Distributors in Food Business: Weighing the Costs and Benefits

The food industry is intricate, presenting numerous paths for a business to distribute its products. While the use of a distributor is a common route, the real question is: Does it always align with the goals and financial model of every food business? In this third part of our series, we delve deeper into the financial aspects and relationship dynamics when considering a distributor.

Distributors: The 30% Markup Without Sales and Marketing

Many food business owners might be lured by the convenience of hiring a distributor. It can seem like an efficient method of getting products out into the market. However, when pulling back the curtains, it becomes apparent that not all distributors offer a comprehensive suite of services. A significant number of them charge a hefty 30% commission and, surprisingly, don't do any sales and marketing on behalf of the products they distribute. Instead, they operate as mere order takers.

This business model might be acceptable for certain enterprises, especially those that already have established marketing strategies and a broad consumer base. But for many, this fee might feel disproportionate, considering that the distributor isn't actively promoting or boosting the product's visibility in the market.

DIY Approach: Sales, Marketing, and Logistics

Given that a distributor isn't contributing to sales and marketing, businesses must ask themselves: Why not take the reins of sales and marketing while also controlling the distribution?

Embracing a do-it-yourself (DIY) approach means that businesses not only have more direct oversight of their marketing strategies but also a greater share of the revenue. Here's the crux of the matter: If a business can handle its sales and marketing, the only missing piece is the logistics of getting the product to the stockists.

In this digital age, logistical challenges are diminishing. Businesses can now employ courier services to deliver their products. This not only sidesteps the distributor's markup but also offers more flexibility in terms of delivery times and tracking. Couriers often provide real-time updates, ensuring that businesses and stockists are always in the loop. 

Strengthening Relationships and Consumer Loyalty

One of the often-overlooked aspects of sidestepping distributors is the ability to build and maintain stronger relationships with stockists. When a business directly interacts with its stockists, it facilitates transparent communication, swift problem resolution, and a mutual understanding of needs and expectations. Such direct interactions cultivate trust, which can be the bedrock of long-term business relationships.

Furthermore, when a business is actively involved in its marketing, it's more attuned to its consumer base. By directly overseeing marketing strategies, businesses can tailor their messages, promotions, and campaigns to foster a loyal consumer base. Engaging with consumers and stockists directly allows for immediate feedback, which can be invaluable for product development and brand growth.

Conclusion

The use of a distributor is undoubtedly one path in the expansive food business landscape. However, in an age where agility, direct communication, and brand authenticity are highly valued, it's worth considering the alternative. By taking charge of sales, marketing, and logistics, businesses might discover not only significant cost savings but also more profound connections with stockists and consumers. As the old saying goes, "If you want something done right, do it yourself." In the evolving world of the food industry, this adage might be more relevant than ever.