- Launching a retail product is a great way to add revenue to your retail business, but you may need additional capital to do it successfully.
- Purchasing inventory, marketing materials and campaigns, and retail space are all considerations that cost money when adding a new product to your sales lineup.
- A retail product launch loan could help you cover the costs of launching a retail product.
How do you launch a new retail product?
A new product launch is an exciting event for any retailer. Whether you are adding a new product to your existing lineup or launching a new retail product for the first time, there are specific steps you need to follow to ensure your success.
Search, search, search
The first and most important step is to do your market research to create a clear product launch strategy. If you want your new product to sell, you need to know the demographic group you are selling to. Demographics will help you narrow down everything from creative product design to the type of messaging you use. You’ll also need to set a launch date and start your pre-launch work from there, giving yourself plenty of time to really work out your go-to-market strategy.
In addition to knowing your target market of potential customers, you also need to know what your competitors are doing. Are there already other versions of your product on the market? What will differentiate your product from others? What type of visuals will you use to attract customers?
You will also need to know where you are going to sell the product. Will you be selling in-store or online in an e-commerce store, or both? Will you be selling through your own retail store or with other retailers, like Amazon? How much of your product will you need to keep on hand?
Create your marketing campaign
After research, the next most important part of your product launch plan is marketing campaigns. A press release is a great start, but to reach your target audience, you need to include a wide range of traditional and digital marketing strategies. Social media is a great way to spread the word about your new product launch. Social media advertising and influencers can help you grow your following quickly, but they will cost more than organic marketing. You also need to ensure that the right landing page is designed for your product to drive online sales.
Defining your customer journey – how you get them from first acquaintance with your product to purchase – can help you determine how you should market your product and where you should sell it.
Mobilize partners
It’s also a good idea to find good partners who can help you get your product in the right place and keep the buzz going past your launch date. A successful product launch often takes more hands than you think, and entrepreneurs of all types rely on experts to ensure their product is launched correctly.
How much money do you need to launch a product?
Most product launches cost between $20,000 and $500,000. The amount of money you need to launch a product depends on the type of product you sell, your existing customer base and the markets you plan to sell in, as well as the competition already present in these markets. These factors can increase costs from a few thousand dollars to several millions.
Remember that launching your product includes everything from product design to marketing campaigns to manufacturing costs.
How much does it cost to develop a new retail product?
According Pacific Research Laboratories, developing a new retail product typically costs between $10,000 and $30,000, depending on the product and producer you choose to work with. They recommend separating development into three stages of investment to help you manage costs:
1. Design planning
This includes determining your goal in selling the product, as well as how you would describe it in an elevator pitch. You can also determine which materials you should use. Get expert help early on to make sure your plan includes everything you need.
2. Manufacturing
This is the stage where understanding your target audience is most important. For example, you can make a premium product, but if your customers don’t need it or can’t afford it, you can’t sell it. During this step, you will also define the quantity of your product that you want to produce initially, as well as the manufacturing cost per unit. Production can also be the most expensive part of your process, especially if you need specialized equipment.
3. Distribution
This step is your launch day, where you define where you will send your product, including the type of shipping you will need to use. You can also use this time to determine if you want to add other products to your sales line in the future, and how your current production can inform your future ones. You also need to have measurable metrics to help you determine what is working (or not) with your post-launch sales so you can tweak as needed. A coupon code can be a good way to verify that your traditional marketing efforts are working.
Is funding available for new product development?
There are several ways to finance the development of your new product, but the most common methods are:
- Self-financing or bootstrap
- Microcredits
- Subsidies
- Crowdsourcing
- Angel investors or venture capitalists
The type of financing you choose will depend on your product. Angel investors and venture capitalists will be more interested in highly technical products (like software or services) that will give them a better return on investment.
Entrepreneurs looking for less capital may have better luck with microloans, small business grants, or crowdfunding. You’ve probably seen plenty of products on reward-based crowdfunding sites like Kickstarter, but there’s also crowdfunding to consider, where you donate a percentage of your company’s equity to stakeholders in exchange for Investment Funds. Grants are essentially free money for your business to help launch your retail product.
If you are already in business, you can consider small business loans, especially a retail business loan, to help you get the capital you need to launch a new product. Or you might consider business credit cards, which can help open up your cash flow to help fund new businesses. A business line of credit can also help you obtain working capital to help you expand your product line.
If you are opting for financing such as loans, microloans, or business credit, it is important to understand how your business credit will play a role in the types of financing you qualify for. Nav can help you learn how to establish business credit and help you determine which financing options are best for you. Login at Nav see your options.
Why Undercapitalization Is the Worst Enemy of Retail Product Launch Success
According to harvard business review, most American families buy the same 150 items for their household. That means it’s notoriously difficult to get a new product to sell successfully to American families. But the main reason a product will fail is because its designers and vendors haven’t properly planned and raised enough capital to support it.
A successful product launch takes money, period. Beyond the cost of a good website, marketing campaigns, product design and development, manufacturing can get expensive quickly. Being ready to develop and produce more of your product once it’s been successful is a fantastic way to retain current customers and win new ones all at once.
Make sure your research has properly informed your roadmap, including the capital you will need to successfully launch your product.
Lenders available for retail businesses investing and launching new products
Several lenders can help you finance the launch of your new product:
The best way to determine what funding you will be eligible for is to connection to Navi. We take details about your business – including your credit scores, time in business and cash flow – to help you find the retail financing you’re looking for.
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