March 14, 2018

Working with Distributors by Tim Forrest

Working with Distributors by Tim Forrest

Working with Distributors is important for any food company that seeks rapid and expansive growth for their food business. Distributors provide a method to have your goods delivered in bulk and then sent to individual store locations as needed for the shelf. It's very difficult and expensive to grow business quickly delivering to stores and over time it is likely not scaleable thus the importance of dealing with distributors. 

Do you first understand and know the role of a distributor? A distributors function is to warehouse an inventory of various products that customers can order on an as needed basis and pay for what they need when ordered. Warehouses are secure storage and inventoried for accurate accounting and financial record keeping. They manage financial terms along with ordering and consolidating the various items a customer would need on a regularly scheduled order day. Distributors generally publish a catalog or order guide that customers use to pull product for their stores and locations.  Once customers create the order, the distributor will consolidate the load and place onto a delivery truck for receiving by the customer. The end customer orders frequently in small amounts and generally does not have the ability to order directly from manufacturers in such small amounts. 

In my experience to influence and sell distributors require you get to their customers. If you are large enough and have prior success with the accounts of a distributor and can demonstrate a solid program and plan that will gain acceptance by their customers then go first to the distributor. My first choice is to call on end-users, retailers, and operators to convince, authorize and gain distribution into a distributors warehouse. 

Distributors are going to review your product and run through their matrix on the item for their market and customers. The criteria used to evaluate will be profitability, scalability, # of new items, new authorizations you currently have, what market actions will be taken by the you the vendor, and your customer service level. For example, the distributor will verify if you are able to meet their customer demand with possible site visits and questions about capacity. Depending on your presentation, they will make likely assumptions in this area and it is important you meet their criteria if you desire selling to their customers. 

In your meeting with distributors, they will be looking for answers to these 5 questions:

  •  Customers asking for product?
  • Serve a retailer segment need?
  • Can we quickly land customers for the item?
  • Are there current planogram/authorizations for the item?
  • What is the vendor doing to support the item?

The most important component for success when dealing with a distributor is their customer base.  They're beholding to their customers and their needs. My success and work with distributors is about leveraging their customers. I go directly to their customers and make things happen for my client business and brands at the customer level.

So what is the process of working with distributors? 
  1. You get a list or build a list of the customers that are serviced by the distributor. 
  2. You phone and call and visit the distributors customers and gain authorization for your products within the customers. 
  3. In the beginning, you might need to deliver the locations yourself or with a driver but then bundle these accounts and hand them to your distributor.

If you will understand this process in the beginning and price accordingly, it makes it so much easier to succeed and grow with distributors.  If you have any questions, send me a note and lets discuss it on a call. 

My video on the topic is here...

What actions are you taking to grow your business? Send a note or comments to Tim, also follow me on Twitter and see my retail photo notebook.. I want to hear about your success!

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