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Slotting Goods

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Slotting goods has nothing to do with Vegas. Slotting is a business practice that retailers utilize to improve their margins on. Not all retailers ask for slotting from their suppliers. Companies like Wal-Mart, Costco, and Trader Joe’s do not ask for it. Slotting is like paying rent for the privilege of selling merchandise through their stores. Slotting normally is a cash payout for the right to place your product on the shelf. Slotting costs vary from retailer to retailer, and there are a variety of factors that impact your total cost of slotting your goods onto the shelf. Small specialty items normally are charged less, but items that have a high turnover rate carry a significantly higher price tag. If a company, like our own, was to slot multiple items into a store, then slotting can be negotiated at a lower cost. Sometimes slotting is in the guise of free merchandise to the retailer in exchange for placement. Retailers will argue that slotting is important to them for reasons beyond adding to their bottom line. Having to reset the shelfs to accommodate new items, having to enter new items into their accounting systems, and having to educate their customers to the new items. And besides you, there are a lot of other companies vying for the privilege of taking your space away and are willing to pay it. All valid points, but in our experience we end up paying for those items as well somewhere down the road. There is no free ride in getting a product on a shelf at retail. If you wonder why some things cost so much, this is just another one of those hidden reason to explain part of that cost.

John Vlahakis
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