In my last blog post, I explored the retail-distributor relationship. (Read that post here.) I will now focus on working directly with brands.
While a distributor is a vendor from whom you can buy multiple brands, and potentially across product categories, a direct brand is a vendor from whom you only buy one or a limited few brands. As the name implies, you are buying from the manufacturer of that brand, which has chosen to go to market by selling direct to its retail customers instead of using wholesalers.
Reasons for a brand to sell direct can be many and varies. The first consideration is if the product is the right size, price and form to be shipped direct to retail. For that reason, most direct brands are supplements and body care. These products are small enough, pricey enough and stable enough that they can be shipped to a store by a common carrier. They are everything that a gallon of ice cream is not.
Other reasons for brands selling directly include their desire to put marketing support and funds into either retail or consumer vehicles, rather than participating in wholesaler programs. Some brands want to support a specific class of retailers (such as natural products stores) and by their selling directly, they can assure their retailer customers that they are not putting products in grocery, drug or mass market channels. (This is valuable to many natural product retailers who want to carry products that have a limited presence in their markets.)
Direct brands are able to support retailers via their own sales teams a good bit of the time. The rep who supports your store may be one based in the market who calls on you in person or someone who services you via phone and email from the company’s offices. Some brands, however, will also use brokers as their sales force. (In my next post, we will talk about building relationships with sales reps and brokers.)
A few thoughts about direct brands:
Who are they? Who you are buying from is a very good thing to know. Do your due diligence before adding any line, but in the case of a direct brand, it should be easier to find out about the company, its history, its manufacturing, its formulators, etc. You can learn this with distributed brands, and should, but it isn’t as much of a priority. If you are buying from a top-notch distributor like UNFI, Tree or Palko, they will have done this research. For a direct brand, before cutting your initial purchase order, be sure that you have been added as an “additional insured” on their product liability insurance.
Market goals. Where are they going to be placing this brand? Not just for this year, but five years down the road. If the brand is going to be in retail channels other than yours, where discounting and pricing practices are different, that should be part of your decision-making process. There is a danger in emphasizing a brand in your store, getting hundreds of your customers trusting it and then removing it or drastically reducing its presence. When a brand changes in a way that you are no longer comfortable with, it has to be done, but doing it too often will lessen the confidence that your shoppers place in all the products on your shelves.
Cost, freight and discounts. You want this all confirmed in advance. What is the minimum order, in terms of dollars, eaches, cases, etc.? At what level is the order shipped to you with the freight paid by the vendor? At what dollar level of business are you able to get a volume discount?
Shows. In which trade shows do they exhibit? (You won’t see them at distributor shows.) What show discounts do they offer?
Ads and demos. What programs and support do they offer you to advertise their products in your fliers and newsletters? What kind of support do they give to in-store demos? Sometimes you can get a rep to do demos; other times, the company may supply samples to give away.
Experts. Many direct brands have formulators available for staff training, consumer lectures, etc. Sometimes you can’t get the expert in your store, but you can get copies of books for consumer giveaways. Many brands will have these experts speak at trade shows so you and your staff can learn from them while at a show.
Support. What other support do they offer? Consumer literature? Staff training programs? Floor displays? What resources do they have for you to use to drive additional sales of their products?
What tips or insights have you learned from working with direct brands? Share below.