This episode provides a stark warning about the perils of expanding a CPG business into big-box retail without a solid strategy. John Terry's candid account reveals how the allure of major retailers like Walmart and Kroger can lead to devastating financial and logistical challenges, ultimately destroying a business. Ecommerce operators should listen to understand the hidden costs and operational complexities involved in retail partnerships to avoid similar pitfalls.
Key takeaways
Before expanding into major retail, meticulously analyze all potential costs beyond just shelf space, including logistics, inventory holding, marketing contributions, and potential return fees. Kroger's hidden costs were a major factor in John Terry's business failure.
Do not rely on retail expansion for prestige alone; prioritize sustainable unit economics and proven product-market fit within the retail channel. John's product failed to perform in Walmart, leading to inventory buybacks and significant losses.
Diversify your sales channels and avoid over-concentration in a single, high-risk retail partnership. John's experience highlights the danger of placing too many eggs in the big-box retail basket.
Thoroughly vet retailer logistics and privacy policies. Kroger's opaque logistics process created significant headaches for John, impacting his ability to manage inventory effectively.
Develop a robust inventory management strategy tailored for retail, including clear clauses for unsold merchandise. The emotional and financial toll of buying back inventory from Walmart was a critical blow to John's business.
John Terry joins Mike in today's episode as a follow up from his Under the Hood Episode 417 where he talks about how COVID & the political climate affected his business, and how going into retail ultimately killed his consumer packaged goods (CPG) business. Today's episode is one that left me absolutely speechless during recording. It's a hard topic to talk about when listing down a bunch of mistakes, but it's infinitely more difficult to talk about when the list of mistakes eventually lead to the death of your business. Nevertheless, I commend John for coming on today to talk about how his business ended up this way, the "trap" of going into retail, and advice for those looking to expand into selling in any big box retailer. Here's some timestamps to help you along: 0:00 - Introduction 2:47 - Podcast Start 3:03 - Under the Hood Overview 4:31 - Meeting with Walmart 7:16 - The Second Mistake 7:48 - Kroger Reaching Out 9:13 - Ordering Inventory for Retail 11:34 - Kroger Privacy Around Logistics 12:35 - Kroger's Costs 13:41 - Backing out from Kroger 14:42 - First Warning 15:10 - Skyrocketing costs 18:27 - Poor performance in Walmart 20:24 - The goal moving forward 21:36 - Buying back inventory from Walmart 22:25 - Why the product failed in retail 25:39 - Where to go from here 28:00 - Mike's advice 32:02 - John's advice to entrepreneurs 37:21 - John's public adjusting business John, I can't thank you enough for coming on the podcast and sharing all of the painful things you went through. I hope that someone listens to the episode and knows not to get into retail for the prestige of it. We hope today's episode was useful to you. If you want to get in touch with John, you
What does this episode say about retail & omnichannel?
Before expanding into major retail, meticulously analyze all potential costs beyond just shelf space, including logistics, inventory holding, marketing contributions, and potential return fees. Kroger's hidden costs were a major factor in John Terry's business failure.
What does this episode say about supply chain & operations?
Do not rely on retail expansion for prestige alone; prioritize sustainable unit economics and proven product-market fit within the retail channel. John's product failed to perform in Walmart, leading to inventory buybacks and significant losses.
What does this episode say about finance & fundraising?
Diversify your sales channels and avoid over-concentration in a single, high-risk retail partnership. John's experience highlights the danger of placing too many eggs in the big-box retail basket.
What does this episode say about founder & leadership?
Thoroughly vet retailer logistics and privacy policies. Kroger's opaque logistics process created significant headaches for John, impacting his ability to manage inventory effectively.
What does this episode say about retail & omnichannel?
Develop a robust inventory management strategy tailored for retail, including clear clauses for unsold merchandise. The emotional and financial toll of buying back inventory from Walmart was a critical blow to John's business.
