You might be asking yourself, why is Distributors 101 the last module?
Well, we tend to see here at WeStock that our brands prioritize distributor relationships too early and that it gets them into a very expensive trap.
Distribution is key to retail success and you want to pick the right distribution for your company.
We spoke earlier about opening independents and how you can service those stores directly to start. We have seen $1M+ brands not even touch distributors and instead ship their product direct to retailers. This is definitely an option, but most brand’s want to get big which means eventually they will have to move into a DSD (direct-store-distributor) relationship at some point.
These are distributors who deliver the product directly to the store (vs a warehouse) and often have road reps who represent your product and actively open up new accounts for you.
Most brands get very excited about opening up a new DSD and think that the orders are going to start flowing in, but that is rarely the case. The best brands view their DSDs as a conduit to amplify their internal sales team’s efforts. They can now pitch stores actively and let the buyer know that they can pull through their DSD partner, this is much easier for the store since they can now order your product along with their normal order of goods.
When you open up a DSD partner, you want to spend time with them. You want to educate their sales team and go on ride alongs with their trucks to stop into their accounts. Their team will value that and in return the relationship will be more successful.
You can also work with distribution platforms like Mable or Faire, but you will have to most likely do that in tandem with a larger distribution strategy.
Let’s fast forward. You have now decided that you want to grow nationally.
The first thing most brands think they need to do is open with KeHE or UNFI. These are the two main national distributors and they can both be great partners for your business. The issue is that most brands open up these large distributors, get placed in multiple DCs (distribution centers) and their product sits. The charges then start to compile because the product is sitting and because you failed to secure the necessary points of distribution (new stores) for your product. Now your product is in danger of being pulled from that newly opened DC. It is a tale as old as time, and one we see often here at WeStock.
We believe the healthier route is to secure an anchor account in a region, which would be a high-volume chain account, in tandem with opening up the distributor. You are going to pitch that retailer first, get their interest, ask them their preferred distributor, and then leverage that retailer interest to open up the appropriate DC. This way you have an anchor account who is going to pull from that DC and from there you can open up other accounts without the fear that your product isn’t moving and that you’re going to get hit with charges.
If you have your eyes set on a large national retailer, we suggest not worrying about securing distribution first. Large retailers like Target and Walmart are going to have you ship directly to their warehouses and you are going to coordinate that with a carrier, while large regional players like Publix will walk you into their distributor partner KeHE if there is interest.
Brands tend to think the distributor and retailer conundrum is a chicken or the egg situation, but our advice is to focus on the retailer first and the distribution will fall into place after.
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Distributors 101