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Distributors are expensive, demanding, and absolutely essential. Retailers can’t buy directly from the hundreds of manufacturers of the thousands of products they have in their stores. So buyers at retail chains typically purchase from one or two preferred distributors to service their stores. That way a huge variety of product arrives at each store packed neatly on pallets with a single invoice to be paid for all the different products. Top distributors will also supply retailers with a blanket discount, special deals, preferred service from reps, and lavish treatment at distributor trade shows. These buyers may turn to minor distributors and direct sales in order to fill gaps on their stores’ shelves, but you want to be with the preferred distributors that stores already work with. Just as distributors make things convenient and efficient for buyers, they can incorporate your product into an existing order on a Nature’s Best, UNFI, or KeHE delivery truck, making things convenient and efficient for you too.

What Does a Distributor Do?

Distributors are the veins in the body of the retail industry. Distributors buy in bulk from suppliers like you. They then “break” the bulk shipments into smaller quantities and store them at their distribution centers. When an order arrives from a retail account, the various items needed to fill the order are pulled together. A truck is loaded up and the order is delivered to the account. They are, essentially, supermarkets for supermarkets.

Getting into a distributor is not easy, and as you will read, they do have a number of requirements. But if you can meet them you are in the club. It’s a club you must be part of to some degree to be successful in the natural foods industry.

Distributors: Easy or Tough?

Distributors can be pretty tough because they know what it’s like to be burned. For instance, one company expanded its business from Canada to the United States. It was in every distributor. Nonetheless, for many reasons the company went bankrupt. All its distributors were left with product nobody was ordering. Ultimately, distributors had to sell off product at deep discounts or eat the costs of expiring product. This is not an uncommon situation. As a result, new vendors with little or no experience are often seen as unreliable. But remember, experience and sales open doors fast!

Before a distributor will purchase pallets of an unproven product, the distributor will want to see real demand. Warehouse space is valuable, and unproven products are given very little shelf space. Don’t expect any distributor to buy in high quantities unless customers are demanding your product.

That said, distributors are your partners. They want your product to sell for the same reason you do: profit. If you coordinate with them properly, they will serve you and your brand well. Depending on how aggressive you and/or your sales directors are, you can use them to close major deals.

What Distributors Require

Commitments and preorders from at least eight to ten of their customers.

Properly completed paperwork. Most packages require twenty-plus pages to be filled out.

Liability insurance to cover any damaged or destroyed product. Each distributor has specific insurance requirements. Meet them.

A 15 percent discount for the first three months on introductory items.

Yearly promotions such as 15 percent discounts during your peak sales months. For example, for a dietary supplement, January (New Year’s resolution month) and/or summer bikini time would be a good promotional focus!

Guaranteed product. If product is expired or damaged, you take it back. Be sure about this and do not send soon-to-be-expired product.

Formulations. Your suppliers will have your formulations or products they have supplied to you. To define formulation, it’s your recipe broken down into detailed ingredients. It is not as simple as giving your recipe because once you get into consumer goods it’s beyond the recipe. Formulations comprise nutritional breakdowns, ingredient sources, and recipe. Sometimes where you source your ingredients may have a bearing on a buyer’s decision, such as if your ingredient goes against a free trade policy. Ingredient specifics is something you would obtain from your co-packers because they can supply you the nutritional chart, ingredient breakdown, and ingredient sources. Sometimes it takes a few weeks to obtain formulations from your co-packers, so get them at the first opportunity.

Product details such as pallet size, UPC, height, price, weight, suggested retail price (SRP), wholesale price, and every other minor detail imaginable. Creating price sheets for your team with all these details before approaching a distributor would be wise, as well as time-saving.

Commitments to their trade shows for at least the first year.

Adherence to protocols about schedule deliveries.

Punctuality for product delivery appointments. Otherwise, you will be turned away.

