In previous blogs we discussed Specialty Food Distributors, and how most new products from emerging companies will need to utilize the network of Specialty Food Distributors to find success getting on the shelf of the groceries of America.
Today, I want to help you understand the complexity of SFD’s, and specifically the multi-levels of who you must sell within this channel to find success. If you don’t fully understand all the levels that must be sold to get your product on the shelf of a retailer that uses one of your Distributors, you are going to wait a long time for your product to actually show up on the shelf!
To best understand SFD’s let’s first look at the selling process if you were to sell your product direct to a company like Whole Foods. The buyer you call on at WF is most likely responsible for a group of stores located in a specific geography. If Whole Foods accepts your item they place an order, you ship them the product to their warehouse and they in turn ship it out to the individual WF stores in that geography and they place it on the shelf where consumers hopefully go wild buying it. While this is an oversimplification to an extent, you will note that you made one sale and got the product on the shelf. Simple! Here’s a diagram that shows the selling process at a chain like Whole Foods.
The problem is that it’s often not that simple. Most grocery chains won’t accept your product as a direct item because your sales volume won’t warrant a slot in the warehouse. The best alternative if you cannot sell your product direct is to utilize the services of a Specialty Food Distributor.
Here’s how the selling works in a SFD. You first sell the SFD itself. You will need to get an appointment with the buyer at the SFD who represents the category your product falls within. The outcome of the call will generally be one of two. The buyer likes the product and will place an order, or the buyer wants you to attempt to gain acceptance at one of the key grocery retailers that use the SFD’s services before ordering the item. Either outcome will require you to next approach the key grocery chain that the SFD handles.
Your second selling effort is at the appropriate buyer within that key retailer. If the buyer at the SFD has already accepted the product, your mission on the second sales call is to attempt to have the targeted retail grocery authorize the product and begin pulling the product you sold and work onto their shelves. If the SFD buyer has conditioned his purchase on acceptance by one of his key retailers then your mission is to gain acceptance by the targeted retail grocery so you can go back to the SFD with the authorization and get the order.
Let’s be positive and assume success at the targeted key grocer. The buyer authorized your product! You now have a SFD buying your product and a key retailer has accepted and authorized the product as well. Your question may well be, how soon will my product show up on the shelf? Unfortunately there are hundreds of items that are sold to the SFD and have acceptance and authorizations at key retailers that are not on the shelf. That is why the third sale is often the most difficult and elusive.
Below is the diagram for selling your product via a Specialty Food Distributor. Note the multiple sales that are required by you or your sales force before your product actually makes it to the shelf.
In my next post, we’ll discuss the elusive third sale that must take place at the retail store level and how companies utilize brokers and the SFD personnel to work synergistically to get the product on the shelf.
For now, keep working, to the grocery shelf!