In the world of consumer-packaged goods (CPG), understanding the nuances of distribution is key to a successful market strategy. As a seasoned CPG consultant, I often guide clients through the decision of whether to use distributors or ship directly to retailers. Each method has its benefits and drawbacks, and the right choice depends on various factors including the nature of the product, scale of operations, and business goals. Let’s explore these two distribution models. 

Using Distributors 

Distributors act as intermediaries between manufacturers and retailers. They purchase products from manufacturers and then sell them to retailers or other entities. 

Advantages: 

• Wide Network: Distributors often have extensive networks and relationships with a large number of retailers, which can be especially beneficial for new or smaller brands looking to expand their reach. If Whole Foods Market or similar sized retailers are your goal, this could come in extremely helpful.  
• Reduced Logistical Burden: They handle the logistics of storage, transportation, and inventory management, reducing the complexity for manufacturers. 
• Market Penetration and Support: Distributors often provide market penetration and support, using their expertise and resources to promote products. 

Disadvantages: 

• Less Control: Manufacturers have less control over how their products are marketed and sold. 
• Lower Margins: Selling through distributors typically results in lower margins compared to direct sales, as distributors mark up prices to make a profit. 

Shipping Direct to Retailers 

Direct shipping means the manufacturer bypasses the distributor and supplies products directly to retailers. 

Advantages: 

• Greater Control: Manufacturers have greater control over their product’s placement and marketing in stores. 
• Higher Margins: Eliminating the middleman can result in higher profit margins. 
• Direct Relationships: Building direct relationships with retailers can offer better feedback and collaboration opportunities. 

Disadvantages: 

• Increased Responsibility: The manufacturer is responsible for all logistics, which can be complex and resource intensive. 
• Limited Reach: Smaller brands may find it challenging to establish relationships with a wide range of retailers. 

Choosing between using distributors or shipping directly to retailers is a strategic decision that impacts various aspects of a CPG business. For brands seeking to leverage an existing network and minimize logistical complexities, distributors can be a valuable partner. Conversely, for those looking to maintain greater control and foster direct retailer relationships, going direct might be the better path. Ultimately, the decision should align with your business model, resources, and long-term goals. As a consultant, I recommend a thorough analysis of both options, considering factors like product type, target market, and operational capabilities, to determine the best fit for your CPG brand. 

To get that conversation started, reach out to me today so we can figure out which avenue is better for you and your product.