SHELF CHECK 6

Know the Five Major Distributor Networks

The five dominant broadline distributors in the natural/specialty market are Nature’s Best, UNFI, KeHE, Core-Mark, and McLane. Other major distributors exist, and these five can be costly at times, but they are your best bets for success. Broadline distributors are major distributors that deliver product to retailers with a markup of approximately 7 to 15 percent.

At their trade shows they can help you find the sales gold mines and extract the lucrative deals that will launch your product and jump-start your company. For example, at the 2012 KeHE summer selling show in Chicago, I connected with a KeHE sales rep in charge of the H-E-B markets at more than 150 stores. The rep responded positively to our product, taking samples and literature away with him. Periodically over the next six months I called and emailed this sales rep. I did not hear from him so I sent additional samples and kept that contact alive. A few months later? The KeHE sales rep informed me we had closed a major deal. A few weeks later the product was in every H-E-B store. The same KeHE rep closed a deal for us through his buyer connections. Now that’s a good partner!

Let’s look at the big five:

Nature’s Best

I love Nature’s Best, the largest privately owned wholesaler-distributor of health and natural foods products in the natural products industry. They have many valuable accounts: Sprouts; Raley’s; adored retailers such as Mother’s Market & Kitchen; Lassens; Clark’s; and hundreds of natural/specialty independent retailers. They are also the best distributor to start with. And although they use distribution centers in California and Texas, their distribution channels extend as far as Hawaii. The trade shows Nature’s Best puts on have a comfier ambience than other distributors’. In addition, their sales teams are smaller but solid enough to remain powerfully influential and help accomplish your goals. In fact, a salesperson from Nature’s Best works right inside the corporate office at Raley’s approving items. (Wink, wink.) I highly recommend Nature’s Best and their family-oriented lifestyle—like staff.

For salespeople it’s easy to submit turnover orders to Nature’s Best. You simply fill out the turnover and email or fax it in. Nature’s Best supplies the turnover forms. Also, any broker worth anything will have these turnovers on hand.

They specialize in retail marketing support, Web services, business analysis tools, and sales/category management consulting.

In my opinion, Nature’s Best is one of the easiest major distributors to work with. The reason is, it’s like working with a family. As I said before, it’s the most ideal distributor to start with. In my experience, they take the least amount of time to set products up with item numbers (i.e., distributor coding). Nature’s Best will get the ball rolling for you. Then you can go to other major distributors after some success with Nature’s Best. (In July 2014 Nature’s Best was acquired by KeHE, but they still operate as two separate distributors.)

WEBSITE: WWW.NATURESBEST.NET

For a reasonable fee, Nature’s Best will supply you with sales reports. I recommend this once you are off to the races and sales begin to pick up. They do require detailed paperwork, and acceptance is not guaranteed. But the value of their established connections is obvious.

Nature’s Best is also accommodating if you need to pick up product from their warehouse for samples and demos. This is handy for smaller companies with no local warehouse space to store product. It also minimizes your shipping expenses. However, a pickup appointment is required.

I have consulted with companies that target Nature’s Best from the beginning. In the real world, sometimes a simple phone call can accomplish this. For other items and considering category competition, a little coaxing and selling is necessary.

UNFI

UNFI is the leading independent national distributor of natural, organic, and specialty foods and related products, including nutritional supplements, personal care items, and organic produce, in the United States. They also distribute in Canada. UNFI has thousands of coveted accounts. These include Meijer, WFM, Publix, Publix GreenWise Markets, Safeway, Bristol Farms, and Jimbo’s . . . Naturally! as well as thousands of major service accounts.

WEBSITE: WWW.UNFI.COM

UNFI may be the most demanding of all distributors because of their administrative requirements. UNFI requires pre-sales because there is only so much space they can give to unproven products in their distribution centers. But trust me, it’s worth the effort to meet this difficult requirement because the major retailers that draw only from UNFI distribution centers will be open to reviewing your product.

Don’t count your free-range chickens before they’re hatched; keep in mind that it can take up to a year to obtain codes. UNFI struggles with demand for warehouse space. Very few companies can stockpile inventory anymore—if any. So expect a six-month window to generate codes from UNFI for the west region and another six for the east. Be persistent.

