Any supplier that provides a retailer with their product wants to ensure that it will end up being offered to customers. While this isn’t a problem in some industries, there can be a great amount of competition in others. Suppliers can get an edge up on some of the competition by paying a slotting fee. If you’re new to the supplier world, you may have little knowledge of what this fee is or how it can help you. Here is what suppliers need to know about slotting fees.

Slotting Fee

A slotting fee is a payment made to a retailer to ensure that a product will appear on their shelves. For this reason, it’s also sometimes called a slotting allowance or shelf placement fee. This is not a new option for suppliers to ensure their products are easily available as it’s been used for at least the last 35 years, especially in grocery stores and supermarkets. This usually consists of a one-time fee to the retailer. The fee depends on the retailer so some may charge much more than others. This can make it difficult for a smaller supplier to afford such a fee. However, if you can find the right retailer and know how to use the space, it can be very beneficial.

Guarantee Space on the Shelf

Depending on the product you manufacture, you may have a lot of competition. This could make it difficult to find space on a retailer’s shelf. The retailer is looking to move as much product as they can so they’re going to place the most popular items first. If a company pays a slotting fee, customers may see their product more often and become comfortable with the brand. This will result in more product being sold. It also allows for lesser-known products to compete with big name brands. Most people will be more familiar with bigger brands, resulting in their product moving easier. If a supplier is placed next to that brand, they will be seen more by customers and begin to sell more product.

Make Wise Decisions

When paying a slotting fee to a retailer, there are ways that you can increase your chances of being successful. It starts by knowing how much you’re willing to spend and not going over that amount. Don’t pay an amount that will hurt your company just because they’ll offer you a slot in their store. Once you’ve paid your fee and have a good location on a shelf, you need to work to create sales. Use marketing tactics, such as in-store promotions, to influence people to purchase your product. Paying a slotting fee will get you on the shelf, but it’s up to you to stay on the shelf. If you provide quality products and market them well, you’ll likely sell more product. This will convince the retailer to keep you on the shelf without a slotting fee because you’ll be moving product and making both businesses money.

It can be difficult for a supplier to get on the shelf at a retail store. A slotting fee will ensure that they get on the shelf and are available to customers. Through marketing and providing a quality product, a supplier can build up its reputation to the point where the retailer desires them. This will enable them to be readily available to customers at all times. Contact TradeBeyond if you’re in need of the ultimate sourcing app for retail supplies.

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