In my last blog post, which you can read by clicking here, I talked about how using a POS (point of sale) system can improve your purchasing for a retail store. The underlying thought is that the smart use of presently available technology can help you do the job better and faster. I am a big fan of that!
Part of managing your purchasing, however, involves your relationship with the vendor community—or, as it’s sometimes called, your supply chain. While technology can improve some communication, for the most part, this part of your purchasing is a matter of learning about available products and programs, and building personal relationships.
Over my next few posts, we’ll talk about several parts of the supply chain—and specific things you can do to make your relationships more effective. This time, let’s start with distributors.
Types of distributors
Distributors, sometimes called wholesalers, are vendors from which you can buy products from many different brands in many different categories. A large, full-service distributor will carry hundreds of brands and thousands of products in dry grocery, supplements, body care, bulk, cold item, frozen items, basic food service and other product categories. Typically, they will deliver to your store on a regular schedule, giving you the convenience of placing one order and paying one invoice.
The best-known distributors in our industry are those who cover the whole country (or most of it) with their own trucks making deliveries from their own warehouses: United Natural Foods (UNFI) and KeHE/Tree of Life. UNFI was formed when regional distributors of natural products across the country merged to form one national entity. Tree of Life is a longtime natural foods distributor primarily serving independent natural stores that was purchased a couple of years ago by KeHE Distributors, a specialty and natural foods distributor that primarily services independent and chain grocery stores.
There are full-service distributors that don’t serve the whole country. Nature’s Best located in Southern California is probably the best known of these.
There are also distributors that service the whole country but don’t have their own delivery trucks. They carry mostly supplements and body care but also have some select grocery items. Palko Services from Indiana and Threshold Enterprises from Northern California are two of the leading distributors offering this kind of service. In fact, both UNFI and KeHE/Tree of Life have divisions that serve stores in this fashion. UNFI’s is called Select Nutrition and KeHE’s is called The Source.
There are many other types of distributors to consider—sports nutrition, produce, food service, etc. Depending on the products that you carry in your store, these can be a great help to your business.
For a smaller store, having a single distributor as your primary distributor makes sense. While it limits your options, you can be much more confident that your orders are going to be at or above the minimum required by the distributor. Over time, as your business grows, you have opportunities to earn volume discounts and lower your costs on all purchases from your distributor.
Here are some questions you will want to obtain answers to when evaluating which distributor(s) you want to work with:
Schedules: What are the order deadlines, and delivery days and times?
Payment terms: When are invoices due? Are there special payment terms for new stores or expansion orders?
Catalogs/item lists: How do you get these (printed, electronic, online)? How often are they updated?
Ordering methods: How you submit your orders? Via computer, fax, phone, hand-held device, etc.?
New item communication: How you learn about new items?
Deal communication: How you learn about monthly specials and trade show specials?
Sales tools: Does the distributor have any flier, demo or other programs to help you drive sales?
Controlled brands: What brands owned by the distributor are only sold to other stores in your same class of trade?
Price change communication: How do you learn about price changes? How much advance notice you get?
Out of stock communication: How do you learn about out-of-stock items, if they are manufacturer or distributor outs, and when they are due back in stock?
Discontinued communication: How do you learn about discontinued items and if they are manufacturer or distributor discontinued?
Other things to ask include: Does the distributor have any help available to assist you in resetting shelves if you do a store remodel, move or open a new store? Does the company do its own show during the year? How often will a sales rep be by your store and what service and information are they tasked with providing you?
In the next posts we will explore brokers and direct lines. In the meantime, use the comment section below to share things that have helped you foster a better relationship with your distributors.