UNFI hosts effective tabletop shows, most notably in Portland, Oregon; and Orlando, Florida. This pair of shows generates excellent attendance and creates unique opportunities. A real drawing card to these shows is the opportunity to schedule one-on-one meetings with UNFI sales representatives as well as the buyers of your target chains an entire day before show launch. In essence, you are speed dating your distributors. In a large noisy room you are allowed fifteen minutes for each meeting. At the end of that time a bell chimes and you are off to see another potential partner. So you can simultaneously make connections and be instantly educated about various distributors.

For salespeople UNFI is an easy company to submit turnover orders to. You simply fill out the turnover and email or fax it in. UNFI supplies turnover forms, and any competent broker will have these turnovers on hand as well.

KeHE

KeHE (which also owns Nature’s Best, which they purchased in 2015) works with retailers at every level: national, regional, and all sizes of grocery chains and independent retailers. Their reach as a major distributor extends beyond the United States to Canada and all the way to South America.

WEBSITE: WWW.KEHE.COM

With 3,500 manufacturers, importers, and other product supply partners, there is virtually no limit to the assortment of products that KeHE makes available to their retailers. Their team could be out there selling your product every day, and you will see it in real time!

KeHE has the best and most entertaining trade shows. I highly recommend their popular Summer Selling Show. Attendance is expensive. What makes it expensive? No, it’s not the tickets. You will find yourself paying around $200 or more per day to stay at the hotel hosting the trade show, which saves you the hassle of driving back and forth to the show. Meals out can be around $20 to $60 per person. It will depend on whether you plan to wine-and-dine customers. You’ll pay at least $5,000 to $7,000 for a five-by-ten booth. Sometimes you can opt to share a booth, which can be cost-effective. And you’ll have shipping costs also. You will get at least two passes for your booth for you and a worker. I suggest you don’t work it alone. Too much for one person. You never want to leave your booth empty—ever.

Despite the expense, fascinating opportunities are bountiful at trade shows. KeHE has a set process for reviewing new items before the show. Acceptance to these shows is not automatic. Send in all paperwork completed per instructions. Imagine your product in huge retail partners like H-E-B, Publix, Publix GreenWise Markets, Winn-Dixie, and so many more. These are the players who attend.

What I love about KeHE is that you can monitor all your sales, ads, and other details in real time on KeHE’s online site called OAK. Who doesn’t want to know their distribution center’s stock levels in real time? Or if a PO has been issued? Or the quantities they sell to each retailer and which distribution center is most successful? The site is not easy to use, though, so I recommend that you have individuals who have worked with it on your team.

Core-Mark

Core-Mark is a mainstream broadline distributor. This means they service a lot of the mainstream accounts and C-stores (convenience stores). For example, if you feel your product would thrive in C-stores, universities, hospitals, gas stations, hotels, and restaurants, then you’ve hit the jackpot. Core-Mark covers all this and more.

Core-Mark has been around for more than 120 years! Since starting in 1888 as Glaser Bros. a single storefront in San Francisco, it has grown to be one of the largest distributors and marketers of consumer goods in North America.

Core-Mark has monthly open houses and sales meetings that are free to attend. I suggest your team attend every single one until your product is known within Core-Mark regions.

WEBSITE: WWW.CORE-MARK.COM

McLane

McLane is the biggest of the big, an international broadline distributor that covers 7-Eleven, gas stations, convenience stores, hotels, hospitals, and universities. To put things in perspective, if WFM takes your product, they can put it in nearly 400 stores. If McLane gets your product into gas stations, it could be in thousands of outlets. McLane, along with Core-Mark, defines the mainstream.

McLane prides itself on innovation, integrity, and leadership. It evolved from a distributor of the smaller retail grocer in 1894 to a leading grocery wholesaler and distributor in the 1960s and 1970s to a worldwide logistics powerhouse in the 1990s. Today, McLane is a supply chain services leader, delivering more than 10 billion pounds of merchandise to customers every year.

