The Month End provides emerging inventory-based brands real life knowledge in the accounting, finance, and operational world. Our guests are not only similar brand founders and owners, but key stakeholders and contributors to the industry. Each episode provides a glimpse into the vast experience and insight from its guest’s unique background in a casual, conversational tone.
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In episode twenty eight, Accountfully's CEO and Partner, Brad Ebenhoeh, sits down with Juli Lassow from JHL Solutions, a consultancy dedicated to helping build phenomenal private-label partnerships. Juli gives us a glimpse into how brands can prepare themselves to establish lucrative and collaborative retail relationships. This episode is a must for those seeking to step into the wholesale space.
For more small business and CPG- focused resources, visit Accountfully's resources page, where you will find helpful articles, guides, eBooks and more. • • • Follow us on social media to take advantage of even more info and news.
Brad Ebenhoeh:
Welcome to The Month End CPG community chat, The Month End will provide emerging CPG brands real life knowledge into the accounting, finance and operational worlds. Our guests will be key stakeholders from those same brands as well as other key contributors to the industry. Welcome to Episode 28 of The Month End today, we have Julie lasso from jhL solutions. How you doing today, Julie?
Juli Lassow:
So Well, Brad, thanks for having me today. Yeah, we're really excited to have you as we keep trying to have a diversity of guests on our CPG podcast brand owners, people in the finance and accounting space, people with supply chain operational expertise, I think he fit that bucket. And I think our listeners are really excited for today's chat. So let's get started on just your background, who you are and where you've come from. And then what jhL solutions is today. Yeah, happy to share. Well, I have only professionally had a career in retail coming right out of college, I went to work for hometown team at Target Corporation. And I was there for 17 years and worked in a variety of merchandising and merchant I'll call it adjacent spaces. So start up my careers many do at Target in inventory planning, spent several years there, worked in the finance team did some buying and then worked about half of my time in sourcing and negotiations. And at Target sourcing is all about finding the right partners. In my case, it was specifically own brand partners to bring those amazing products to the shelves. So finding, vetting, onboarding, and then negotiating with those teams to come to agreements that were really building more value for target for the guest, and then the the suppliers and vendor partners as well. Awesome. And what does JHL solutions do? So I stepped out of Target a little over five years ago now and launched a business that was stayed very centrally focused on that retailer and supplier partnerships. So I do a fair amount of work and own brands, but some branded work as well. And I help retailers find the best partners for themselves. And then also make sure they're working with those partners effectively to build and develop new products. So this is certainly the Process Princess side of me has a an approach to building products and helping ensure that retailers are being really clear on their perspective and what their needs are. And then also working to build really collaborative and impactful negotiation strategies and implementing those. So sometimes that can be very competitive, like an RFP, but my favorite ones, actually are the ones that are more collaborative, where you're you're building some additional value. So excited to share a little bit of that perspective of what's behind that the recent retailer's point of view on today's conversation. Yes, definitely. The majority of our listeners are in the brand space that suppliers face to retailers. But the more that our-the listeners, and these owners and founders can get into the head of the retailers the better, you know, process and understanding kind of sales process, relationship, process, etc. So, so I guess first things first, let's get into, you know, couple topics one touch on today, negotiation on brands, I think a very kind of relevant topics for the listeners, number one, negotiation. So let's talk on, touch base on that aspect of, you know, of, of the business; the contract negotiations, the whole process. So can you kind of just start high level from what that process looks like? And then we'll dive into more details? Yeah, of course. So the process for me really starts with understanding what the impact and the value is that the retailer because often they're my client wants to drive in that business. What are their strategy is what are their priorities? What are their interests? What do they really want to get to? And importantly, with that retailer, also ask to have a perspective on what does the supplier want to get out of the partnership? What are their interests? And then using those priorities, using those interests as a framework then to help think through? How do we want to approach this negotiation? What are the key pieces of measurement we want to be looking at so often, that's going to be certainly sales margin turnover, market share. And looking at it again, not just from the retailer perspective, but then also that supplier partnership perspective, and then structuring the conversation. Depending on if it's more competitive space, or more collaborative space, you've got a lot of players and maybe just a handful of players, or maybe a singular player, then we build out that approach of how do we want to have this conversation? How do we want to structure creating value, and that can be a little bit more transactional, and