Know-How Exchange : Strategy

Saforia,
I can help you with the Distributor side of the business. Understanding their motivations is relatively simple.

I am having a difficult time understanding exactly what your product is. The EGGS acronym doesn't ring a bell.

Message me via my profile and I will see if I can help you a bit off line.

You said exclusive distributors - so they only carry your products?

Looking at this simply - the distributor's main job is to sell product. Their main goal is to make a profit. They help your company by acting as local sales channels for you. They want you to support them (make decent products, provide good marketing support materials, etc.) and give them access to a territory that allows them enough sales (so not put other distributors too close to them).

One of the large challenges you will find is that their goal is not 100% aligned with your company's. Specifically in regards to territory and distributors. It often makes sense from a manufacturer's standpoint to have more distributors than less, as the overall total sales for the company will be larger. But each distributor does not like this, as it can cut into their individual sales (which they want to balance). And distributors will generally be quick to complain if what they feel is their territory is being broached.

Dear Saforia1948,

"How'd ya want yer eggs? Fried or boiled?" This was the punch line, asked by the gnarled old landlady of a boarding house in a set of TV ads that ran in the UK in the late 1970s.

Aah! Those were the days. But eggs can also be pickled and it's into this state—a pickle—that you appear to have wedged yourself.

Hmm. What to do?

Blunt though Techgirl's response might be, she is, I believe, correct and I've a sneaking suspicion that were we ever to meet, that Techgirl and I would get along like a house on fire. Not, mind you, that this solves your problem.

For me, your questions hoists a number of red flags and if I listen hard enough, I can hear two of them cracking in a strengthening breeze:

1. You're new but keen. But does it not occur to you that you
might be a tad out of your depth in this role? So with that out of the way, here's a ground breaking idea: admit you know Jack about FMCGs and ASK YOUR BOSS FOR HELP!

That's his/her job: to make sure that underlings (and you, dear heart, are an underling whether you like it or not) are not crushed by the weight of responsibility.

Come clean and say, "Look, sorry to bother you and all, but well, I'm er, well, you know, that is to say, clueless!" Because with the best will in the world, looking at a few websites and checking a few resources might help you skate over this thin ice. But what about the next time? And the time after that? You simply cannot carry on in a fog of ignorance in marketing and expect to get very far anytime soon. Alas my child, tis not to be!

2. Your distributors, smelling blood (yours) might hold out for better terms so check your company records and see how things have panned out over the last few years. You then use this information as leverage.

One other thing you need to do is put yourself in the boots of
the people buying and reselling your FMCGs. I've no background
in FMCGs at all, but were I looking to buy eggs, milk, bread and so on from a supplier I'd want—no, scratch "want", it's too wishy-washy—I'd DEMAND: freshness, quality, choice, quantity, timely supply, consistent pricing, reliable delivery, exclusive terms, bulk discounts, and a say in who else you sell to!

And all with sprinkles and a cherry on the top.

Why? Because if you want a slice of my pie (meaning, if you want
your eggs on my supermarket shelves), I wield the knife, not you.

Your task is to decide how hungry you are and how big of a slice you'll ask me to cut before I fob you off and find someone else. It's a buyer's market, your product is perishable, and I, heartless git that I am intend to take advantage of that point so that I can make my profit while also passing in savings to my customers—who I know will come back for more. So, although I've no background in FMCGs at all, if I can figure this out, so can you (Whoops! That's given the game away!)

What this means is that when it comes to who will pay what for whatever, unless you hold the cards of a cartel (possible but unlikely), you're going to have to haggle with your buyers.

So see things from their point of view (see above), and you'll have a better understanding of what your buyers need. They're people just like you. So talk to them about the things that matter to them.

This isn't the diamond trade, where one major player allegedly gives its buyers a box of rough stones five times a year and says, "OK boys and girls, take it or leave it!"

In the diamond trade the supplier does this and gets away with it—also controlling what goes into the box and what the price will be—because the supplier knows its buyers can't buy from anywhere else. Why?

Because the supplier keeps its buyers blind and also tells them, "you have a choice, if you want to sell diamonds, you buy from us or you don't sell diamonds!" (which explains why diamond prices remain high—the cartel owns, not controls, OWNS the market).

Your buyers have a lot of clout and I'm stunned that you'd be thrown into this lion's den without some backup from on high. So again, ask your boss for guidance.

The answers to the questions you post on this forum will get you so far. The rest you'll have to learn the hard way, by doing it. So, check your old records. Ask questions. Ask for help. Fess up. When in doubt, ask, and for heaven's sake, get tough!

I hope this helps.

Gary Bloomer
Wilmington, DE, USA

I agree with techgirl fully.

It may look like, but you wont get the skills from a website! Talk to your superior, the distribution channel is specific to the product type, esp in FMCG, and has its own straights and turns. The best guide would be your superior (for guidance) and on field juniors(for experience). Talk talk talk!

The distributor will talk tough on negotiating, the only two weapons that are generic across FMCG are the stock (amount) and distributor margins. You may want to play with them to gain ground in negotiation.

All above may be correct, but your are 'da man' period.

The key to distributors are margins, and insuring adequate and timely stock.

If you are not familiar with how distributors handle their business and are concerned in asking direct ; ask in a complementary vendor - dairy, bread etc.

Go over the distributors overall assortment vendors and give them a call.