So, you’ve developed your amazing new products and are ready to sell, but there’s one crucial step left: building a solid distribution strategy. Deciding on the right distribution approach is key to your success, and there are several options to explore.
1. Launching Online
Many small brands start by launching online, either through their own website (using platforms like Shopify) or by partnering with e-tailers like Amazon or CultBeauty.com. If you choose the online route, it’s essential to have a robust marketing plan to drive traffic to your site. Unlike physical stores, where customers may wander in on impulse, an online store requires active marketing to attract buyers.
2. Launching in Physical Stores
If you’re aiming for in-store distribution, approaching retailers directly is another option. You will still be expected to drive costumes to the retailer but also to participate in their trade marketing plans by paying to be part of promotions or be featured in special areas of the store. Presenting your brands to buyers can be an intimidating process, especially if you’re new to it. Retailers will expect a detailed presentation covering trends, pricing and brand positioning, sales forecasts, and margin negotiations. It’s important to be well-prepared for these conversations.
3. Hiring Professional Help
If navigating the distribution landscape feels overwhelming, there are three main routes for contracting out distribution services:
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Sales Agents
Sales agents act as advocates for your brand and products, using their market expertise and retailer connections (be sure to ask for proof of these connections). They focus solely on selling your products, but they don’t buy directly from you or handle deliveries and after-sales services. Their role is to find the right buyers and negotiate on your behalf. However, you have the final say in any sales decisions. Sales agents work on a commission basis, so they earn only when they secure sales. -
Distributors
Distributors purchase your products directly from you and manage everything from finding customers to distributing the products in the market. They also handle after-sales services. Since distributors buy at an agreed price, they usually do little to no price negotiation with the end customer. In exchange for these services, distributors charge higher fees than sales agents, as they take on more responsibilities. Distributors are a good option to expand your business in distant markets where the time zone, language and regular buyer meetings would be difficult to manage. They become and extension of your team in that territory and allows you to expand without employing a local in country team. -
Wholesalers
Wholesalers fulfill orders from retailers but don’t actively promote your brand or seek out new sales opportunities. For startups, this can be a less-than-ideal option, as wholesalers don’t drive demand. Instead, they buy in bulk at a lower price from you and resell in smaller quantities to retailers at higher prices, which means lower profits for you. Their main income source is the discount they charge on your products.
Understanding the Costs
It’s important to note that distributors and sales agents typically take a percentage of net sales for their services, which means you only pay them when they deliver results. While this protects you from upfront losses, it’s important to weigh the ongoing costs. Distributors tend to charge higher service fees than sales agents, given the broader range of duties they perform.
Choosing the Right Distribution Strategy
Each distribution option has its own layers of complexity, and your decision should be based on your commercial goals, market strategy, and financial considerations. You may have a different strategy for different geographies around the world.