that can be incredibly collaborative. And the best conversations, again, in my opinion, are the ones that are more collaborative, they're looking for more creative ways to drive value. And you're not just focused on one or two really key measurements as far as determining success of the conversation. Gotcha. So then from an aspect of dealing with big business coming from the Target world and big corporations versus small business and a lot of these listeners, you know, zero to 5 million revenue brands that are emerging, trying to get in these doors. So, you know, I think having a couple of tangible points for the listeners is really good. So let's say for example, your a million dollar revenue brand, you sell on your direct consumer website, maybe Amazon, trying to get into Target, let's say, because that's where your background is, you know, whatever, let's say they sell coffee or kombucha or whatever, like it is, like, you know, from just, you know, getting into that relationship, creating a relationship with the buyers and the retailers and all that stuff. How does, How would one approach specifically a couple points that they should, you know, arm themselves with to be better prepared for the conversation to start and then negotiation moving forward? Well, it's a really great time for smaller brands to be connecting with some of those broader banners. And I would say increasingly, so when I started my career at Target in the early 2000s, it was very much a cookie cutter approach, there's only a handful of different formats. And basically, the assortment varied very, very little across the country, I sort of think of it as like the opposite of more that Whole Foods model where it's very niche and very specialized to the, to the way that the the country shows up in the different regions. And now a lot of mass is moving towards a more diverse perspective. So you don't need to be a Procter and Gamble, you don't need to be a General Mills to get your product on the shelves at Target anymore. But you do need to have a specific point of view. And you need to understand what that crossover is, or that visualize that Venn diagram of what does that brand. So what is Target to keep with this example, really want to show up and deliver in maybe the region that you're based in? Or the specific product category that you are bringing to life? And what's that overlap of? What's that commitment they want to fulfill to their guest, or even in some cases, are they not fulfilling it at all? Do they not have the next Kombucha on the shelves at all. But you see that is starting to peak, you've got a sense of who that Target guest is. So doing a little bit of that research of who Target is, who they're going after. And if your product is a really great fit for that if you're able to help Target bring and incremental availability and incremental offering that Walmart's just not going to prioritize, or some of the the mom and pop stores might be already running away with as an advantage, but you can help Target get into that game, you're, you're showing up with a perspective on how you can how you can have an impact. And that's something that a merchant is going to appreciate. Awesome. So clearly, a key couple key parts of this is number one is educating yourself on the customer or the person that you're going to be trying to sell to, right. So education number one of who their customers are, what they're currently selling, you know, is their opportunity, etc. Number two, on top of educating or educating yourself on them, but then educating them when you talk to them about how this brand can really benefit them versus their or for their customers or guests as well as the against their competitors. The last thing that I think which is very important in this day, and age is opportunity, it feels like there's so much more opportunity, and, you know, food, drink, everything is just so democratized now, because of just the plan, and just overall education and consumers and consumers are all leaning towards the more health; new things, new age products, progressive products, that type of stuff. So the opportunity is probably never been bigger than where it's been the last couple of decades. You're saying it kind of all those topics relevant from and true, I guess from what you're saying? Yeah, absolutely. I think those are the key things to be thinking about, like who that guest is what Target's trying to offer to them or the retailer of your choice, and how you're able to really fit that need and fill a gap but know that others can. A couple of things that I will say, though, from a "watch out" perspective, is before you are starting to make some of those outreaches or thinking about who you're trying to scale with. What is your operational runway? What does that start to look like? How many stores can you realistically support. So the flexibility of Target is that you're not going from zero to 2000 stores anymore? 