Finally, here we are.
After so much effort, your new product is ready to be put on the market.
But as they say, a product is not really a product until it is sold.
But which distribution channel to use?
To simplify, let’s say you have 3 possibilities:
Sell it directly from your website
Sell it to shops that will sell it to their customers
Sell it to a distributor, who in turn will sell it to a store that will later sell it to its customers.
Probably, indeed, you will use all these three channels.
Each channel has its advantages, but also insidious disadvantages.
The retail channel, data in hand, is generally the one that offers the highest margin on sales.
But if you are trying to sell directly to the stores, unless your product represents a crazy novelty, to convince them to give you a chance you will need some sales history.
So, unless you have good track records, convincing them will not be easy. As long as you do not have any other strategic weapon…
The good news, however, is that these shops are numerous, and even if someone of those refused your purpose, others would believe in the value of your product, and they will accept to start to deal with you.
Selling directly to the stores hides two other problems: the first is that it is a time-consuming activity.
The second problem is that often these kinds of stores, either for convenience or organizational reasons, usually prefer to have a single supplier.
They like working with distributors who can offer them multiple products, and they don’t want to deal with dozens of vendors or to have to make dozens of phone calls.
So, in some cases, finding the right distributor could be the most useful way to go.
Be careful because their interests are very different from those of a shop or a retailer.
But what does a distributor really want?
As you know for sure, these 4 things:
Know what level of profit they can make on your product.
Know the cost of storing and managing your product.
Whether the product you sell is available in quantity or not.
If you sell some more products.
The reasoning behind the first two points is quite obvious: both for a retailer and a distributor, profits and costs are fundamental.
It means that you need to have a product that sells very well, or you have to conquer the supplier with discounts and other bonuses.
Third, scalability is especially crucial if your product is relatively inexpensive.
A supplier that can earn only a few money per sell will have to sell a ton of your products to make that effort profitable.
This is why it is essential to provide a useful sales tool to support distributors.
The fourth point is related to the optimization of the costs, and it consists of your ability to provide more products.
Distributors also like to buy more products from individual suppliers, for the same reasons that retailers want to buy from a unique distributor instead of dozens of single suppliers.
Let’s say that they are a bit lazy, and they don’t want to have problems.
After all, the good ones have the ranks of companies that would like to work with them.
So, before offering your products to a distributor, put yourself in its shoes and be prepared to answer these 7 questions:
How much profit can they get from your product – both for a single unit and in total?
Can they make a better profit, selling your products than selling a similar one?
Will your marketing efforts helps them drive their sales?
What inventory level will they have to maintain?
How will the storage and the fulfillment of your product affect their distribution costs?
Do customers require a product like yours? Does it satisfy a need that their customers have already identified?
Do you have other products that they can sell? Or do you have them in the future?