When a distributor agreed to take on my young but growing company, I was thrilled. Having a distributor is how you expand your network. It’s how you grow.
Or, in my case, it’s how I nearly wrecked my business.
The plan was to transfer my existing book of business (retail grocery outlets) to my new distributor, which would allow me to focus on signing up new retail accounts. I had more than a year’s worth of point-of-sale data for each of the retail customers. I handed it over to my distributor—and I transferred inventory based upon what it said. The distributor assured me that the transition would be seamless.
But then came a sign that something was amiss. The distributor’s orders were becoming smaller and smaller. Strange, I thought. Maybe it was the recent Christmas season. Shortly thereafter, I was told to hold off bringing in any more product. I knew something wasn’t right—but I trusted that the team at the distributor were doing their job—and I didn’t want to step on their toes by getting involved. Besides, I was busy trying to sign new customers. But when newly signed customers started telling me that they were receiving deliveries of expired product, I had no choice but to investigate myself.
I quickly discovered that order fulfillment simply wasn’t happening. My food sat in the warehouse for two months before the first case even went out! This was all the worse because my products, naturally fermented pickles and vegetables, have a four-month shelf-life from date of manufacture and require refrigeration, so when they finally started making it out to grocery stores, the opportunity for the retailer to sell my food was greatly diminished.
This bungled transition resulted in lost communication, unfulfilled orders and my getting kicked out of several stores, including my number-one brick-and-mortar. Instead of my revenues increasing, they fell—and I experienced a setback in sales velocity as I had to stop signing new accounts in order to stabilize my book of business, while at the same time, repairing relationships. Needless to say, my distributor and I parted ways.
At the end of the day, I take full responsibility for this mess. But, it provided some valuable lessons.
- Your food could be one of a distributor’s 50,000 SKUs. Given this, how front-of-mind do you think your products will really be for the distributor? Stay involved with your accounts. Don’t give up your book of business to anyone.
- If your product’s movement inexplicably changes, investigate right away. Don’t make assumptions as to why sales are off.
- Don’t rush into working with a distributor just for the sake of having one. Make sure it’s a good fit for your company.
- Don’t be afraid to cut the cord from your distributor. You may feel like your company needs them more than they need you, but if the distributor isn’t helping grow revenues, then they’re not providing any value.