McLane hosts the 7-Eleven franchise shows. These shows are costly, meaning you could spend upward of $6,000 for a booth, but it’s well worth it. You will need plenty of product and a way to get it there. I suggest you bring it to the show yourself—that is the easiest way. You will also need to stay at the hotel unless you live near the show location. You will need help at the booth, plus the time it takes to organize the show. Get into 7-Eleven and you are money! I have worked for a company that claims that 35 percent of its $12 million annually in sales is from McLane. If I did not see the thousands and thousands of dollars in orders daily, I would not believe it. The greatest part is, these are low-maintenance accounts, meaning no demos or constant store visits. It’s an automatic order.

WEBSITE: WWW.MCLANECO.COM

SHELF CHECK 7

Use Your Distributor Sales Reps—They Are Working for You!

Distributors like Nature’s Best, KeHE, Core-Mark, McLane, and UNFI sell their products using sales representatives in the field. These employees introduce and market new items for placement in their existing accounts. These distributor sales reps receive incentives and bonuses from their distributor (employer) and/or manufacturers like you as they secure accounts. Good reps have many long-standing relationships. Distribution partners can bring life to stagnant sales. It’s a win-win situation for you.

As soon as I get a product into a distributor I start calling their sales reps. Who better to walk me into retail accounts that I have no relationship with? That’s right. Be sure to get a list of your distributor’s sales reps and their contact information when you are accepted by a distributor. Reps are paid to provide customer service and aid in advancing your brand. You need their support to ensure closing new business.

Utilize distributor sales reps, but don’t expect that the minute you sign up with a distributor every rep will be begging for your attention. From their perspective, the inflow of new vendors is incessant, and they come and go with monotonous regularity. Nevertheless, cultivate the hired help.

So you ask, What should one expect to pay when joining a distributor? There are setup fees ranging from $500 to $5,000 depending on the distributor. These charges often come off your first invoice. These charges are associated with new item publications, distributor ads, distributor trade shows, new item programs, and free-fills for their sales reps. There are distributor trade shows you must commit to at least twice the first year, and you must commit to sell your product to as many of their customers as possible. Distributors are not cheap! But if you want in you must pay the entrance fees. Be specific about your needs and be clear.

Connect with Your Distributor Account Buyers

Create a relationship with your distributor account buyers. Every distributor has account buyers for each category. For example, there are dairy buyers and health and body care buyers.

Distributor buyers are a superb resource. They can give you a list of distributor sales reps and their territories. They can swiftly push new items through for distribution approval. Develop a strong relationship with your buyer. If you create a product in another category, you can contact your regular account buyer to get a referral to the new account buyer you need to contact. They are also a great resource as you move around the natural foods industry. As in all industries, people are highly connected, and I consider that doubly so for the natural foods industry.

Prepare for the Trade Shows

All right, you are set up with KeHE, UNFI, Nature’s Best, Core-Mark, or McLane and have signed up for all their trade shows. How do you prepare for them?

Make sure that every sales rep at your distributor knows you and your product. This advance marketing could take several months, during which you send out samples and sales sheets to every rep. After a period of time, though, you will start receiving sales reports from all over the nation, your efforts rewarded by the distributors. Priceless!

Customize your sales sheets. Both distributors and retailers love customized sheets because they make life so much easier for everyone! The minute you are accepted by a distributor with item codes create a customized sales sheet including images of the item(s); UPC(s); distributor item code(s); distributor logo; your company logo; your sales rep and/or sales director info; and, most important, ingredient lists. List ingredients or you will be asked what they are every time you show—to everyone’s aggravation. Product ingredients are what natural foods are all about. Highlight them; don’t hide them.

Get a list of retailers and hit them up! Get account lists from sales reps. Send them samples and sales sheets. Treat these samples and sales sheets as unique gift boxes. Personalize them when you can—be interesting and different, and cut through the noise. The more advance legwork you do, the easier it is for you and/or your broker/distributor to close accounts.

