... are you sure they’re going to come? (final installment)

So you’ve got the right product and merchandising strategy, now you’ve got to figure out how to get it on the shelves. Here are four of the most common ways to do so:

1. Commissioned Sales Reps

Many industries rely on commissioned sales reps to reach out to online and brick and mortar retailers to carry as many of your products as possible. Sales reps will carry many manufacturers lines and take a flat commission (typically 10 – 15%). Reps will have a geographic territory that they cover and most rep agreements give them with exclusive rights to sell your product in their territory, including major retailers who are located in the territory.

2. Hire a Sales Manager (Selling Direct)

Another approach you might want to consider is by bringing sales in-house. This strategy makes sense if it’s difficult for you to secure good reps in your industry or if you have deep enough pockets to manage this in-house. This is a time-consuming process and would involve a lot of direct sales and marketing techniques, including:

• Lead generation techniques (i.e., purchasing lists, scanning competitor sites for lists of retailers)
• Direct mail pieces
• Direct sales (store visits, cold calling, sending out samples, etc.)
• etc. 

3. Distribution Partner

 A third option is to find a distribution partner to sell your product. Here you look for someone with a complementary product to yours who already has a strong sales force and relationship with the retailers, who’s looking for a little bit of extra money (typically distribution partners get 24- 30% of sales). In this case you have the benefit of getting great sales reps (without the agony of trying to recruit and motivate them) and you don’t have to worry about the fulfillment, invoicing and collections processes (which are very time-consuming). The distribution partner wins by netting 5 – 15% of your sales (after they’ve paid out sales commissions and fulfillment costs) and by having a new products to keep their customer base engaged in their existing product line (in order words a good excuse to get reorders). Like with a sales rep, you only pay a distribution partner on the sales that have been made, but they also deal with all the order management, inventory, fulfillment, and commissioning issues.

 4. Wholesalers / Traditional Distributors

In some industries, there are great wholesalers / distributors who will sell your product. Unlike the distribution partners described above, wholesalers / distributors only line of business is selling other people’s products. Sometimes this is a welcome resource for small businesses (i.e., publishers, grocery items), but in other cases (namely alcohol with the dreaded three-tier distribution system), it’s required by law and many complain their profit margins are really cut into. Wholesalers work basically like the distribution partners described above, except with wholesalers you still need to maintain your inventory and then they’ll place order to you for the amount of inventory they think they can sell to retail channels.

This is in the final installment in my “If You Build It …” series. If you have questions about how to develop an effective product marketing and sales strategy, feel free to contact me via email and we can chat more.

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