In this article, learn about:
What a distributor is
How to select a distributor
Common roadblocks when selecting a distributor
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An essential part of being a supplier is selecting distributors for your products. This process can be frustrating and can occasionally result in disappointment for both the supplier and distributor. Understanding what a distributor is and the general process of how suppliers select distributors is helpful in choosing which distributor is the best fit for the process.
What is a Distributor?
Distributors are the backbone of the supply chain industry. A distributor is the entity that moves the product between the supplier or manufacturer and the customer. Often, the distributor is simply a retailer, but sometimes it can be a wholesaler, or even an e-commerce platform.
It is helpful to think of distributors as one of two groups:
Direct Distributor: Direct distributors take the product directly from the manufacturer to the consumer. Often, direct distributors are simply the supplier itself. Direct distribution is typically utilized for farm-to-table products, digital products, or even crafts. Large retailers and suppliers often utilize direct distribution.
Indirect Distributor: Indirect distributors are typically retailers or wholesalers. Indirect distribution is typically utilized for electronics, apparel, and packaged goods. Some common indirect distributors would be any supplier that primarily utilizes e-commerce options, for example suppliers who sell with Amazon.
Additionally, there are Exclusive Distribution and Intensive Distribution. Exclusive distributors typically work within a specific geographical area. This can be helpful for geographically particular products. Intensive distribution generally involves products that suppliers intend to get into as many channels as possible, as quickly as possible. This usually involves lower cost items and/or high demand products.
The primary difference between retailers and wholesalers is that retailers receive their products from wholesalers. Wholesalers function in a distribution capacity by supplying the retailer with the products in bulk from the supplier. The other distribution option would be for the supplier to provide the products directly to the retailer.
How to Select a Distributor
When selecting a distributor, suppliers need to do their research. There are pros and cons to both direct and indirect distribution.
Pros of Direct Distribution: Direct distribution provides more control over the logistics process because it reduces the need for intermediaries. Smaller suppliers typically opt for direct distribution for this reason.
Cons of Direct Distribution: Direct distribution comes with an increase in risk, as suppliers/manufacturers are on the line for any and all issues. Direct distribution is also typically more costly, both financially and in the effort to manage the entire supply chain process.
Pros of Indirect Distribution: Indirect distribution allows suppliers to offload much of the logistical process of their supply chain, which in turn gives space for other aspects of supply chain management. Generally, indirect distribution is more cost effective.
Cons of Indirect Distribution: Indirect distribution can sometimes lean too heavily on third parties, which means suppliers have less control of the process and risk margins being decreased.
Once you know what type of distributor you will utilize, the next step will be to find a specific distributor that makes sense for your product.
Some considerations beyond direct or indirect are cost, performance, and load type.
The cost of choosing a distributor is going to be an important consideration. Not every distributor will offer the same level of assistance with logistics, and the cost will vary across options. However, a more expensive distributor might have a better market reputation and perform better than a lower-cost option.
Product type and the required load type are important considerations because some distributors may not deal with certain product types. For example, food distribution is likely to be far more specialized, and food distributors are unlikely to focus their distribution efforts beyond the food industry.
Below are several common distributors and the kind of suppliers they typically work with:
General and Broadline Distributors
Core-Mark | Convenience store products |
C&S Wholesale Grocers | Grocery |
KeHE Distributors | Specialty, natural, organic, fresh foods |
McLane Company | Grocery, convenience store products |
UNFI (United Natural Foods, Inc.) | Natural and organic foods |
Pharmaceutical and Medical Distributors
AmericsourceBergen (Cencora) | Pharmaceutical, healthcare logistics |
Cardinal Health | Pharmaceutical, medical supplies |
Henry Schein | Medical, dental, veterinary supplies |
McKesson | Pharmaceutical, medical supplies |
Industrial and Hardware Distributors
Fastenal | Industrial, safety, construction supplies |
Motion Industries | Industrial parts, supplies |
MSC Industrial Supply | Metalworking, maintenance supplies |
W.W. Grainger | Industrial supplies |
Consumer Packaged Goods and Personal Care Distributors
Beauty Systems Group (CosmoProf/BSG) | Beauty, salon products |
L&R Distributors | HBC, general, cosmetics for mass retailers/drugstores |
United Pacific | Beauty, cosmetics, personal care |
Foodservice and Restaurant Distributors
Gordon Food Service | North America-wide foodservice |
Performance Food Group (PFG) | Foodservice, vending |
Reinhart Foodservice | Acquired by PFG |
Sysco | Food |
US Foods | Broadline foodservice |
Books and Education Distributors
Baker & Taylor | Books, media for libraries |
Follett | Educational, technology for schools/colleges |
Ingram Content Group | Books, education, media |
Technology and Electronics Distributors
Ingram Micro | Technology, IT products |
Tech Data (now TD SYNNEX) | IT, consumer electronics |
Automotive Distributors
LKQ Corporation | Auto replacement parts |
Specialty Distributors
Bunzl | Janitorial, foodservice, safety, packaging |
Dot Foods | Redistributor |
Common Roadblocks for Selecting a Distributor
Unfortunately, sometimes selecting a distributor is not that simple. Most suppliers struggle to find possible distributors due to a lack of visibility.
This comes primarily in the form of a lack of market transparency. When it is unclear which distributors are most effective within a certain market, suppliers may choose a distributor that is not the best option.
In this case, it is important for suppliers to run a competitive market analysis while determining which distributor best fits their needs. Some questions to ask are:
What is the distributor looking for? Do you, as the supplier, fit that description?
Will the distributor benefit from selling your product?
What are other suppliers doing for distribution? How does your distribution process compare?
By asking these questions, suppliers can accurately assess the market and the distributors available to determine what will best support their goals and give them a competitive edge.
Best Practices for Selecting a Distributor
Selecting a distributor is a regular process for suppliers, but it is important to revisit and revise these processes in an ever-changing market. Keeping the process of selecting a distributor error-free allows suppliers to focus on making sure they're making money.
In summary, then, when it comes to selecting a distributor, suppliers should:
Know what type of distribution best fits your needs (direct versus indirect)
Know your distribution options
Know what you need from your distributor
Know what the distributor is looking for
Know when to negotiate terms
When the supplier knows what they need, they can accurately predict for the future and analyze the market and competition to make informed goals and decisions about distribution. Ultimately, this allows suppliers to make an educated choice.
When suppliers know what their distributors are looking for, they can meet those needs and gain a competitive edge in the market with aligned goals for product and distribution.
When suppliers know how and when to negotiate terms in the selection process, they can ensure their products maintain market value.
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