What I do is get a list of contacts from my distributor and send personalized emails to every single buyer. They say something like, “Your distributor sales rep thinks our product is a perfect fit because . . .” You may not get a response to every email, but you will get a response in sales.

In fact, you may just secure sales by plain, old-fashioned cold calling of accounts. Distributors appreciate it when you close an account and they can take over servicing the account. I have closed thousands of accounts with cold calls. It works!

Be in the Stores

Track your distributor’s accounts. Find out who is buying your product. You or the rep should visit stores to discover to which customers your product is currently being sold. Find out if these customers are in your buyers’ retail landscapes. Perhaps, after some strategic talk, you can alter your position. You might live in California, for example, but discover that your product is a hit in Connecticut or Michigan. Although it may not be feasible to personally visit those out-of-state store customers, retailers can phone them and send them coupons to show gratitude for their business. This will create buzz. You will be surprised how a little concentrated effort can impact your sales.

Watch Your Shelf Life

The shelf life for most products is roughly 365 to 450 days, after which they can no longer be sold at a retail level. Therefore, you can’t ship to a distributor product close to expiration because they will know the expiration date. Of course, some people do this anyway. I witnessed one overstocked manufacturer, in a scramble to stay solvent, ship distributors $40,000 of soon-to-expire product that had been sitting in a warehouse. Sly? No. Unprofessional. The distributor doesn’t want it. Another time I worked with a manufacturer that sent product to Nature’s Best that was expiring within six months. Nature’s Best was not impressed and three months later sent most of it back.

Do not ship product unless it is six months before your organic and normal expiration date. Product that’s about to expire should be used for demos, samples, and freebies.

Also avoid overstock! Doing so will reduce the pressure to ship product too close to its expiration date. For most of its history, Amazon has labored tirelessly to reduce spiraling losses due to overwhelming inventory and overstock issues. It has systematically implemented numerous radical technologies to adjust to customer demand. You can be just as careful. I suggest you forecast your sales and produce accordingly. Stick to your plan. I understand that longer production runs will reduce costs. But don’t let third parties convince you of the value of producing three or four times what your plan calls for, just to support their optimistic sales predictions for an advertised special. Running out of stock for two weeks is a lesser evil than returning $20,000 in product. It happens more than you think, so be wiser.

There is a fine line between overstock and understock. Many manufacturers overstock and think that close to the expiry date their product is still sellable. Well, it’s not. So don’t let yourself get stuck with unsellable expired product!

SHELF CHECK 8

Don’t Do Trade Shows Without a Major Distributor

Far too often I have seen manufacturers with inflated egos but without distribution channels set up booths at conventions and leave with zero sales, empty promises, and enormous bills. In the eyes of major retailers, without a distributor you are an amateur, a wannabe—or, worse, as Mark Cuban, the owner of the Dallas Mavericks, would say, “a want-a-preneur.” The majors will assume that these manufacturers will be gone in a year or two. Usually they are right.

I’ve seen the difference having a distributor makes. I attended a show with a manufacturer who had attended the previous year to no effect. This manufacturer came back strong with distributors locked in. The product was available and easy to order. We closed more than $20,000 in deals on the show floor.

I worked with another team who felt that because their product was so outstanding everyone at Expo would buy direct. Thinking solely about distributor costs (losing an immediate 35 percent of margin), they could not immediately look a few steps down the road. As a result, they had no sales. When I stepped in to consult, I set up distributors and retailers, and during the following year Expo generated more than $30,000 in sales on the floor.

Distributors’ trade shows are your opportunity to get in the game. A spirit of deal making permeates them. You will meet distributor sales reps and buyers face-to-face. It’s imperative at your incubation stage to expand your contacts. So shows are a very efficient way to secure deals. Be passionate!

