Home – New Forums Logistics Distribute direct to retailer or use wholesaler?

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  • #983362
    DANKS
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    Hi Guys,

    Just looking for some feedback- advice.

    We import a Pet product range from the US and distributes throughout Australia direct to retailers – . Seems i have a big decision to make. Although my customer base is OK at the moment, I’m trying really hard to break into the large retailers. It seems that these large retailers only tend to use Wholesalers who stock 20-30 different brands from foods to toys, i think they prefer to buy just from one wholesalers. Because of this i have been contacted by a few wholesalers who would love to pick up my product range. This would pretty much change the way i do business, no longer would i deal direct with retailers but rather through wholesalers. Seems to be a common trend for guys like me just to deal with wholesalers.

    Are there any other imports here who have come across the same problem?

    What did you guys do?

    I’m just thinking, do i keep battling on and eventually break into these big retailers or take the easy route- make less profit per sale – and go with the wholesalers…

    #1141972
    rdenton
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    The problem with breaking into large markets is usually trust related.

    A corporate giant is going to continue to use its trusted wholesalers over a smaller less-known business.

    Is there any reason you can’t continue with your current business model whilst pushing into the wholesale market as well?

    #1141973
    Melanie Miller Biz Coach
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    Hi Dan,

    That is a difficult one to answer as there are so many factors to consider:

    What is your distribution agreement and is there anything stopping your wholesalers from cutting you out and going direct to the US

    Will your business still be viable on the lesser margin (if you sell to a wholesaler)

    Are the wholesalers able to provide evidence that they have relationships with the bigger retailers and therefore will you get your product in the door or will they just end up supplying your current customers anyway

    My experience with wholesale (not at all in the Pet industry though!) is that dealing with the larger retailers can deplete your cash flow and push margins down considerably. Are you sure that you want to be stocked in the bigger retailers?

    I have also seen a lot of smaller wholesalers “eaten up” by bigger wholesalers who offer what seems like a great solution only to push your product down to the bottom of the pile. Bulk wholesalers like to have a massive product range and sometimes your product just gets a bit lost in the mix.

    If what is driving you to consider bigger retailers is profit have you saturated your own market yet?

    I don’t envy your decision Dan! Hope I haven’t confused you even more :)

    Melanie
    http://www.agent99hq.com.au

    #1141974
    DANKS
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    Hi Melanine,

    My Agreement protects me from such things happening – You do make some good points though regarding wholesalers and the products getting lost in the mix. It is one of my fears that this would happen.

    You have left me lots to think about.

    Melanie Miller Biz Coach, post: 162267 wrote:
    Hi Dan,

    That is a difficult one to answer as there are so many factors to consider:

    What is your distribution agreement and is there anything stopping your wholesalers from cutting you out and going direct to the US

    Will your business still be viable on the lesser margin (if you sell to a wholesaler)

    Are the wholesalers able to provide evidence that they have relationships with the bigger retailers and therefore will you get your product in the door or will they just end up supplying your current customers anyway

    My experience with wholesale (not at all in the Pet industry though!) is that dealing with the larger retailers can deplete your cash flow and push margins down considerably. Are you sure that you want to be stocked in the bigger retailers?

    I have also seen a lot of smaller wholesalers “eaten up” by bigger wholesalers who offer what seems like a great solution only to push your product down to the bottom of the pile. Bulk wholesalers like to have a massive product range and sometimes your product just gets a bit lost in the mix.

    If what is driving you to consider bigger retailers is profit have you saturated your own market yet?

    I don’t envy your decision Dan! Hope I haven’t confused you even more :)

    Melanie
    http://www.agent99hq.com.au

    #1141975
    Cat – GLC
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    That is a very tough decision to make Dan definitely let us know what you decide.

    My mind is going a million miles an hour at the moment just trying to think of what I would do if I was in your current situation.

    Cheers

    Cat :)

    #1141976
    DANKS
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    Things have developed.

    I have had sit down meetings with all the big retailers here in Australia.

    Every one of them deal with large wholesalers, ( usually the same one)

    This wholesaler has also been in contact with me.

    Its getting hard to say no.

    The more i think about it the more im liking the idea.

    Grrrr…. decisions.

    #1141977
    Johny
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    I have had sit down meetings with all the big retailers here in Australia.

    Every one of them deal with large wholesalers, (usually the same one)

    And for all those that complain about high prices and lack of choice, this is one very good example of why.

    Comment not aimed at you Dan, just made in general.

    If it was me, I would probably go down the wholesaler route as it is probably a much easier route to follow. The large retailers are so entrenched in their buying habits that it isn’t going to change any time soon.

    #1141978
    DANKS
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    Your spot on. I warned each and every retailer that if i was to go through wholesalers due to lack of action from them, i would not be held respobile for the pricing..

    Whats a guy to do. End of the day i need to make a profit.

    #1141979
    Melanie Miller Biz Coach
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    You are right Dan, you are in business to make money!

    It seems as though you have put a lot of thought in to it – talk to the wholesaler about pricing, terms etc – have the offered up any of that info yet? That might make your decision easier.. maybe :)

    Melanie
    http://www.agent99hq.com.au

    #1141980
    DANKS
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    Pricing has been discussed, Its half of what id make selling direct to retailers but id be expecting a massive boost in qty and i think buy sending pallets instead of cartons ill save on freight as well. so i think it will work out.
    Im going to try the wholesaler thing for my WA market. I figure it saves me shipping smaller items to WA and saves me time from travel to WA to visit my small customer base. im really looking forward to see if the wholesaler pushes the product and if the product range grows over there now. ( im based in melbourne).

    #1141981
    DKChoices
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    Revenue is price x quantity. Hence, I guess as long as the additional quantity is enough to cover the reduction in price, that is all good for you.

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