Road Warriors: Tips for Winning Your Costco Roadshow

If you want to get into Costco, you’re going to have to hit the road.

For years, the big box chain has used its roadshows as a testing ground for new brands. The all-day sampling events, typically hosted in stores from Thursday through Sunday, give aspiring CPG companies a valuable platform to demo to thousands of potential new customers, and to test their performance, within the world’s third-largest retailer.

Yet the process of planning, staging, executing and following through on a roadshow can be complicated and fraught with risk. In speaking with brands, brokers and entrepreneurs about their experiences, a common theme surfaced: be ready.

Why A Roadshow?

Roadshows are, in essence, a combination large-scale sampling demonstration and high-speed consignment sale. Producers ship inventory directly to the roadshow location, with load-in typically occurring the day prior and the leftover product needing to be out the day after the roadshow’s end. Brands sample heavily and sell the product they’ve brought in.

Pricing is predetermined before the deal is finalized and all promotional materials, varieties, and product formats must be approved by store buyers before the deal is finalized. Although the markup can fluctuate slightly, it hovers at around 14%, according to people familiar with the process. (Costco representatives did not respond to comment on the specifics of its roadshow pricing structure.)

Although roadshows are sampling events, brands should approach them differently because of their sheer size of the store, according to Kirsten Everard, founder and president of Turn-Key Marketing & Promotions, who has helped brands with roadshows for 25 years. Some Costco locations see 4,000 to 7,000 members walk through daily with that number going up on weekends. This means a brand could speak with and sample to over 2,000 potential customers per day.

“At worst, this is a self-subsidized sampling campaign where you’re getting paid by Costco for your product as it scans through the register,” said Everard. “At best, you get the “golden ticket;” you get a rotation [or] maybe another region picks you up.”

Fail to Prepare, Prepare to Fail

So how does a brand prepare?

First, anticipate big numbers for your samples and demo tables, and over-index on your event staff, Everard said. She suggested a mix of brand employees and outsourced sampling gig workers and dedicating a team member solely for the logistics of running the roadshow, including transporting product, hiring and training staff, and setting up and breaking down.

When sparkling water brand Aura Bora did its first two roadshows this summer, founder Paul Voge brought along two employees for all four days. Looking back now, he said he wished he had brought at least two more.

“It’s so busy, there is no way to over-staff a roadshow,” he said. These are long four-day weekends where team members are working the tables from open to close. Staff need to keep the energy up and be prepared to talk to hundreds if not thousands of people each day.

Make the Meet: Catalina Crunch VP of sales A.J. Mergele suggests scheduling a meeting with the store manager before the show begins to work out critical decisions like where the demo table will be on the show floor, how it will look once constructed, what the flow of traffic is expected to be and how the brand can prepare for speedy sampling and packaging at peak hours.

“This meeting will cover important logistics, such as booth placement, timing and any specific requirements,” Mergele said. “By doing this, we can guarantee that we’re fully aligned with the club’s expectations.”

Observe allergies: Costco requires that products containing allergens like peanuts must pre-bag and pre-seal samples to prevent contamination. This has been an advantage to Tosi Snacks — which has done at least 12 roadshows over the last two years — because they can spend time talking to customers instead of having to continually refill samples.

“Be prepared. Have enough samples, have enough gloves and hair nets,” said Tosi CEO and co-founder Stefanie Hults. “Invest in comfy shoes and a thick floor mat. And always bring a jacket because you might be right by the refrigerator.”

Mix It Up – and Track It: Costco offers most brands the opportunity to create variety packs at the table for club members. These ‘build-your-own’ variety packs allow brands to better understand what club store shoppers prefer, and the data can be used to build out multipack formats for possible rotations or other roadshows.

Cold brew coffee brand Wandering Bear brought four flavors and had special boxes made that could house three 32 oz. cartons so consumers could choose which three varieties they preferred to buy.

Next time Aura Bora is bringing more flavors, Voge said, to hear from the “sparkling water aficionados who would have sampled much more.”

Post-Show Planning

Roadshows can be a prodigious source of valuable data for brands – if they have the right strategy for collecting and analyzing metrics.

For Wandering Bear’s three 4-day roadshows in the Northeast region this summer, the company built a system to track data points like target sales versus actual sales, conversion rates of samples to successful purchases and how these numbers compared to the volume of customers coming through the door each day. All this data was used both for internal business operations but also to demonstrate the success of the roadshow to Costco buyers, as well as other retailers.

For its first roadshow in 2022, edible raw cookie dough brand, Doughp, used “broker estimates of foot traffic, conversion rates and benchmark sales from other brands” to dictate its targets and estimates, said Doughp CEO Israel Moreira. It went on to use the data gathered from its first roadshow to prepare more efficiently for its subsequent five more demos in 2023.

“One thing a brand absolutely should not do is bring too little product and run out before the show is over, as this is a great opportunity to showcase the product while educating the customers about the brand and mission.”

To Roadshow Or Not To Roadshow

Although the idea may be appealing, roadshows come with some risks.

Launchpad president Jeremy Smith — who has represented over 300 clients over 26 years as a Costco broker — cautions that “some brands aren’t ready” with the overhead of labor and shipping costs, let alone the time and energy it takes to do the four-day events.

Smith advises brands to take the metrics even further, and seek the commitment from their buyer that if the producer hits the expected numbers, the product will be submitted for approval as a regular (in-line) item at a specific, agreed-upon price.

“You don’t want to do a road show and then get into really heavy negotiation on your in-line item and the number doesn’t make sense,” he said.

That’s not to say there isn’t value in it. A business with proper scale, in terms of people and supply chain, Smith said, can use the experience as a good trial for testing innovation and building brand recognition. That was the case with Doughp and Tosi, which traded off the roadshow cost as an investment in momentum for new products that had already been approved for the store.

On the other hand, make sure you’re ready. If things don’t go smoothly, it could hurt a brand’s chances of getting a rotation in Costco for a long time.

“If the wheels are falling off and you didn’t really pull off the roadshow logistically, that might raise some eyebrows,” Everard said. “You do not get a second shot at Costco.”