Development takes as long as it needs to. Skipping any of its steps can be fatal to a brand in infancy. The Natural Foods Expo West is the most affluent food Expo in the world and also one of the most expensive to take part in. If you go to The Natural Foods Expo West in Anaheim without a distributor and/or your product isn’t shelf ready, you are bleeding unnecessary cash. Stick with the fundamentals: Partner with a distributor.

If buyers are enthusiastic about your product, they may take an order from you, but this is rare. Some retailers make decisions on the spot on the trade show floor, which resembles the noisy activity on the New York Stock Exchange floor. But usually these retailers are smaller and will do the bulk of their ordering through a distributor. Few are interested in direct sales or ordering via private sales sites.

SHELF CHECK 9

Before a Review, Secure Distribution

Retailers rely on a process called category reviews to accomplish many things. One of their objectives, critical to you, is what is known as a “reset.” A reset wholly remerchandises a category in their stores according to a planogram or design schematic. This reset is the motion picture equivalent to being nominated for an Oscar and then getting a chance to vote for yourself. I have been fortunate enough to receive an invitation to participate in a large grocery store’s reset. Imagine: There is madness in the store and you are able to collaborate with the managers on exactly where your product sits. Instead of your product being on the bottom shelf, you have an opportunity to move it up to eye level. Cultivate your relationships to increase the possibility of getting an invitation to a review.

DSD (Direct Sales Distributor)

A DSD is a distributor, but it’s a full-service distributor. A DSD will restock your shelves and fight tooth and nail to sell product, whereas major broadline distributors do not restock shelves, check tags, or fill voids. They simply pack pallets and deliver.

Here is how a DSD works. Let’s say you are a beverage supplier and you want to get into 7-Eleven and convenience stores. To do so you decide to use a DSD. The DSD takes care of your product by ensuring tags are up, there are no voids, merchandise is correctly positioned, coupons are available, and stock levels are adequate. They become an extension of your company. They will go in and make sure your product is there. If your product is in demand, a DSD can be another set of eyes and feet on the street. But you do pay for this service with their high markups. One example of a DSD is HBC (Haralambos Beverage Company; www.haralambos.com) in Southern California. There are many other food and supplement DSDs, such as Frozen Gourmet in Northern California (www.frozengourmetinc.com), Natural Choice in Northern California (www.naturalchoicefoods.com), Lipari Foods in Michigan (www.liparifoods.com), Island Fresh in New York (www.islandfreshny.com), Cold Front Distribution in Denver (www.coldfrontdist.com), Select Nutrition in California (www.selectnutrition.com), and Dora’s Natural in New York (www.dorasnaturals.com), which has become the preferred DSD distributor for New York City. This is to name just a few. I also want to mention an outstanding regional distributor, Los Angeles Distributors (better known as LAD) in Southern California (www.ladistco.com). They are a Los Angeles region distributor and not a full-service DSD. However, they give a lot of service to their customers without charging like a DSD. They have very competitive pricing. They are a great team to work with that makes every effort to take care of your product. I know this firsthand because I have and continue to work with LAD.

Advantages of DSDs

DSDs make sense—to some. From the perspective of a traditional small store, this can be true. A DSD like HBC has an in-house sales group that goes out to sell your product at their thousands of retail accounts. You can ride along with their sales team. If you are a success with a DSD you are on the way to brand recognition. Your product will be easily recognized because it’s in convenience stores, liquor stores, independent grocers, cafeterias, gift stores, car washes, gas stations, and many more locations. Prompted by sales data demonstrating your DSD’s success, retailers will more likely request a major distributor to supply your product.

Another advantage of DSDs is that there is no minimum order for retailers. Most major distributors have a minimum order of $500. For many little liquor stores that’s just too large for a weekly or biweekly order. But DSDs will not only sell any size order but also merchandise, stock, and restock products. A DSD is full service, which means if your product is delivered, the DSD salespeople ensure it gets on the shelf.

