November 10, 2016
As your business starts to grow, you will have to decide whether you want to handle sales and distribution on your own, or hire a marketing intermediary to help you. There are many benefits to outsourcing sales and distribution, including higher sales, better customer service, and more time to focus on other areas of the business. Sounds great, right? Not so fast. First, you have to decide whether you want to work with a wholesaler or distributor. Here’s a look at what each of these intermediaries do, and how they can help your business:
Wholesalers purchase inventory directly from suppliers with the intent to resell it to retailers, who will then resell it again to the end user. This is the sole purpose of a wholesaler: to resell products for a profit. Because of this, wholesalers do not focus on building a relationship with suppliers like distributors do. If you are looking for a long-term partner, a wholesaler may not be the appropriate choice, however if you are solely interested in moving large amounts of product quickly, hiring a wholesaler is a wise business decision.
Wholesalers usually do not actively seek sales from retailers. Most retailers have existing relationships with wholesalers, and will contact the wholesaler to place orders. This means the wholesaler does not need to ever go on sales calls or pitch new products to existing clients. For small businesses, this could mean trouble if retailers are not familiar with your product line just yet.
Distributors also focus on reselling suppliers’ products to retailers, however there is one major difference. These marketing intermediaries typically offer after-sale service, meaning they will handle customer service on behalf of your company. Some distributors will even be closely involved with educating retailers on how to use your product and the benefits of it compared to competitors. Overall, distributors are more hands-on, so they are often preferred by small businesses who are interested in forming a strong relationship.
Distributors also do not work with competing brands, but wholesalers do. For example, a wholesaler might represent both Colgate and Crest toothpastes, but a distributor would only work with one or the other. This means distributors can focus solely on selling your brand instead of worrying about how to meet sales goals for each supplier.
Finally, distributors actively seek new opportunities for your product instead of sitting around and waiting for the phone to ring. They definitely take the more aggressive sales approach of the two, which may be appropriate for you so you can penetrate the market and quickly build brand awareness.
In the end, every business will have to decide whether a distributor or wholesaler is right for them. What fits for one company will not fit for another, so take the time to carefully review these options before signing a contract with either of these marketing intermediaries.
Which do you think is right for your business, a wholesaler or distributor? Leave your thoughts in the comments below!
Joel Goldstein is the President of Mr. Checkout Distributors, a network of 1,000 distributors around the country seeking new and innovative products for their convenience stores, grocery stores and truck stops. Since 1989 Mr. Checkout has helped grow national brands like 5 Hour Energy and Pepperidge Farm using their DSD (Direct Store Delivery) network. If you have a product that they should see, you can submit your product for review here: http://MrCheckout.net/submit