1800. You can start small with the regionality. But if you are successful, and if your product sells well, and it makes sense, there could be very quick conversations about how quickly you want to expand. So that's also something that Targets going to want to understand is what's your operational ability to scale. And it's sometimes it takes a while to hit and sometimes it goes really, really quickly. So just being really nimble and candid with that to start off the conversation in a very direct way is also something that I encourage. Yeah, definitely don't, don't bite off too much more than you can chew initially, but also be aware of where they may need you in 6, 12, 18 months depending on us because the last thing they want to do is commit to a brand that is fantastic. And then they can fulfill and then they have to switch the brand out and it's short term because of that aspect. So yeah, that door will close very firmly and probably won't open back up for you again, so you have to be candid. Awesome. So kind of any other talking points on kind of the next initiation process and things like that? from a negotiation perspective, so once you're in the door, even sometimes when you're just stepping in, there will be some often some sort of structured line review process that's going on. And if you're going through this, for the first time with a specific merchant or specific organization, just really encourage you to do your homework, reading really carefully, what all the information that's that's shared with you, and I'm not a lawyer, so this isn't contract advice. But even just thinking through and understanding what is the process that this merchant is going to be going through when they're making their decisions? And asking those clarifying questions; what is the timing? What is the expectation? When would you have this product on shelf? And being really clear about what's important to them as they're making their decisions? If they're not being upfront with you, what are some of the questions that you can ask to draw that out? So what is the rate of sales velocity you're looking for? Margin, if that's not abundantly clear to you. Make sure you understand what their margin expectations are. Also some of the non the non-product related expenses. So what are you going to be on the hook for what's the damage defective or policy? What's the foods, the shelf-life policy expectations? Case backs, everything, everything within that space, if you are going in somewhere new, really make sure that you're either scrubbing the information you're getting directly from the merchant, or it's part of a vendor portal, for example. What are those standard vendor terms of engagement that that retailer is going to expect? Because candidly, they're moving fast. And a merchant is tasked with being an expert on who their customers are. But there's a lot from an operations perspective that they aren't often experts in, and they aren't going to tell you to watch out for or understand or volunteer information, not necessarily, because they're they're trying to hide it, because sometimes they just don't know. So you need to be your own advocate and asking questions, and doing a lot of the research before the negotiation even begins, to understand what's the standard way of working with this retailer, or partner for the first time? Yeah, 100%, like, arm yourself with advisors, people who've done this before, like, ask questions, get educated, get people involved, that can really help you and clarify that. I've seen some just clients of ours that have, because of bad decisions or not having clear expectations of Bill backs, you know, pre-fills, things like that, that really, really devastated them upfront that they weren't expecting. And that impacts cash. And as a small business, it's impossible to run a business without cash. Exactly right. If you're given a form, read it very, very carefully. Or if you have an online input template that you're being asked to use, I would read that incredibly carefully. And make sure you understand what those each of those cells are that you are filling out. And because to a certain extent, you are then stepping into their process. I mean, you've got a prospective, you're an owner, you've really worked to build out what your brand means and how you go to market. But now you're stepping into someone else's space. And again, if you're doing it for the first time or with a certain client for the first time, you are moving into their turf in a new way. So how are you really making sure that you understand the way that they're setting up that that approach? Yep. And just one last question on that topic, like how much? How much negotiating negotiation leverage does a small brand have getting into like a, you know, a Target? Or even like a regional thing? Is there? Is there a lot of flexibility like, or is it depend upon the situation? I don't know. Because clearly, a lot of small brands are like,"well, it is what it is through the distributor, you got to just deal with it". But you know, I'm just wondering, from your experience? Yeah, that's a great question. It all depends on power. To be honest, how badly do they want you, there are some things that a brand or a retailer isn't going to be able to move on just because the operationally they're set up a certain way. So those are definitely some watch outs, you want to understand what those expectations are. But if you've got an up and coming brand, and it's a really great fit, and you've done that work, or they've come to you because they have anticipated or understand the gap that you can fill, they can be much more willing to make some shifts. So in some cases, I would just recommend asking if it's not clear what the flexibility is ask. Usually it's pretty straightforward. But if they want you, they might be some room to negotiate a slotting fee or Yeah, or add fee or participation rates on on certain elements. Just like everything in life depends on which power, control, leverage you have. So that's completely... But you've got to start with asking. So I if you don't know, I wouldn't assume? Yep, perfect. All right, let's move on to own brands. This is a very interesting topic that uh, not a lot of our target brands or clients really do. A couple of them have thought about it or do it but just give us a little background on kind of own brands, private labels and kind of how they operate and what are the benefits of it. And then we can kind of talk more specifics of examples of how somebody could leverage it. So own brands and private label really started out as a compare-to space, so it was the same as a national brand equivalent. So it was basically