Disadvantages of DSDs

In recent years, it has become very costly for suppliers to get into a DSD. DSD upcharge can be up to about 40%. Honestly, suppliers end up giving too much away. This can be an alluring and additional source of revenue, but have your team examine this path very carefully. A DSD may sound attractive because it has 4,000 accounts, but the hassle is the small size of these accounts. A DSD rep will drive endlessly around presenting to one small account after another only to face tightfisted buyers and conservative family-run stores. These types of retailers are rarely open to new products because they have a tiny store and don’t want the risk of a new, untried product.

DSD accounts more often than not don’t have the money of a WFM or a Sprouts and therefore can’t always pay full price. For example, they may be interested in coconut water because it’s a proven product people request but not interested in the new Stevia-sweetened tea unless it’s at the right price or is even a steal. Most specialty products are too expensive for DSDs. If a DSD retailer’s normal price for a drink is about $1, then a $3 specialty drink will sit there gathering dust. Plus all DSD retailers want free-fills and often take the free product and don’t reorder. Also, DSDs require opening deals like buying one and getting one free. So when that deal ends perhaps your sales end as well. This is often how little products fall between the cracks of DSDs.

Compare that to getting national distribution for a thousand Safeway accounts across the United States set up with UNFI distributors who have distribution centers nationwide. This can be done using a systematic review schedule with one presentation for all 1,000 accounts. It’s like a hole in one. So you can see why DSDs are a bottom-feeder type of game unless you have the “breakout,” in-demand, super-new product at every corner store in the country.

An example of a breakout DSD item is 5-hour ENERGY. This product was the first in its category on the market. It was a breakout hit that had every corner store in the country foaming at the mouth for supplies. This is one case where a DSD was great because the small accounts had access to 5-hour ENERGY along with their minimum order. DSDs fill in the cracks that big distributors miss. But I can assure you that for every one hit product there are a thousand misses.

Major retailers tend not to use DSDs as much as major distributors because DSDs tend to cover territories rather than national chains or not to have as wide a range of products and categories as the majors. Buyers from big retailers buy from DSDs a little here and there, but when they want to place their major orders they buy from the big guns with the big selections.

Going It Alone

There is a different way to start a customer base: direct sales. If you get a direct sale with a major retailer you keep the 35 percent profit that would otherwise go to the distributor. Those savings in turn can be reinvested in ads, sales, and/or demos, which will please the retailers. However, think carefully about direct sales as a tactic. If a beverage company relies on direct sales, the heavy weight will make the beverages expensive to ship in small quantities to retailers. Such shipping costs increase operating expenses. On the other hand, distributors purchase in volume and they do the shipping but will charge you for their services. Pallet purchases (i.e., larger volumes) through direct sales are rare, but if possible charge ahead!

It’s true that major retailers own distribution centers and do order directly to warehouse from product suppliers rather than distributors. But as a rule, this is reserved for high-volume products. For instance, a major beverage company I worked for distributes its product to WFM via UNFI. Given its size, this beverage company has every right to approach WFM directly and offer pallet discounts because large savings are inevitable for all involved.

You may not have a high-performing item. Or you may have a product just launched. In general, I would say that an effective distributor route is the best method for most retailers.

E-Commerce Website

Direct sales can start right from your website. When considering the development of your site, hire experts and the best your budget can afford. Many companies keep track of their online sales and analyze sales data closely. Setting up a website is a necessary step while preparing for distribution. Various forms of data stemming from online sales analysis will add immense value to your endeavor. Today, more than ever, success stories you share with your potential distributors via Twitter, Face-book, and other outlets will demonstrate your professionalism.

Have a store locator on your website. This will allow your ultimate customers to know where they can find your product. Offer online coupons and loyalty programs. And, above all, listen to your customers and invite them to join the process of growing your business. Once you garner true customers, they will be a voice supporting you in the marketplace.

Be realistic about what you expect of your website. It’s rare, at least in the natural products industry, that a product can be a success solely through online sales. You need to remember that most stores and chains want a distributor to supply products so as to ensure quality service and guarantees. This is precisely why distributors are a necessary partnership!