How a store buys from you decides who delivers, who invoices, and how much of the shelf price you keep. Most brands move through these in order, and the mistake is moving too early.
Direct
You sell, ship and invoice. You keep the most margin and you do all the work. It is the right place to start, because you hear every objection yourself and you learn what the store actually needs.
A wholesale marketplace
A marketplace handles ordering, payment and often terms for the store, in exchange for a share of the order. It makes a first order easy for a small store. Check what it does to your margin on a first order and on a reorder.
A regional distributor
The distributor buys from you, stores the product and delivers it with everything else the store orders. Many stores prefer this once an item is established, because it is one truck and one invoice. The distributor takes a margin, so your wholesale has to carry two margins and still land at a shelf price that sells.
National distribution
More doors, more requirements, more money tied up in inventory and promotion. It rewards a brand whose velocity is already proven.
Use Faire as a marketplace benchmark. In North America, it takes 15% on orders from retailers who find you through the marketplace, plus $10 on their first order. On a $100 order, you keep $75 the first time and $85 on a reorder, before payment processing, freight, and product costs. Qualifying Faire Direct orders carry 0% commission.
For a specialty food distributor, use a 20% to 30% gross margin as a starting point. Work backward from what the store can pay. If the store pays $5 a unit and the distributor needs a 25% margin, the distributor pays you $3.75. Run your numbers on that $3.75 after freight, promotional allowances, and any other deductions in the agreement.
The rule
Your shelf price has to work in the next step before you take it. If adding a distributor's margin pushes your shelf price past where you sell, you are not ready for that step yet.
Do this
Run your shelf price three ways: direct, through a marketplace, through a distributor. See which steps your price survives.
Applied to this season's trends
Fiber frenzy and protein + fiberRealThe brand takePosition against a familiar staple, with taste and convenience leading and fiber supporting the proposition.
Clean proteinRealThe brand takePosition your product against the snack it would replace, such as a meat stick or protein bar.
Terroir's new territoryRealThe brand takeLead with products where origin creates a difference shoppers can taste, such as region-specific olive oil, honey, chocolate or coffee.
Functional beveragesRealThe brand takeThe functional claim alone is no longer enough.Written for The Shelf Signal from general trade practice. Check the details with your own advisors. ← Planning your first 20 doors