was the knockoff or generics if you want to call it that way, but over the years, the space has become much broader, and I would say has a lot more depth to it now. And now it's become more of a competitive advantage. It's not just about the value play, it's about how can I offer something as a retailer that I can protect against the competition, something that Amazon isn't going to be able to show up with, but it helps me deepen my brand loyalty with my Target consumers, my Target guests to put a specific name on it. And there's certain businesses that just do this beautifully, like Trader Joe's really stands out. As you know, when you walk in the store, it's a high, high percent of products you aren't going to find anywhere else. And if you're a Trader, Joe's loyalists, you will be going for the Greek yogurt, or they're Gronola or my family really likes some of the frozen meals that are there, those are our go-to's, and we can't get those where we were shop elsewhere. So for a consideration set, it's a fast growing part of the business, the retailer is able to protect the flavor, flavor profiles, they're able to separate the product diversity in an impactful way. And they're often able to build it in so it's margin and creative to their mix. And so there's also a profitability play. But you need to start hitting scale, you need to be able to hit a certain balance of your assortment and meet that expectations of your customer if they're looking for a certain set of CPG products, and how do you surprise and delight them with additional own-brand products. So that's a lot of what's going to the strategy of the expansion and the deepening of own brands today. And just pausing there before I jump into how potential audience members might be able to capitalize on that. It's, it's a pretty exciting space. But any questions? Or reflections on that? Okay, no, no, keep going. But that's it's great. So far, we're going to other ones that are building up. Fair enough. So that's how own brands is evolving. So the benefits that I see for smaller emerging and even moving into midsize brands is that if you've got a specific offering, that can really complement or falls under the brand, I would say Halo or that brand persona that's already in that retailer, you might be well positioned to bring that product to them. Now there's some pluses and minuses with this idea. Certainly a plus is that for retailers, there's only so deep in of expertise they want to build, they'll have a food scientist team. And depending on the size of the retailer, they might be developing a ton of their own products. But sometimes they are partnering really closely with a brand that already knows that business really would really well. So they can outsource some of the product development to a supplier. And in that case, if that partnership takes off, it can be very, very fruitful for both partners, because the the retailer isn't going to want to change that flavor profile of the Kombucha or whatever it is, once they get on the shelves, and their customers are responding to it, they want to stick it stick with it. So there's gonna be some great lock in for that supplier, that they're going to have that assortment that can continue to grow and expand. The downside can certainly be that if you've given away your flavor profile or your formulas, there's often some exclusivity and there's some limitations that you are now really hitching your wagon or pick whatever euphemism you want, you're you're locked in with that retailer. And that gives you less opportunities to be able to scale and move to other partners. And if that retailer goes in a completely different direction on the brand, that could be really challenging for you then to start re-engaging and rebuilding that momentum if you haven't been in a position to be out selling and pitching that business. So there's a bit of high risk, high reward when it comes to those partnerships. But they can be incredibly beneficial if it's a really great overlay of the priority of the consumer that the retailer is trying to connect with and the brand expertise that a brand can come to the table with. Yeah, I think it definitely high risk, high reward, but there's definitely a thought process behind it. And something to think about, if you move in this direction of own brands is like do big retailers. Will they start with own brands like in a regional capacity? Or is like will they go national? Or is it kind of dependent on circumstances? I'm wondering about this whole operation capacity conversation as well? Yeah, that's a great question. From an own brands perspective, there are certainly opportunities to pilot and start things small before they scale. And it certainly depends on how close in the product categories are to something that's already on the shelves, what is already known. But if there's a lot of unknowns, it could start smaller. But I would say the expectation would be that if a retailer is investing in own brand development, if it's a broader own brand, and you're coming in with a specific subset of products, they're going to want to scale that pretty quickly. So I from an operational perspective, it's definitely a conversation you want to have a word of the goals of this business, but my instinct would be would be that they'd want to have it across most of the doors where it's regionally appropriate and pretty quickly once there's some good proof of concept.
Brad Ebenhoeh:
Yes, definitely. And then clearly, I'm assuming that probably every relationship can vary depending upon if you can still sell into with your not own brand, but with your actual brand into other competitors, or retailers or different situations, right? There's always could be some competitive, you know, stops or, you know, whatever, like as part of this correct?
