How to Distribute Your Product

Your product’s made. It’s packaged. It’s branded. Unfortunately, it’s also lying dormant in the dark corners of your basement. Not cool. For this week's How-to Tuesday, we're going to discuss moving your goods from the basement to the hands of your willing customers. You may have the most fantastic product in the industry, but without distribution strategies, you'll have it all to yourself.

Direct vs. Indirect Sales

The modes of distribution available to small producers can seem too overwhelming to tackle. There are so many stores in existence, so many online channels, so many direct sales opportunities... How do you know where to go? The first major question to address is one of direct vs. indirect sales. You have the option of pushing your goods directly or selling to a distributor who then does the leg work. Advantages and disadvantages accompany both approaches.

Direct sales require the small business owner to personally persuade stores to carry their product, sell in online forums (e.g.--Etsy), vend in fair settings (e.g.--Empowerment Group's market fairs), or use direct mail. While more time-consuming, approaching retailers in store or at trade shows gives you more control over how your product is displayed and how it's presented to customers. When selling directly, you know that someone is personally taking the time to showcase all your products singular attributes.

Indirect sales incorporate a middleman in some way or another. In this fantastic article on bnet.com, Don Debellek breaks down indirect sales like this: "A distributor's functions include stocking, ease of ordering and quick delivery--but not pioneering sales efforts. So before turning sales over to a distributor, build a base of direct sales to prove the product will sell." Intermediaries have expertise and contacts, but they may require minimum order quantities or ask you to demonstrate an established sales record. Plus, they lack that personal touch.

Still not sure what's right for you? Here are some factors to consider:

• Scale of production. If your making your product by hand or manufacturing it on a small scale, finding outlets independently is probably your best approach. Large chain outlets may boast bigger profits, but they're generally not interested in your hand-crafted handbags.
  
• The competition's M.O. Susan Jacksack at the Business Owner's Toolkit maintains: "As a starting point, make a list of any competitors that could compete directly with you for the same customers. Then divide these competitors into categories based on the distribution channels they currently use. The result will be a picture of which channels are being successfully used in your type of business and location." Investigating competitors gives you a sense of how it's usually done, but don't feel compelled to toe the industry line. Check out this article to see how the Philadelphia Brewing Co. redefined beer distribution to suit their priorities--fresh, cheap, and Philadelphia.
• Cash flow. Going through a distributor can mean larger paychecks, but it can also mean lag time. Indirect sales can be a risky option if you don't have some extra money in the bank to pay your vendors while your check languishes in a file folder.

Being Direct

So, let's say you decide the direct approach best suits your business model. How do you then choose which stores or online channels to target? And how do you get it from Point A to Point B?

• Choose outlets that match your brand. Be conscious of the synergy between a retailer's image and your product's brand. Stores have target markets and so should you. That's not to say that you can't experiment, but don't waste your time (and your inventory) selling your buttercream-frosted cupcakes at the health foods store.
• Sell where you like to shop. Do you often frequent a clothing store that echoes your style or a crafts gallery in line with your DIY sensibilities? Contact the store owners and make an appointment to show your product. One of the many wonderful things about Philadelphia is the abundance of independent retailers who support independent producers. Local restaurants with local rolls, local grocery stores with local totes, local studios with local musicians. With the strong relationships afforded by proximity, everyone wins.
• Don't stretch yourself too thin. Always be conscious of your labor costs when distributing your product. What are you actually spending on distribution if you have to work 16-hour days to find outlets and drive all over the city? Four Worlds Bakery asks customers to place their orders ahead of time and then delivers the goods to select drop-off locations. The job of getting the bread into the hands of the consumers then becomes a shared responsibility. Time is minimized and patrons are involved in the process. I like it.

Lists are good, but I think the most straightforward way to learn about distribution is through example. If you have a story about getting your product into the hands of your customer, tell us about it in the comments below.