Marketing - Distribution
Streetwise Tips

Streetwise Tips on Distribution

When a very small firm or a larger firm is branching out into ancillary markets, such as a secondary domestic market or a foreign market, distributors can provide a great way to successfully traffic merchandise. For example, a publisher of golf books may do better to sell the books to book wholesalers and retailers through its own sales representatives, but find a distributor to sell the books to sports stores. The high discount required by the sports store distributor may seem prohibitive at first glance, but when the costs of funding a new in-house distribution effort are totaled, the distributor will probably prove to be quite a bargain!

* Clarify roles

Be sure that all parties understand who is responsible for what territory—in both geographic and market terms. Get it in writing! And be sure that you won’t need to give much notice if you decide to cancel an exclusive agreement, in the event that sales are disappointing.

* Wholesaler promotions

Most wholesalers work on extremely tight margins and are constantly under price pressure. The are not only being challenged by their competitors, but their own clients often threaten to buy direct from the manufacturer if certain prices can’t be met! As a result, many astute wholesalers have turned their ancillary services into important profit centers.

Many wholesalers will require that you spend a certain level of advertising money, generally ex-pressed as a percentage of net purchases, on their promotional programs. If you don’t comply, they won’t stock your product. And, unfortunately, these advertising programs aren’t always worth the money they cost.

Small firms, particularly, are reluctant to participate in these advertising programs. However, if you feel this way and make a fuss, you are being short-sighted. The ill will generated could very well result in the wholesaler refusing to stock your merchandise. While the advertising program may seem to be a scam, the wholesaler is, after all, selling your product at very, very thin profit margins and deserves to make some money. So, just participate with a smile. Ultimately, it’s worth it!

If you carefully choose which advertising program you want to participate in and write your own copy, you might find that the promotion actually does you some good. Despite popular wisdom to the contrary, I have found that wholesalers’ co-op programs can pull in a lot of sales.

* Sales reps

Even if you have your products stocked at every wholesaler in the country and are utilizing all of the advertising programs these wholesalers offer, you will still need the services of a sales representative to call on your accounts.

If your line is very simple, consisting of only one or two products, you may get away with telemarketing. But if your line comprises half a dozen products, you need an in-person sales representative to get initial orders, at the very least, into the wholesaler’s hands.