Juli Lassow:
Exactly right. Well, and that's also some of the benefit, though to that you get of partnering with a retailer is that you get to outsource some of the the work and the marketing and the brand building, they have a Target has a Good and Gather brand that they're investing millions of dollars in, and you're able to really just focus on bringing amazing products. So your formulation priorities or your assortment expansion priorities, that can be most of your effort, you, you then don't need to focus quite as much on selling. And then you can also then focus on the operational side, how are you scaling? What is the supply in the production capacity that you are then building out? So it frees up resources within your organization to maybe scale more quickly, when you don't have to, basically be delivering everything on behalf of your brand.
Brad Ebenhoeh:
Yeah, yeah, definitely. I mean, deepening the relationship and creating a very beneficial relationship for both parties can help everything as you move forward with your business in the short term, or long term. And at the end of the day, like from a lot of small business and brand owners, a big goal is scaling and growing their business and selling, Assuming, that you create this relationship, and everything's great, and you're hitting your marks. And also, you're going to a point, there's probably a world where the, you know, in a purchase or, you know, can happen for a small brand. So again, not guaranteed, but again, a lot of things to think about as you go forward just from your idea of business development, selling relationships, you know, within different retail partners.
Juli Lassow:
Yeah, absolutely. And I'm not an expert on on selling your business. But there, that would certainly be an interesting consideration of what is that future value start to look and feel like if you've locked in a direct relationship versus a private label relationship? And across all of your channels, whether that's wholesale or direct.
Brad Ebenhoeh:
So last question, then on this is for kind of a small version of brands, again, back to kind of like how you know, how much operational capacity you have and funds to bring product to the table for somebody, I'm assuming that similar to our initial conversation that retailers are going to look at like, what is your brand or your product that we can do this on? And what is the scalability long term in the short term to focus on this. So again, it may not work perfectly for a small brand, right, like million or 2 million, but it's something to think about maybe starting the relationship, having conversations and then targeting down the road. And maybe when you're ready to go that so what I'm trying to say by this is like it can happen in any venture of your business, depending upon various circumstances that exist across the board.
Juli Lassow:
Yeah, I think that's well said. Too early on, it's it's one of those things, be careful what you wish for. Because when the when the gods want to punish us, they grant us our our wishes is that the phrase? And I have seen businesses that have gotten into a partnership with a Target or someone of that scale. And it is really challenging. And like I mentioned earlier, when that if the door shuts, that usually doesn't reopen. So you do want to make sure you've got some of that mapped out and make sure you are I think sizing, your pursuit that aligns well with what you can actually deliver. So if you need to be really upfront that this is something that you can test and get into it at a small way. But you aren't going to be able to scale until you see some mutual proof of concept, then I think that's it's really fair to be able to say that, but then also be ready to say these are the things that we're willing to invest in, should it seem viable to expand this product, this is what we can do. Here's our backups, here's the different Packers were able to use the different manufacturing lines. This is how we're going to be able to secure credit. Target isn't going to be as interested as financial backer is going to be in all of those operational plans. But just what are the high level bullet points that give them a sense that you would be able to grow with them and be able to meet those common objectives together?
Brad Ebenhoeh:
Awesome. Awesome. All that makes sense. So as kind of just general question I have and topic is just overall kind of supply chain, in today's economic climate. You know, from our perspective, the last kind of, you know, 6, 12 months clearly have been crazy on the economy as a general, local, you know, national, global, it's affected a lot of our client's supply chain disruptions, capital funding disruptions, all this type of stuff that goes into a clearly from your perspective from a supply chain, just kind of high level what you've seen and then what are the things that a brand can do to try to offset this crazy time or lack of certainty each step just to support their supply chain and operational venture?
