Your first retail launch: what to plan before the first PO

Choose your first channel account by account

Natural, conventional grocery and club are the usual starting points, and each works differently. Natural stores often look for ingredient standards and a story that fits their assortment. Conventional grocery reaches more shoppers per store, usually with heavier launch costs and more competition on shelf. Club sells larger packs in a concentrated assortment and asks for more inventory up front.

A channel label tells you less than the account does. Two retailers in the same channel can have different margin targets, ingredient lists, fees, payment terms and replenishment models. Ask each buyer for their actual terms and build a model for that account, rather than using a channel average.

Start where your product, price and supply fit, not where the biggest store count is. A small, well-supported launch that sells through is a stronger story for the next buyer than a wide one that stalls.

Broker or distributor: know which job you are hiring for

A food broker sells. It represents your brand to retail buyers, presents your items, coordinates category reviews and may manage the account after launch. A broker generally does not take title to your inventory, and it is paid by commission, retainer or both.

A distributor moves product. A buy-and-resell distributor buys your goods, warehouses them and delivers to stores, keeping the difference between its buying and selling price as its margin. A distributor listing does not create store orders on its own; someone still has to sell the retailer.

Some accounts buy from you directly, some only through a distributor, and some businesses offer both services. Check which role each contract covers, what it costs, and which accounts and territory it includes before you sign.

Build the price waterfall with real account terms

Work from the shelf price down. Take the retailer’s margin off the selling price to get what the retailer pays, then the distributor’s margin off that to get what you invoice. That invoice is your net revenue; the retailer’s and distributor’s cuts are not costs on your P&L, because you never earned them.

Use each account’s actual terms. Confirm whether every percentage is a margin on the selling price or a markup on cost, since the same number gives different prices. If an account buys from you directly, you invoice the retailer’s buying price but take on the delivery and service work a distributor would do.

Then decide where trade spend goes and count it once. Vaaha Unit Economics takes it off below gross profit; accountants often deduct some of it from revenue instead. Either view works, as long as you never subtract the same allowance from revenue and again below gross profit.

Budget for slotting and free fills

Slotting is a payment or allowance for a new item’s first placement on a retailer’s shelves or in its warehouse. A free fill is product you give the retailer to stock the shelf in each new store, so the first shelf of goods earns you nothing. Not every account charges slotting, and there is no reliable standard fee for a new brand, so ask each one for its whole onboarding package.

List every launch charge on its own line: slotting, free fills, introductory promotions, demos and any new-item fees from the distributor. Get the covered stores, timing and conditions in writing, and ask whether any charge is refundable or conditional. Slotting does not guarantee a permanent listing or a reorder.

Keep cash back for after launch. A brand that spends its whole budget getting on shelf has nothing left for the demos and promotions that get the product off it.

Treat slotting as a one-time launch cost with its own payback, not as a cost that recurs on every unit.

Plan trade spend and how it will be deducted

Trade spend is the money and allowances you spend with retailers and distributors to win distribution and move product: temporary price reductions, scan-backs, slotting, free fills, demos and similar programs. Build the budget from each account’s terms and your promotion calendar, then test what happens to contribution if it runs over.

Much of it never arrives as a bill. It comes off your invoices as a deduction, or as a distributor chargeback weeks later. Agree on how each program will be collected before it runs, and keep the paperwork so you can match every deduction to a promotion you approved.

Check each deduction before you record it. Some are promotions, some are returns, freight, damage or penalties, and some are mistakes you can dispute. Coding everything as trade spend hides both the real cost of your promotions and the money you could recover.

Make sure you can supply the account

A buyer weighs availability as well as demand, and an empty shelf costs you sales and goodwill. Before you accept a PO, line up production with your co-packer, packaging and ingredient minimums, and the lead time for each.

Work backward from the first ship date: production, quality release, transit to your warehouse and then to the distributor or retailer. Then plan the reorder, not just the first order, and decide how much stock you will hold in case sales come in faster than forecast.

Check shelf life against the account’s requirement. Retailers and distributors often require a minimum amount of remaining shelf life at delivery, so the time your product spends in production and transit comes out of the time it has to sell.

1. Confirm the co-packer’s schedule, minimums and lead time for every SKU in the order.
2. Confirm ingredient and packaging minimums and lead times, and who holds the leftover materials.
3. Map the timeline from production to the shelf, including quality release and each transit leg.
4. Check remaining shelf life at delivery against the account’s requirement.
5. Plan the first reorder and a buffer for faster-than-expected sales.
6. Confirm you have the cash to fund production before the account pays you.

Measure sell-through with velocity per store per week

Shipments into a distributor or a retailer’s warehouse are sell-in, not demand. What tells you the product is working is what shoppers buy. Measure it as units per store per week, for one SKU at a time.

Divide the units sold by eligible store-weeks: each store that carried the item, multiplied by the weeks it carried it. When stores launch at different times, add up their eligible weeks instead of multiplying the whole chain by the whole period. Keep promoted weeks and stockouts in view, since both move the number for reasons that have nothing to do with steady demand.

Use velocity to check the launch math. Your slotting payback depends on how many units sell each week, so the same fee can pay back quickly or take years depending on velocity.

Decide when to expand

Expand on evidence from the stores you already have. Look for velocity that holds in the same group of stores after the launch promotions end, reorders from the account, and contribution that stays positive once trade spend and deductions are counted.

If sales rise while velocity falls, new stores are doing the work and existing ones may be slowing. Fix availability, price or shelf placement in the current stores before you add more.

Before you take on a new account, run it through the same steps: its real terms, its launch costs, your supply and your cash. Success in one channel does not prove demand in another, so treat each new account as its own test.

1. Track velocity for each SKU in a consistent group of stores, separating promoted and baseline weeks.
2. Confirm reorders and contribution after trade spend and deductions.
3. Check that supply, lead times and cash can support more stores.
4. Model the next account on its own terms before you pitch it.

Common questions

How do I get my product into grocery stores?

Start with an account whose shoppers, price points and standards fit your product, and sell to the buyer directly or through a food broker. Before you accept an order, model the account’s real terms, launch costs and your supply, then support the launch so shoppers buy.

Do I need a distributor to sell to retailers?

Not always. Some accounts buy direct from the brand, while others only buy through a distributor. Ask each account how it buys, and compare the distributor’s margin and fees with the cost of delivering and servicing the account yourself.

How much does it cost to get into a grocery store?

There is no standard figure. Add up the account’s actual launch package, including slotting, free fills, promotions, demos and distributor fees, and keep cash for supporting sales after launch.

What is a free fill?

A free fill is product you give a retailer to stock the shelf when your item launches in a new store. Count it as trade spend, alongside slotting and promotions.

Related glossary terms

• Slotting fees
• Sales velocity
• Trade spend
• Food broker
• Distributor margin
• Retailer margin
• Natural channel
• Club channel

Free tools

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