There are a multitude of options for emerging food and beverage brands looking to sell wholesale to independent retailers. There are your traditional distributors with national players like UNFI and KeHE, regional distributors like Rainforest, Chex, and Associated Buyers, wholesale platforms like Faire, Mable, Handshake by Shopify, and hybrid models like Pod Foods.
Each option comes with its pluses and minuses. For net margin per sale, and price competitiveness on the shelf, you cannot beat the platforms (see related post). If what you’re after is freight and volume consolidation, especially when pursuing a regional focus, then distributors still have their benefits. In terms of retailer preferences though, those are diversifying rapidly.
In our recent survey of independent retail grocers, we found that UNFI and KeHE are still holding strong as the preferred method of distribution for many of these independent retailers, which are mostly natural and specialty food stores. However, almost every retailer mentioned at least one, if not several, of the wholesale platforms as an additional way that they source their products. The regional distributors appeared, as you might imagine, by region.
What to make of all of this as an emerging food and beverage brand? Like seemingly everything else related to growing a brand these days, the answer is going omnichannel, this time for wholesale.
How should I establish my omnichannel presence for independent retail?
First, you need to take a look at the business models of each of the partners you are evaluating in setting up your independent retailer wholesale business.
For example, if you have a perishable product that makes it nearly impossible to drop-ship, you are going to need to find a suitable last-mile solution before pursuing the platforms that are built on drop-shipping small parcel wholesale orders. If you’ve already solved this problem to reach a DTC audience, it is likely you can use the same partner with only minor modifications to the process.
If you have opened a chain retailer, like Whole Foods or Sprouts, which necessitated the opening of a UNFI or KeHE distribution center, you will already be listed for sale in the preferred catalog of hundreds of retailers in a particular region. Now, this may not always mean that you want to route the orders through that distributor once you consider cash flow implications and net margin on the sale, but if the retailer prefers consolidating their orders through one wholesaler this can be a frictionless way to land the sale. Or you may actually want to drive volume through the distribution center for other reasons (freight rates being one, volume thresholds at the DC being another). Do note that simply opening distribution centers of major distributors to sell into independent retailers, without a chain retailer key account as an anchor, is a major pitfall! These distributors have built their businesses around the volumes they do at chain retailers. If your focus is not aligned with theirs (as a rule of thumb, 80% of your projected volume at the DC will be product sent to the chains), it will be painful.
The point here is that you want to leave yourself the option to route orders through a process that makes the most sense for your business goals and realities. Being available through several wholesale options, especially as retailers become more and more open to these multiple options, allows you to remain in the driver’s seat as you scale your independent retail presence.
Once you have made yourself available to the widest amount of independent retailers as possible, without stretching your inventory or other commitments too thin, you need to get on the independent retailers' radar. Many of these stores will just need some sales outreach, a sample, and an intro deal offer to become a new customer (assuming a positive reaction to your product, of course).
Our product, Pitchable, is built exactly for this use case. We built up a database of thousands of independent retailers across the US with data on the categories they buy and the wholesalers they purchase from. This way, the “omnichannel-for-wholesale” brand can gather new retail customers, route orders, and offer promotional deals to retailers in a customized way that aligns with their business realities.
Conversely, you could employ a traditional broker for this, but the same caveat applies to them as applies to distributors. Theirs is a volume game. Further, as a human-centric 3rd party service, often the complexities of your particular business goals can be lost in translation. Forthright brokers will tell you at the onset of the relationship to make your selling guidelines as simple as possible, so they can be translated to the widest number of reps without error. This one-size fits all approach may make it easier for brokers to sell volume, but for the emerging brand, it cedes control of the brand-building process and the advantage of being omnichannel for wholesale in the first place.