Getting your product into carts is not only a marketing problem, it is a distribution problem. If you pick the wrong path to shelf, your unit economics will suffer, your team will burn out on logistics, and your buyers will hesitate to expand you. If you pick the right path, orders arrive in full, margins hold, and your brand earns the right to scale. This guide breaks down how founders should think about the three core choices, brokers, distributors, and self delivery, along with the hybrid models in between. You will see what each option does to your economics and execution, how retailers view them, and how to stage your decisions as you move from launch to scale.
Before we dig in, it helps to align on terms. A distribution channel is simply the route your product takes from you to the end customer, sometimes with intermediaries who perform transport, storage, sales, or merchandising functions. If you want a quick primer on channel types and how they fit a go to market plan, this high level overview of distribution channels offers useful definitions and context, see Distribution Channel. For a product led view of how brands choose channels and set them up for success, this guide to distribution channels and product success is a helpful complement, see Distribution channels, how to ensure the success of your products.
The three roads to shelf
Most early stage CPG companies begin with a mix of direct to consumer and local retail, often fulfilled out of a small warehouse or a third party logistics partner. As velocity grows, you will face a decision. Do you continue to ship directly to each store or retailer distribution center, do you engage a distributor who aggregates orders and covers the last mile to stores, or do you deploy brokers who represent you to retail buyers while you maintain ownership of inventory and shipping. Each path changes your realized price, your cost structure, and your control.
A broker is a sales agent, not a wholesaler. They do not own your inventory, they work your line in front of buyers, sometimes manage authorizations and category resets, and earn a commission on sales that you invoice directly to the retailer or to a distributor. Brokers can be powerful in complex regions or channels where relationships and repetition matter. The trade off is that you must still build a shipping and service backbone behind them, because a purchase order secured by a broker still needs to ship on time and arrive in full.
A distributor buys your product at a discount, then resells it to retailers through their own network. This compresses your net price, since you sell at a distributor cost, but in exchange you get scale access, credit terms with retailers, potentially merchandising services, and consolidated deliveries to stores. The trade off is control. You will have less direct influence over store level service, promotion execution, and sometimes even assortment, unless you manage the relationship actively with clear guardrails.
Self delivery covers everything from shipping to retailer distribution centers with your own carrier relationships to direct store delivery, where your company, or a contracted partner operating under your brand, places cases on the shelf. Direct store delivery can be powerful in categories where freshness, frequent replenishment, and display execution matter, for example baked goods, beverages, or grab and go snacks. It also has the highest operational burden, since you are now in the routing, staffing, and store service business in addition to the brand and product business.
What the retailer sees
Buyers want confidence. They want to know that orders will be confirmed quickly, that deliveries will arrive on time and in full, that deductions will be minimal because paperwork is clean, and that shelves will look good on the weekend. When you sell through a reputable distributor, buyers often assume a base level of service because the distributor is already in their receiving systems and on their docks. When you ship direct to a retailer DC, buyers expect you to understand routing guides, appointment systems, and chargeback rules. When you propose a direct store delivery model, buyers expect you to bring a clear plan for coverage, merchandising standards, and proof that your team can keep up with high traffic days.
Retailers also care about data. Through distributors, you may receive delayed or partial sell through information, which can slow your decision making. Through a direct model, you can sometimes access more timely inventory and deduction detail, which makes it easier to manage cash and improve accuracy. Make sure you weigh data visibility in your decision, not only freight rates and discounts.
How the math changes
Your contribution margin sits at the center of this decision. In a direct ship to DC model, your realized price is the retailer cost, less trade and timely pay discounts, while your variable costs include outbound freight, pick and pack, palletization, and accessorial fees. In a distributor model, your realized price is the distributor cost, which is meaningfully below retailer cost, because the distributor must earn their margin, and your variable costs include the freight to the distributor warehouse and often promotional allowances paid both to the distributor and to the retailer. In a direct store delivery model, your realized price can be higher if you negotiate direct margins with the retailer, but your variable costs include route labor, fuel, vehicle or partner fees, and shrink at the store level.
