As a brand owner, one of the main problems you will encounter is finding ways to sell your products. Getting your products into major stores is a fantastic way to secure your bottom line. However, selling directly to retailers is very time-consuming and difficult. That’s where distributors come in. Finding and partnering with a wholesale distributor is a strategy that will provide you with consistent income and security. When it comes down to how you identify the best sources for your business, something as simple and obvious as an internet search may be a great place to get started.
TradeGecko will take care of your inventory and order management, so you can focus on finding the right wholesale distributor to sell your products.
Appreciating that there is no “one size fit” in the world of wholesale distribution, and possessing a clear idea of how your specific industry sits within its overall supply chain are great assets to have on hand too. From dealing directly with manufacturers and jobbers to exclusivity deals and fixed regional distributors, there are plenty of available avenues for wholesale distribution out there.
A wholesale distributor is a business that handles large quantities of product shipment. Such a business will also have the capacity to either store or directly distribute these products to retailers or the end user. In terms of the flow of goods, the product goes:
It’s also important to recognize the difference between a distribution agent and a wholesale distributor.
Partnering with a wholesale distributor has endless benefits for your business including:
By having a wholesale distributor handle all of the above, you have more time to focus on creating or sourcing your product.
Depending on the product that you create or source, you might need to implement a different strategy to find a wholesale distributor. We have looked at five business types to discover the best distributor identification and implementation strategies for each:
With many major department stores now geared up to bypass wholesale supply altogether, there are some great opportunities opening up to clothing and apparel brand owners and suppliers. Figures released by KordaMentha suggest that at least a quarter of the $1.3 billion in annual revenue is flooding into outlets such as specialty retailers.
This is good news for savvy clothing and apparel creators that can quickly adapt to supplying what these retailers need. This trend of direct supply has virtually created a separate wholesale outlet that is open to any supplier that can fulfill the client's needs.
Furthermore, continued growth in online retail means that online distribution channels are also a viable option for clothing suppliers. Distributors such as Joor have just as much reach as physical wholesalers. With over 155,000 retailers and 1,500 brands, this global online wholesale sector alone processes over $7 billion annually.
However, business owners must do their research. According to Joseph Coen, president of ASKCO Marketing Services, “New manufacturers must prepare sales materials that tell retailers the product's benefits and its statistical information, such as how much space it needs in the warehouse and on the shelf.”
According to Forbes, supplying to the food giants has never been easier now that the consumer appetite for artisanal foods is on the rise. Rather than invest in production for these small market segments, many of the giant brands are contracting food-producing SMEs to fill the gaps.
While many SMEs are successfully supplying the bigger manufacturers in exactly this way, there are a few potential traps that you could fall into. In one recent case, a Californian specialist pickle producer was unable to buy fresh cucumbers that filled nearby fields.
Specialty food businesses in the middle stage of their growth cycle (too large to source from the farmers market, too small to take on the volume of a Heinz or General Mills), don't just have a supply chain problem. They also typically have an operations issue. They may need to figure out how to go from hand-making everything to mechanizing certain steps in their production process, without losing quality. Packaging might also become an issue. Distribution and quality control could be problematic. The average small food business owner has not run a factory or a distribution center before and the learning curve here is steep.
Therefore, any potential food supply contract needs to be well assessed in terms of output capabilities before proceeding.
Beauty is another avenue which has great potential for growth through wholesale distribution. A prime example of this is the cosmetics brand, Fresh. From producing a single bar of soap in 1991 the business has grown to include 15 stores and 400 retail distribution outlets.
After borrowing $10,000 from their own families to open their first store, they were topping $14 million in sales by 2001. Looking beyond the limits of their own resources, they partnered up with LVMH Moët Hennessy Louis Vuitton SE, better known as LVMH in 2000 and at the same time retained a sizable stake in their own business. Through following their own simple rules they have managed to move the maximum amount of product while at the same time maintaining a healthy profit margin.
If you’re a creative business owner but have little experience with the logistical ins and outs of trade negotiations, Samantha Wills is a great example to follow. The 34-year-old Australian-born jewelry business tycoon and self-made celebrity certainly took the long route to the top.
From starting her own jewelry business at the age of 21 after attending Australia Fashion Week and netting $18,000 of orders, Wills now has an annual turnover of $10 million and is stocked in eighty countries around the world. What does she put her meteoric success down to? Clever partnerships and education!
“Every day I wish I'd studied business or management. But, I learn as I go. I might have learned the harder way on the job,” says Wills.
Because of this, Wills brought onboard a distribution business partner, Geoff Bainbridge, who was able to commercialize her back-end production and allow international expansion. Thanks to his hard work she was able to launch into many foreign markets and expand sales into the huge turnover she now enjoys.
For bespoke luxury furniture suppliers, Hellman and Chang, tradeshows were the way into the distribution market. According to Hellman, the brand had previously only received one or two phone calls a month. However, they decided to set up a stand at the ICFF (High-End Luxury Furniture Fair). ICFF is North America’s largest series of design events and regularly draws over 20,000 every year. For Hellman and Chang, the results were immediate. “...at that first show we also met the representative of [high-end furniture showroom] A. Rudin,” says Chang. A. Rudin was able to market the Hellman Chang range across America through their extensive network of furniture showrooms.
According to Robert Nadeau, a businessman with 25 years’ experience optimizing distribution channels, industry associations, and trade shows are a good place to start. “Distributors gather in herds.”
The bottom line is that if businesses want to fast-track their expansion and increase sales, the most effective way to do it is through wholesale distribution. However, it’s important to do your research and formulate a clear strategy.
Jeff Haden of Forbes says that there are four key questions every distributor will ask themselves:
However, your job doesn’t end once you have found a distributor. Nadeau states that finding a distributor is just the start. Once you have secured a distributor, it’s important to recognize that your businesses are now entwined. And, although you both have the same customer, you will have different operating strategies and philosophies. “The distributor is not your customer… That's the hardest thing for entrepreneurs to get their minds around.”
Once you have found a wholesale distributor suited to your business, you can focus on finding the right software to streamline your business operations. Inventory and order management software, like TradeGecko, will help you manage your inventory, orders, and customers from one place, saving you both time and money.