Kennel Kelp Keynotes
BH Sales Product Distributor and Direct to The Manufacturer Ordering
Why clients sometimes feel more at ease ordering direct
How this is a value added service provided at no charge for my clients to save additional dollars You probably purchase your pet care products from someone you have developed a relationship with or from someone you can see yourself developing a relationship with. In most cases, a distributor fits the bill due to their locale and ability, and willingness, to service you. Also, the distributor probably has access to multiple manufacturers’ products - they have a choice of products to propose. The benefit for the customer is that they are more likely to get a solution that fits their needs, not a solution that is pigeon-holed into a particular product. This “choice” paves the way for interaction between the sales rep and customer in order to really pin down the right solution. The interaction builds the relationship. The manufacturer on the other hand may only have one solution to offer. So sometimes the discussion can be short and may lack the warm, fuzzy feeling. Manufacturers and distributors have two very important, yet very different roles in the pet products arena. The success of one is dependent on the other and vice versa. And the success of the end-user is dependent on both. Typically, minimum order quantity requirements directly from a manufacturer are larger. For smaller retailers, it is unwise to sacrifice cash flow for excess inventory. Inventory just sitting around is CASH. Initial cost savings per unit may be cancelled out by: Storage/space cost
Cash flow strain
Staff needed to manage larger amounts of inventory
Lingering unsold portion of the order that ends up being liquidated at a wholesale or lower price (out of season, old or discontinued)
Once a retailer has determined a popular and profitable product, or product line, it may be beneficial to begin manufacturing a private label version. BH Sales has private label programs for retailers.
Retailers need to stay agile, continually introduce new products, manage a difficult cash flow and inventory cycle and market the heck out of themselves in a highly competitive industry.
BH Sales provides for FREE:
Product selection advice based on your store's location, volume, product mix and customer base
- Order quantity and season advice
- Display/merchandising ideas and fixtures
- Professional lifestyle and product photos Brainstorm ideas to sell slow moving inventory Special exclusivity for your niche or geographic area Special offer co-marketing opportunities Special offer volume discounts, sales and promotions
Each participant in the supply chain provides a specific value-adding service that through focused specialization in management, delivers these particular services in the most efficient and cost effective way. A retailer can skip the distribution/wholesale participant and go directly to the manufacturer, but that won't negate the work that the wholesaler performs in the supply chain which must now be performed by the retailer who does not have the wholesaler's specialized systems, management expertise. This lack of specialized skills and infrastructure adds a difficulty that may not be obvious at first to the retailer enticed only by the cheaper price. Here are the increased costs that the specialist retailer must face, if they go direct to the manufacturer:
- The manufacturer's business model is built on selling high volume lots that are usually far greater than a retailer sells in a reasonable time - increased stock holding and storage costs is the result and in the most expensive space possible ... retail space.
- Add to this the impact on your cashflow with your cash now tied up in inventory, putting pressure on your ability to pay other bills as they become payable.
- Manufacturing businesses are usually few, large scale and located remotely, away from typical retail zones, making lead times longer and delivery more expensive.
- Where wholesalers deliver good to a wide range of retailers via efficient daily logistics, your purchase from the manufacturer will be a one-off costly one To obtain the same range of goods that a wholesaler sources from many different manufacturers, a retailer would be spending all their time managing deliveries from multiple supply contracts rather than just outsource this function to one wholesaler who has developed the expertise to do it well. In retail as in any business ... time is money.
- While you as a specialist retailer are attending to the delivery, storage and management of goods from manufacturer, you are incurring a hidden opportunity costs due to the lost revenue from not attending to what you do best - selling goods to customers.
Looking at all the increased costs and management hassles, it's easy to see why the vast majority of retailers stay with the long established supply chain and buy their goods from distributors/wholesalers. Main reason that distributors exist:
Manufacturers don't want to manage the cost of servicing small accounts.
Manufacturers don't want to provide credit and break bulk.
Manufacturers often ship from a single location while wholesale distributors often have local or region inventory.
Ultimately it's about doing what you do well. Manufacturers are great at making things, and wholesales are great at servicing small accounts and getting inventory to them quickly.
- Product mix: They buy more than one brand
- Finance: An important way to joggle credit lines
- Contracts: Distributors provide better overall terms
- Logistics: Faster delivery, solution bundles...
- Price: In the overall mix they provide better deals
- Relationships: There is a much closer relationship
This is the reason why we follow a chain that makes it easier for customers to buy goods as per their requirements and avoids transport and storage of huge quantity of goods at the retailer’s level. Once competitors start price wars and the profit margin falls, it is time to seek a series of new products.