Getting this right begins with a clean unit economics worksheet. If you need a simple way to model list price, net price after trade, gross margin, landed costs, and contribution by account, the calculator on our Unit Economics Tool page gives you a founder friendly template. Build versions for each potential path, then test a few stress cases, a fuel surcharge increase, a deeper temporary price reduction, an accessorial spike, or a change in minimum order quantities. The best choice is the one that keeps contribution positive across a realistic range of scenarios, not the one that looks best under perfect assumptions.
Brokers, when to use them and what to watch
Brokers shine when you need market coverage and time leverage. A strong broker team can put you in front of more buyers, represent you during category reviews, and chase down paperwork so launches stay on track. They are especially useful when you are expanding to a new region or entering a channel where you lack relationships. The caution is simple, commissions do not build margin, they spend it. Make sure your commission structure matches the work performed, and that you have clear expectations for meeting cadence, reset support, and post authorization follow up.
Avoid exclusivity until the broker proves performance in your category and price tier. Set clear termination rights with defined notice periods, keep rights to your data and brand assets, and require timely forwarding of buyer feedback, deduction notices, and reset calendars. Build a weekly rhythm with your broker so opportunities and issues do not drift. The best broker relationships feel like an extension of your commercial team, with transparency on both sides and active joint planning around promotions and displays.
Distributors, when to use them and how to manage them
Distributors unlock scale, but they are not a set it and forget it solution. Pick a distributor when your delivery density is high enough that their trucks and store coverage will increase your on shelf availability and your ability to support promotions. They are essential in regions with fragmented retail or in grocery formats that depend on distributor service for daily gaps and weekend peaks. They also help smaller teams by consolidating credit and collections across hundreds of stores, which can improve your cash predictability.
Manage distributors through math and visits. Watch fill rate, out of stock days by item and DC, deduction patterns, and days sales outstanding between you and the distributor. Visit distributor DCs at the start of a relationship to see how your pallets are handled and what special instructions your items might require. Set clear expectations for minimum inventory levels ahead of promotions, and confirm that store level communications match your plan. The brands that win with distributors create joint business plans, not only price lists. That plan should define growth targets by region, the role of promotions, and how merchandising will be supported on key weeks.
Self delivery, when to choose it and how to set it up
Self delivery is a strategic choice, not a default. Choose it when store level execution is the primary driver of velocity in your category, when your product requires frequent rotation or special handling, or when your pricing power relies on premium placement and displays that you can control better with your own team. Be honest about the burden. Routing, staffing, merchandising, and weekend coverage are operational disciplines. If your core advantage is product design and community building, you may be better served by a partner who provides these services rather than building them yourself in year one.
If you do choose direct store delivery, start small and prove the model. Pick a city or a cluster of high potential stores, hire or contract a small team, and track availability, display compliance, and weekend on shelf rate. Build a simple coverage model that balances route efficiency with service quality. Use the results to justify expansion to more stores or a larger geography. A well run direct model can give you unusual control over the retail experience, which is valuable in categories where shoppers are pulling products from the shelf quickly and expecting them to be full and fresh every day.
Hybrid models and staged decisions
Most successful brands do not choose once, they stage the choice. You can run self delivery in your hometown, use a regional distributor for the surrounding states, and partner with a broker for national accounts you ship to retailer DCs. You can move a region from direct ship to DC to distributor once density improves. You can start with a broker, then bring sales in house for your top five accounts. There is no award for purity. The only test that matters is whether the blend increases availability, preserves margin, and reduces friction for your buyers.
When you build a hybrid, set crisp boundaries. Define which SKUs, regions, and accounts each partner covers. Avoid overlapping rights that invite channel conflict. Decide who owns promotion funding at each step, who approves displays, who handles credits and returns, and how disputes are resolved. Keep a single source of truth for pricing and promotions so your team, your broker, and your distributor are looking at the same plan.
