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Retail Shark Tank Lesson: Asking the Right Questions Results in Better Retail Options

Posted on in Growth Strategies

New products provide cash revenue opportunity for HMEs

By Dorothy de Souza Guedes, VGM Education

Sharks with business experience

VGM loosely modeled its Retail Shark Tank on the seven-season ABC television program “Shark Tank” in which “self-made, multi-millionaire and billionaire tycoons” invest in American businesses and products. The VGM sharks are all also experienced in making important business decisions: CEO and CFO Mike Mallaro; President of VGM & Associates Clint Geffert; COO and President Jim Philips; and Jim Greatorex, business development, VGM Retail. The Shark Tank host was VGM’s Bob Hoffman, vice president of VGM’s Nationwide Respiratory.

Two products tied for first place: SoClean CPAP cleaner and sanitizer from Better Rest Solutions for its pertinence to existing HME clients and therapeutic active wear by Incrediwear for its new customer potential. The sharks named Contour Products’ Kabooti® three-in-one seat cushion as the third-place winner because shoppers are already seeking from HMEs its less glamorous predecessor, the foam donut.

Three other products were pitched: from Knit-Rite, Inc., Therafirm Therasport compression stockings targeting a younger, more athletic customer; Vionics fashionable footwear for men and women designed to realign the lower leg and relieve heel pain; and from Therafin, Easy Clip Back, a no-assembly option for posture support on slingback/folding wheelchairs.

VGM’s first Retail Shark Tank was a lesson in how to evaluate retail product pitches based on facts rather than emotional appeal. Knowing what numbers vendors should share and additional questions to ask can help you to choose merchandise based on revenue potential and best fit for your location.

Cash sale potential was the mantra of the six companies pitching to a panel of VGM judges -- or sharks -- June 14 during Heartland Conference 2016. The six were selected to present a product or product line for five minutes, then respond to questions from the four sharks. The questions they asked helped them to choose which products presented the best retail potential for VGM members.

Here are some lessons learned from Retail Shark Tank pitches.

Percentage of potential market

Vendors often toss out large numbers relating to potential sales: Contour Products’ Scott Davis noted that 2 to 3 million foam donuts are sold in the United States every year. Davis convinced the sharks that his product had potential to capture a significant share of that market because the Kabooti® is better-looking and less embarrassing to carry around, plus other improvements to the design also made it more useful.

Scott Davis of Contour Products explains the design and benefits of his company’s Kabooti wedge.

Be wary of vendors who promise nearly every customer who walks in your door needs and will buy their product. In his pitch, Better Rest Solution’s Ben Tomaszewski noted there are 18-21 million CPAP users in the United States – and each machine needs to be cleaned and sanitized. But, he brought that down to a more relatable number by estimating that 20-30 percent of the five to seven patients per day each respiratory therapist sets up with CPAP could become SoClean cash-sale buyers. On that, a VGM member could net $2,500 in monthly profits, he said.

New and improved or revolutionary

You’ve heard this often from vendors: they’ve built a better mousetrap, or their new product is so unique that it will revolutionize the industry. But, can they back up those claims?

Touting improvements over the traditional donut, Davis noted Kabooti’s wedge shape is better for posture, thinner front slides easily under a table or desk, and corners aid distribution of pressure. The new Kabooti ICE gives users the option to insert cooling gel packs, not an option in the old-school version. The subtle design means no one will know the user is suffering from hemorrhoids or perineal wounds.

Then Davis explained Kabooti’s differences in a retail setting: the packaging is more attractive and can be stood up, stacked or hung by the handle, providing retail display options. A Heartland attendee spoke up from the audience: after seeing the product at Medtrade and displaying it in their upscale showroom in a way that allowed customers to sit on the cushion, the attendee had been selling Kabooti “hand over fist. It’s amazing.”

There are many options in the compression hosiery market, but Knit-Rite, Inc.’s Therasport line is designed to appeal to younger athletes, rather than the older HME customer. The fresh colors and styles target that younger person, e.g., a marathon runner, who wants a compression option. Knit-Rite’s Evan McGill suggested HMEs approach local high school teams for multi-sale deals.

How does the vendor support the product?

Shark Jim Greatorex asked Incrediwear’s Jodi Sorenson about signage to help with retail sales. Sorenson said Incrediwear offered signage, posters and other marketing materials. She also suggested employees wear the products they sell: she used the product while recovering from surgery, then began working for the company. When shark Mike Mallaro asked Sorenson what an HMEs total investment was to get started with her line, she explained $400 was the threshold to receive the wholesale price, but the company offers a six-month, buy-back guarantee.

And what about product warranties? SoClean comes with a one-year repair or replacement warranty; customers contact BetterRest directly rather than returning to the HME. Sharks also asked Therafirm’s Marie Meents about a warranty for Easy Clip Back and learned that company also provides a one-year warranty. 

Want to draw in new customers? Hold a Vionics trunk show. The company will send retail partners a free, event-in-a-box marketing collateral package to draw brand shoppers into your retail location. One recent trunk show netted a store 125 footwear sales – at an average $40 revenue per pair. VGM members don’t need to worry about competing with big retailers who carry the line: there’s a minimum advertised price. HMEs can compete by providing a higher level of service.

Product education and staff training are other ways a vendor can support you in retail sales. Brandon Noble, Medical Sales director, explained Vionics wants HMEs to be partners, not just suppliers. To build that relationship, Vionics offers foot health days to educate staff and customers about their footwear line that is clinically proven to reduce heel pain. About 70 percent of Americans experience minor to severe foot pain at some point during their lifetime, Noble said. That includes not only traditional HME customers but also their caregivers looking for a fashionable but comfortable sandal, slipper or shoe option – even stylish boots and heels.

Retail – and reimbursable?

Unlike most products pitched during Retail Shark Tank, Therafin’s Easy Clip Back, a no-assembly option for posture support on slingback/folding wheelchairs, is reimbursed by Medicare. The support is coded E2611 with average reimbursement around $276, explained Marie Meents, Human Resources and Sales Support for Therafin. It’s a washable product that solves a problem many wheelchair users have – lack of firm back support – and often resolve using duct tape, foam or cardboard. 

And even if the product isn’t reimbursable, some, like SoClean, can qualify for reimbursement under flex or home health savings accounts, Tomaszewski pointed out.

Want to know more?

VGM Retail Services offers a variety of options to assist VGM members, including on-site visits to assess current retail strategy and configuration of retail space.

 

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