During the third installment of the SFA’s Maker Prep: Working with Distributors webinar series, Jack Acree, executive vice president of Saffron Road and Patti Doyle, chief executive officer of Rumi Spice shared strategies for success when navigating the distributor relationship.
Here are three pieces of advice they gave for makers looking to enter into or strengthen their partnership with a distributor.
1. Set Competitive Pricing
When setting a product price, Acree suggests taking a look at the category and your competition. Even if there isn’t something exactly like your product out there, come up with some ideas of similar products, what they cost, and how they’re selling.
Other variables in pricing include any trade rates or charges that impact your profits and losses, including manufacturer charge backs, off invoice discounts, and scan promos.
Acree also recommended soliciting feedback from inside and outside the organization.
“Talk to your buyers, talk to your managers,” he said. “Make sure everyone’s on the same page.”
Most importantly, pricing needs to be set for profitability in the near and long term.
“It’s hard to see into the future, but you need to make money right now, not just in the future,” he said.
2. Recruit Strong Partners
A great deal of consolidation has taken place among retailers and distributors, leading to some significant changes in the landscape, said Acree.
One of the best ways to navigate these changes is by working with a broker that has good connections with your distributors, he said. Keeping up with other industry contacts can help keep you up to date as well.
A relationship with the retailer never hurts, either, said Acree.
“The retailer is a shared customer between you and the distributor,” he said. “Relationships with retailers can give you leverage in what’s mostly a ‘David and Golliath’ situation.”
3. Nurture the Relationship
“Ultimately, this is a relationship you want to build to help your business grow,” said Doyle. “And retailers and distributors want to grow their businesses as well.”
The ultimate key to a successful relationship with a distributor is communication, she shared.
“I can’t overemphasize the value of communication, on good things as well as challenges,” said Doyle.
When disagreements arise, make sure to maintain documentation, be diligent, and be straightforward on how you’re following up, she recommended.
“There’s a common goal here,” Doyle explained, “Think about what a long term relationship looks like and how you can help each other.”