The operational details that make or break distribution
Regardless of the path you choose, execution shows up in the same places. Routing guides must be followed precisely to avoid chargebacks. Appointments need to be scheduled with enough buffer to handle delays. Pallet patterns, case labels, and inner pack protection must match reality on the dock, not only a spec sheet. Your ASN and invoice data need to be accurate to minimize deductions. OTIF must be tracked week by week so you catch a service slip before a buyer does. These details are not glamorous, but they keep your net revenue from leaking away a few dollars at a time.
On the store side, merchandising compliance matters. If you are paying for a display, take photos and date stamp them, then tie display windows to POS results so you can see lift versus baseline. If you run a buy two offer, verify that tag placement is correct and that the deal is active for the full period you paid for. If you work through a distributor, make sure your field team or your broker team conducts audits during peak periods, then share findings with the distributor so they can correct service gaps.
A simple decision framework
To choose a path, score each option on five dimensions, then let the numbers and your cash reality guide you.
First, net price realization after all intermediaries and trade. Second, variable cost per case to reach the shelf, including freight, accessorials, and service costs. Third, coverage and service quality, how reliably this path keeps shelves full and displays built on key weekends. Fourth, data visibility and speed, how quickly you will see problems and learn. Fifth, complexity and focus cost, how much founder and team attention this path will consume relative to the growth it enables.
Put your assumptions into a model and run three scenarios, a normal week, a promotion week, and a service disruption week where a lane gets tight or a DC backs up. Use a tool you trust, even a spreadsheet works, but make it repeatable so you can update it each quarter. If you want a starting point that already includes the core equations for list price, net price after trade, COGS, landed costs, and contribution by account, borrow the structure from our Unit Economics Tool to speed up your analysis.
A short case example
A refrigerated snack brand launched in one metro area with a self delivery model. They hit strong velocity in forty stores because their team built displays on Fridays and checked availability on Sundays. When they expanded to a second metro, they kept the same model but struggled to recruit weekend staff, and service slipped. The team moved the second metro to a regional distributor with good refrigerated coverage, then kept self delivery only in their hometown where they could maintain standards. Contribution margin in the second metro fell three points due to distributor margin, but out of stocks dropped by half and promo execution improved, which raised velocity enough to offset the margin loss. The blended approach made the brand more stable, and buyers noticed.
Contracts, expectations, and clean exits
The best time to negotiate a broker or distributor agreement is before the first order. Define geography, SKU list, and channel scope, spell out commission or margin details, and include service expectations like reset support or minimum on hand inventory ahead of promotions. Add clear reporting requirements for sales, inventory, and deductions. Keep termination language practical, with reasonable notice and a sell through period for inventory. Most partners are fair when the relationship is respectful and the expectations are clear. A short kickoff deck with the plan, the timeline, and the contact list reduces confusion and sets the tone for a professional relationship.
What to measure every week
Weekly numbers keep you honest. Track contribution margin by account and by path, distributor path versus direct ship, for your top SKUs. Track OTIF and deduction rates, then review the top two deduction codes by retailer and by distributor so you can fix root causes. Track velocity per store per week and display compliance during promo weeks. Track near dated inventory by DC if you are shipping to multiple locations, since short code product will quietly erode your economics if you do not move it proactively. Most importantly, write down one action you will take each week to improve availability, reduce leakage, or simplify a process. Progress compounds when you close small gaps repeatedly.
Bringing it together
There is no perfect distribution model that fits every CPG brand. There is only the model that makes your math work, keeps your buyers confident, and frees your team to focus on what you do best. Start where density and control matter most, expand where partners bring you coverage and service you cannot build yet, and revisit the decision as your velocity and footprint change. Keep your model current, keep your partners informed, and keep your standards visible, because distribution is not a back office function, it is the bridge between your promise and a shopper’s experience.
If you want a structured way to install this decision making into your operating rhythm, and to build the steps from discovery to retail execution without wasted cycles, our simple blueprint on the Process page lays out how we help founders move from idea to repeatable scale without losing sight of margin and service. And if you need a quick refresher on channel types as you map your path, remember you can scan the overviews at Distribution Channel and Distribution channels, how to ensure the success of your products while you stress test the numbers in your own model.