The Role of the Distributor

The distributor relationship is critical to the success of your brand. Most retailers do not want you dropping off cases from the back of your pickup, even if you can drive to all the stores. You will need a distributor. Let’s review the icebergs to avoid when working with distributors.

Distributors can open new accounts, but it is not their strong suit. Despite what they promote, most are dismal at selling your product for you. If you're relying on your distributor to build new placements, they need two things: a sales team with buyer relationships and a merchandising team with boots on the ground to support reorder flow.

The best practice is to bring an anchor account—a key retailer—to the distributor to establish baseline volume. Once you're in, partner with them to fill in other stores. The truth is that opening doors yourself directly with the retailer works best.

Understanding the Costs

Distributor fees can be steep and painful for cash flow. Start-up costs are real: warehouse fees, slotting fees, mandatory off-invoice programs, payment lags on first orders, and free fills. It can take six to twelve months to see a return. Some fees are negotiable. Most are not, especially for emerging brands without leverage.

Often, the retailer will choose the distributor, not you. If Whole Foods or Sprouts tells you to use UNFI or KeHE, that’s your lane. You need to build distributor costs into your unit economics from day one. Plan for three to seven percent in deductions and chargebacks. UNFI and KeHE offer low retailer markups, but they extract more from the supplier through what I call the cost of doing business.  (I have used worse terms...).  That is a line item I build into every financial forecast.

If you can’t afford those costs, you need to adjust your targets or your pricing.

What Not to Do

Do not push a bunch of product into a distributor and hope their retailer programs will move it. These programs often mean deep discounts, cherry-picked orders, and no reorders. That is how you sell your way out of business.

What to Do Instead

Start with a tight radius of stores where your brand resonates. Build relationships. Monitor in-stocks. Learn. Find distributors where you are an important client.

Platforms like Faire and Pod Foods can be great early on. They are not the cheapest for the retailer, but they can be for you and the transparency and simplicity matter. Fewer deductions and fewer surprises. There are also great regional players out there.

Do your homework. Map your distribution plan alongside your retail targets. When it’s time to scale, budget accordingly, know the landscape, and get support to navigate the big guys.

The Takeaway

Your distributor should be a growth partner, not a liability. Choose one that matches your stage of business and your retail goals. The right partner will help you expand intelligently instead of draining your cash flow or your inventory.