Catalogs offer inventors an often overlooked sales outlet

{Don Debelak’s new book, Turning Your Invention into Cash is now available on Amazon for $3.49. Go to Amazon.com and enter inventions Don Debelak to purchase. From the author of Entrepreneur Magazine’s Bringing Your Product to Market.}

This article originally appeared in Entrepreneur magazine

February 5, 2001 by Don Debelak

Note:   Check out the web site:  http://www.petfountain.com/   Drinkwell® Pet Fountains were acquired in 2009 by PetSafe® Brand but the product continues to be a very good seller.  Google the Drinkwell Cat Fountain and see how well the product has done.

The Entrepreneur: Dr. Mary Burns, 49, former veterinarian and founder of Veterinary Ventures Inc. based in Union, Kentucky

Product Description: The Drinkwell is a pet fountain with free-falling water, a one-gallon-plus water reservoir, a pump and a charcoal filter for removing bad tastes and odors. The Drinkwell offers pets a daylong source of fresh water and has a suggested retail price of $49.95 to $74.95, depending on size.

Burns initially got the idea because her cat, Buckwheat, would only drink running water from a faucet. Tired of getting up during the night to give Buckwheat a drink, Burns created the Drinkwell after observing a decorative desktop water fountain that seemed to offer a solution for faucet-drinking cats.

Startup: Less than $3,000 for a vacuum-formed mold, some initial inventory and an ad in Cat Fancy magazine

Sales: Just over $3 million in 2004, with sales to pet superstores such as Petco and Petsmart, and to independent pet stores, as well as specialty and pet catalogs nationwide

The Challenge: How an independent, one-product inventor with limited business skills can get onto the shelves of category-dominating major retailers

Pets can be an important part of people’s lives, so it’s not surprising that every year, individual inventors come up with dozens of new pet inventions. But the days of the independent pet store are over–and nearly all small shops have been replaced by category-dominating stores like Petco and Petsmart. Inventors can enjoy big-time success once they learn how to penetrate the big pet-store chains.

Steps to Success

1. Obtain strong patent protection. “I knew the key feature on the Drinkwell was the free-flowing water,” says Burns. “I started by reading the book Patent It Yourself by David Pressman. I wrote up much of the patent description myself, but I had an attorney write up the actual claim to be sure I had strong protection.” Burns’ protection paid off–she sold the product without competition from 1995 to 2001 and, even after a competing fountain was introduced by a major pet-products company, the Drinkwell held its sales level because she had the market’s only free-flowing water fountain.
2. Develop convincing proof the product will sell. Burns explains her sales success: “I started out in December 1995, selling directly to consumers through small ads in Cat Fancy, Cats and I Love Cats magazines. Then, in 1996, Hammacher Schlemmer called and wanted to carry the product, and Alsto’s Handy Helper catalog picked the product up at the end of 1997. In 2000, I started to promote the product in trade magazines like Pet Age and started to pick up independent pet stores.” Burns didn’t just have some initial success; she had $2.2 million in 2002 sales, which also included Petco sales of her product.
3. Ensure the product has a “big company” look. Burns started with a functional product that was not stylish. “My initial vacuum-formed tool was very cheap (less than $1,500), but the product didn’t have aesthetic appeal,” she says. “In 1999, before approaching pet retailers, I decided to convert to an injection-molded product, which had a six-figure tooling cost, but which also provided a professional-looking product. That look was essential to Petco and Petsmart.”
4. Get expert help when negotiating contracts, pricing, allowances and returns. Burns’ growing business was starting to overwhelm her in 2000. “My investment counselor suggested I contact Howard Consulting [a business management consulting firm in Reno, Nevada, now called Meridian Business Advisers], who initially provided help with my financial books,” she says. “But they came to my rescue when dealing with Petco and Petsmart. I didn’t know how to fill out vendor qualification forms, deal with allowances and discounts, or negotiate final agreements.”

Howard Consulting helped Burns get the initial orders, and Burns went one step further in 2002. “I ended up selling the company to [Meridian’s parent company] for an upfront fee and ongoing royalties. I felt that I was out of my league negotiating with the big retailers, and was also overwhelmed by the concepts of producing the product overseas and dealing with a major pet-company competitor,” Burns says. “I felt turning the company over to experienced businesspeople was my best choice.”

Lessons Learned

1. Manufacturing costs should be no more than 25 to 30 percent of the suggested retail price. Big retailers will want at least a 50 percent discount from the suggested retail price, and they will also want allowances, which are a percentage of their purchases–typically 2 to 6 percent–to cover the costs of damaged products and advertising. You won’t make any money if your manufacturing costs are greater than 30 percent of the suggested retail price.
2. Big retailers don’t take chances. Big retailers will rarely be the first companies to take on an inventor’s product. They want to see that the product has succeeded in several other outlets, including some retail outlets, before they will even put the product into a few test stores.
3. Hire professional help. An inventor’s lack of management skills is a severe problem to major retailers, as they won’t have confidence in the inventor’s ability to deliver. Paying for consulting help might cost money, but losing the business is an even bigger problem. If you don’t know who to contact for help, visit your local Small Business Development Center.
4. Inventors can succeed. Inventors have obstacles to overcome, but the market is always looking for unique products that customers want. Retailers will buy if you can prove your product is unique in the market and meets an important customer need. Even the biggest retailers will want your product if their customers are asking for it.

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