Why distributors are not Plan A to get into U.S. retailers

Posted by Tom LarsenJan 21, 2015 Marketing, Planning, Sales 0 Comment

There is a common misperception in the marketplace from newer entrepreneurs that getting distributors is the key to success. It becomes the Plan A as evidenced by the number of websites that post “distributors wanted” or the equivalent on their pages.

The role of distributors in the U.S. is not like that of the role of a distributor in almost the entire rest of the world. Distributors in the U.S. are by and large completely on the supply side of the path to retailers. That is to say, they do not create demand from retailers, nor are they very good at placement of new brands. Why should they be? Their model is built around warehouses full of thousands of SKUs for which they earn revenues based on inventory turns of SKUs, not the passionate pursuit of consumers for the solution they have created.

I always counsel that the distributor is only going to be successful to the degree the brand is willing to invest in creating retailer demand. There are numerous resources out there to learn how to be good at selling to retailers. Retailers are also not in the passionate pursuit of consumers for what they have created. They only need to ensure that they will generate revenues with whatever merchandise they put on their shelves.

Generating demand from retailers may require generating demand from consumers, or partnering with stores for POS messaging and/or marketing campaigns that will push the recognition or interest of the solution – drive traffic. It’s always about more than just your wonderful product.

Plan A should always be to reach out to retailers first (or contract/hire sales people to do it). Get them interested in carrying carry the product. They will tell you who the distributor is they need the brand to utilize to make the fulfillment work. Then contact the distributor who will be a motivated partner in the relationship. Distributors are not placement machines. They manage and maintain relationships with retailers. Some are better than others. Don’t get caught thinking distributors are Plan A when you have not invested in the work to create demand from retailers. When money matters (when does it not?), if there is no demand, there is no incentive for anyone to move forward.

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