How to find a distributor, and when you do not need one yet

What a distributor does

A distributor buys your stock, holds it in a warehouse, and sells and delivers it to stores. It adds its own margin between your price and the store's price. In return you get reach, regular deliveries and one invoice to chase instead of fifty. It is one of several routes covered in our guide to CPG distribution.

A distributor is not a broker. A broker sells your product to buyers for a commission and never touches the stock. If you are weighing the two, read food broker vs distributor.

Most distributors specialise. Some cover one region, others work nationally, and many stick to one channel, such as foodservice, liquor or natural grocery. That is useful: a distributor already delivering to the stores you want can add you to the next run. Our guides to food distribution and beverage distribution cover the kinds in each category.

Signs you need one

A distributor earns its margin when delivery, not selling, is what holds you back.

• Driving cases around takes more of your week than finding new stores.
• Stores keep asking "who do we order through?" and want to add you to an existing order.
• A chain or a group you want only buys through distributors.
• Freight to stores outside your city eats the margin on every small order.
• You have stockists who reorder and want deliveries on a schedule.

Signs you do not need one yet

If none of those apply, a distributor will cost you margin without solving a problem you have. You probably do not need one yet if you have only a handful of stockists, nobody has reordered, you are still changing your price or pack size, or you can deliver everything in your own city in a day.

This stage is where most brands should spend their effort, selling direct to independents and learning what makes a store reorder. Our guide on whether to sell to retailers or distributors first goes into it.

Where to find distributors

There is no single directory that covers everyone. These four routes find most of them.

1. 1Ask your stockists"Who do you order through?" is the most useful question you can ask a store owner. The answer is a list of distributors who already deliver to stores like yours.
2. 2Read the shelfFind products like yours in the stores you want, and ask the store, or the brand, who distributes them.
3. 3Go where they goTrade shows and industry groups in your category. Many distributors also list the categories they carry on their websites.
4. 4Shortlist by fitA distributor strong in chilled drinks may do little for a shelf-stable snack. Check their category, their region and the stores they serve.

What to bring to the first conversation

Distributors hear a lot of pitches. The ones they take seriously come with numbers.

• Your stockists, which of them have reordered, and how often.
• Your wholesale price, with the distributor and store margins worked out. The wholesale price calculator does this in a minute.
• Case size, shelf life and how the product is stored and shipped.
• The support you will fund: tastings, staff training, promotions.
• A volume forecast you can stand behind.

How a distributor changes your numbers

Say a unit costs you 2, you sell it direct to a store for 4, and the store sells it for about 5.70, keeping 30%. Now put a distributor in the middle that keeps 25%. If the store still pays 4 and the shelf price stays put, the distributor buys from you at 3. Your profit per unit has gone from 2 to 1.

That is why brands that price only for selling direct get stuck later. Either the shelf price rises, which can push you out of the store, or your margin falls. Work it out before you set your wholesale price, not after a distributor offers you terms. The wholesale price calculator runs both cases side by side.

Questions to ask a distributor

Before you sign anything, get clear answers to these.

• Which stores and regions do you deliver to now, and how often?
• What is your minimum order, and who pays for freight to your warehouse?
• What are your payment terms, and when do I get paid for stock you hold?
• Who pays for promotions, listing fees and samples?
• How do you report sales back to me, and how often?
• Is the agreement exclusive, for how long, and how does either of us end it?

Keep selling direct while you look

Finding the right distributor can take months, and it rarely replaces your own selling. Most distributors are better at delivering to stores than at winning new ones, so the demand still has to come from you.

That is the part LaunchPal does. We find the independent stores that fit your product, find the owner or buyer, and email each one about their store. Follow-ups stop when a store replies, and you take it from there. When a store asks who to order through, you will have an answer, and when a distributor asks how you are doing, you will have a stockist list. Our guides to cafés and beverage sales cover that groundwork.

When you do sign, tell your existing stockists how ordering changes, and keep in touch with them yourself. The relationship is still yours.