"We normally sell from a very different angle of, 'We're not a commodity, this is what we are and this is why we're worth this.' So doing it their way is a bit of a pill to swallow."Ĭostco also takes a cut of each sale, which Stauffer and Baum estimate at 4 percent. "It's hard to swallow," Stauffer says with a laugh. According to Stauffer, it's Costco policy that vendor products cost 10 percent less than any price you would advertise. The prices are less than you'd expect, too. "You go in and they hand you the price tag to put on your product," Stauffer says. The biggest of all: Costco sets the pricing on everything you sell. While Costco events seemingly offer a lot of promise to small, independent retailers - especially as an inexpensive alternative to home shows - the arrangement naturally comes with strings. "They're coming in and they're buying your chemicals, they're buying your patio furniture, barbecue grills and all that because we got them into the store, and we never would have gotten them in if we weren't at Costco." They're no longer the Costco customer," she says. "When we deliver that hot tub, we're like, 'Hey, come to our spa school - we do spa schools every Saturday.' You educate them and you help them. It's the chance to get into the customer's backyard and make an impression it's the opportunity to turn that new spa owner into a returning customer. Stauffer says that final step in the process is the big payoff. All tubs are shipped to the dealer, who then does the delivery/install. When the event concludes, Costco processes the orders. Interestingly, all sales are made through Costco's system, meaning you effectively work for Costco while you're there. "I've had some Costcos move the displays around - you'll be in one spot one day and then you come the next day and you're in a completely different spot behind the toilet paper," Baum says. Depending on the management at your Costco, this can lead to interesting results. The caveat, however, is that you don't get to choose where you are positioned on the Costco floor. So we liked it from a marketing standpoint."īut unlike home shows and fairs, you don't have to pay for your event space, a fee that could otherwise cost thousands. "And it was a market that we wouldn't normally capture. "I think they told us 80,000 people go through in the timeframe we were there," she says. While staunchly anti-big box, Stauffer softened on the Costco event idea largely because it presented a unique marketing opportunity. (If you glance at the Special Events page on the Costco website, you can take a look at the schedule by region products include mattresses, blenders, grills, hot tubs and more.)įor the hot tub events, the manufacturer finds local dealers, like Baum and Stauffer, to work the show, which helps keep costs down for the manufacturer and, more importantly, gives dealers an opportunity to make sales and build relationships with customers. The Costco roadshow program is essentially a "tour" in which participating manufacturers can set up shop within Costco stores across the country and run special events for a short period of time, usually five to 10 days. "Anything to give you an edge is good," he says.
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