Juli Lassow:
I think a lesson that many organizations learned in the COVID response era is that you can't have a very brittle supply chain, you need to build some flex into your supply chain, and understand what are those key pressure points for you? Is it securing a specific raw material? Is it securing a specific packaging based on how your product goes to market? What are those key pressure points? And then what are your backup solutions? And it went from and I would say, pre-COVID. On the procurement, the supply chain side, it was more of a perspective of these were teams that were risk averse, they really wanted to get everything locked down, they want to be able to have the answer and have the best supply chain and deliver ultimate. And not to say you didn't have your backup plans, but you more had those backup plans as a way to show that you were, you'd have everything locked down and buttoned up. Now the backup plans aren't so much of an eventuality as an implicit expectation that you're gonna have to leverage a backup plan and you really hope that you've got the backup plans in place that you need. So I would encourage teams to understand what are those pressure points? What are the things that are gonna bring your business to a standstill, if you don't have solutions, two and three to back them up. And really make sure those are fully vetted-out solutions? First and foremost. So what's that risk planning going to look and feel like? And and that's, that's true in many parts of your business I supply chain and production are places that I know best. But that's the same from a social media perspective and a marketing perspective. If you know, one bad tweet or something goes viral, you need to be able to manage that as well. So I think there is more risk planning than than ever before. But that also I find is opening up opportunities to create value as well. So you're looking at something new. Often when you're operating with constraints, you can come up with a different approach. So it's not to say that, that you can't find upside in some of those backup partnerships as well. It doesn't always have to be doom and gloom. But it's more of "how can we be really creative to make sure we can continue to find solutions to get products in the hands of the consumers that we're connecting with?"
Brad Ebenhoeh:
Yes, definitely, I think risk based approach, you know, you've mentioned, you know, that term, I think it's huge to focus on what are the 1,2,3 big risk points and risk areas that that exists, and really prioritizing time, energy and resources in that as you say. And then number two, you know, for the entrepreneurs out there, these people that have created unbelievable, weird, creative new brands, there's opportunities to create new solutions, we know when doom and gloom come right? And, and that can be you know, part of presenting a solution to a supply chain partner on how you can add value to them, right versus in the past year, I looked at yourself as just a customer is what it is, but go approach them and became great a partnership, for example. So again, looking at things I think creatively, solution oriented, based upon this risk based approach can help out with any aspect of the business that you're saying; marketing, finance operations, etc. So I think just kind of continuing that aspect and consistently re-analyzing your business quarter over quarter over quarter, what are the new risks? What's going on the economy? What's going on with this or that, and focusing time and energy on that, so I think that that's a really good, the baseline and a good thought process for people to have any size of the business. Well, awesome Juli, this has been a fantastic chat, I love I love the topics, I think our guests, or our listeners are gonna really enjoy it as well. So while we end, we have a couple of our every question or our topics we want to touch on. So first things first, give us your CPG do.
Juli Lassow:
o the CP G do I touched on it earlier, but it bears repeating. It's ask a lot of questions. So just coming to this business space, entrepreneurs are excited about their idea their curious about creating something new, and make sure you're bringing that curiosity to the partners that you're working with. It absolutely applies with with retailers. And I find that suppliers that don't ask a lot of questions often don't understand the full agreement that they're reaching. So that's that's a must do for me.
Brad Ebenhoeh:
Love it. And then a CPG Don't.
Juli Lassow:
Don't forget to focus on the other party's perspective. Try to anticipate what's going to be most important to them in framing the conversation. What are they hoping to get out of the agreement, whatever type of agreement you're trying to reach. I think that's a way to help create some more value and find solutions that aren't so you-focused but that ultimately are creating a bigger slice of the pie again, pick your euphemism. But yeah, don't forget that other perspective.
Brad Ebenhoeh:
Yup, empathize. Put yourself in their shoes and look at their perspective, because it literally helps every time you have a conversation when you do that.
Juli Lassow:
that. And so that's true in business in life. But yeah, that's,
Brad Ebenhoeh:
um, that aspect. So all right, Juli Lassow from JHL Solutions, can you let us know how we can get a hold of you? What you're doing today that you know, with with your business and just kind of give us a little bit of that before we sign off here.
Juli Lassow:
Yeah, happy to share. So it's Juli: j-u-l-i- Lassow and you can find me on LinkedIn. I'm pretty active on LinkedIn, or JHL-solutions is where you can find the website, I have a fair amount of information on negotiations and supplier partnerships available. Today, as I shared, I mostly sit on the retailer side supporting retailers and building and developing negotiation strategies. But I do also support suppliers. So if you're looking for negotiation support, if you're reaching in or entering in conversations with retailers, for the first time going direct and moving into the wholesale space, happy to have a conversation on how I might be able to support that work and support your efforts. Awesome.
Brad Ebenhoeh:
Again, thanks so much for your time today, Julie. Appreciate the the knowledge, the expertise, you know the experience that you've had, I do believe the listeners will really enjoy it. So take care, Juli, thanks again. Again. This is episode 28 of The Month End podcast. Hope you all enjoyed it. Take care.
