process, ensuring that you position correctly to accelerate your sales cycle? That s the power of being an industry member.

7 #8 THIS IS THE ONE MARKET WHERE BEING AN INDUSTRY MEMBER MAKES YOU COMPETITIVE This is industry agnostic. It doesn t matter what you sell. No matter how small or large your company is, accelerating into the military resale channel requires hard work, education, strong relationships, and a desire to increase revenue. The American Logistics Association (ALA) is the only military resale organization specifically chartered to facilitate business opportunities that enhance the ability of military resale and ALA members to increase revenue. And it is never too early to engage ALA. The earlier you engage, the greater likelihood of success. Your partnership with ALA is a business decision that provides you with the most comprehensive education and support you will find nowhere else. The President of ALA, Mr. Patrick Nixon, is the former Director and CEO for the Defense Commissary Agency (DeCA). ALA s account management team has more than 100 combined years experience operating inside or supporting the commissaries and exchanges. The majority of ALA s staff worked for the government prior to their recruitment by ALA. Not only does military resale trust ALA, when companies contact the commissaries and exchanges, they refer them to ALA for vetting, education, and support. If you were to pay an industry consultant to help you navigate this process, it would cost between $85,000 and $135,000. If you decide to undertake this process on your own, recognize that the average company takes two to four years to understand and implement what is required to be successful. ALA helps its members navigate the process in half the time for between 1% and 14% of what consultants charge. This is the value of ALA. From a business perspective, we understand cash flow and membership is based on your current revenue, not what you sell. This is fair and balanced to ensure membership does not impact your ability to enter the market and successfully sell your products or services. Did you know that ALA membership provides cradle-to-grave coaching support and you are assigned an account manager who coaches you through each of these barriers? Once you re a member, your information is forwarded to every broker that supports military resale. Not only do we forward your product and service information to the brokers, we facilitate their review, and we introduce you to them. ALA does not do the work for you but there is no other organization that has the knowledge, contacts, and experience to successfully coach you through this process. ALA will help you build the necessary relationships, ensure you have the information you need, and facilitate your success to achieve your revenue objectives. This is the primary reason every ALA member is assigned an ALA account manager. There is no other organization in the country that has the relationships and expertise to facilitate your success.

8 YOUR BUSINESS. YOUR PARTNER. YOUR ALA. Okay, now you understand the 8 most common barriers that you are likely to face. This document alone provides thousands of dollars in value. For many, companies initially decide to navigate the channel on their own. This is what most companies do. And it s why most companies fail. This alone, is a core reason why the ALA exists and why our membership is the largest and strongest in the military resale space. Reading this document was your first step to success! This is a $20 billion market with 13 million shoppers, employing 40,600 employees in all fifty states and more than 30 countries. When you are ready, ALA will be ready for you. ALA is more than a membership. It is a partnership. Exclusive access to the ALA member portal. This is the most comprehensive one-stop-shop for everything you need to successfully achieve your objectives. Exclusive access to timely and real-time information vital to your business success. Exclusive industry access to the weekly Executive Briefing providing timely information, statistics, data, pentagon and congressional updates, and analysis that impacts your entry into the market and impacts your current and future sale s strategy. Exclusive access to every ALA member including vendors, manufacturers, brokers, distributers, and media and marketing companies. Your ALA account manager will facilitate your introduction with the CEOs and COOs of some of the largest retail operations in the world. Remember, having the right broker relationship will make you 50% more likely to succeed. Exclusive annual worldwide directory of every major company that currently sells, brokers, distributes, or buys your products and services. Exclusive annual report and presentation on military market facts, a comprehensive overview to accelerate your understanding of the market and the culture of the buyers. Exclusive annual reports for DeCA and military exchanges provided to ALA by military resale. Basic and advanced industry training to accelerate your understanding of the market; provides basic principles to establish and maintain working relationships with military resale buyers. Personally assigned to one of 17 ALA chapters located around the world to facilitate relationships, education, and to learn from other ALA partners. Personally assigned an ALA account manager who will facilitate and help you network for industry promotion and representation. Exclusive national conventions and conferences where you get to meet and strategize with other members, and are personally introduced to the military resale senior leadership and chief merchandising officers by your ALA account manager. Annual congressional caucus on Capital Hill. ALA works daily to promote, protect, and enhance military resale by educating Congress on the value and benefits of the military resale system. ALA works daily to increase our strategic outreach and patron advocacy through partnerships with military and veterans service organizations. ALA s combined efforts successfully protect military resale and your interests. Success! Once your products are on the shelves, ALA will help facilitate introductions to other ALA members and organizations that can support your marketing efforts.

9 YOU RE READY Headquartered in Washington D.C., our team is available Monday to Friday, 9:00am 5:00pm Eastern Standard Time. Depending on what your company does, ALA is broken into two account management teams. One supports the Defense Commissary Agency (DeCA) and the other supports the Military Exchanges (AAFES, NEX, MCX, CGX) and the Veterans Canteen Service (VCS). If you are a vendor, manufacturer, broker / manufacturer representative, distributor, media, technology vendor, or other product, service, or affiliate provider, please contact your account team below: Defense Commissary Agency (DeCA) Military Exchanges Mr. Russell (Russ) Moffett Mr. Robert (Bob) Ellis Vice President, Commissary Affairs Vice President, Exchanges/MWR American Logistics Association American Logistics Association (804) (817)

10 The American Logistics Association (ALA) is a non-profit trade association dedicated to promoting, protecting and enhancing Total Quality of Life Benefits for active duty, retired, and reserve military personnel and their families. American Logistics Association (ALA) 1101 Vermont Avenue, NW Suite 1002 Washington, DC (202) membership@ala-national.org