The Concerns of a Distributor
Centra Foods supplies Wholesale and Food Service Distributors with olive oil in bulk, and as a result, we get a lot of great business questions from companies in this industry.
One of the most common is from wholesale distributors, working with new accounts for olive oil. They are concerned that after they work hard to set up a new supply chain for their customer, they will eventually be cut out of the supply arrangement. They want to know that if they spend the time to coordinate the transition to bulk deliveries at the customers’ facility, and offer them a major cost savings that they will be able to keep their customer.
The common fear is that after the first shipment, the customer will research the brand name and go directly to the manufacturer for their orders from that point on. This is a legitimate concern.
How to Protect Your Company
There are a few ways you can protect your distribution company to make sure that your customer keeps coming back to you. Here are the top 3:
1. Sell Under Your Private Label Brand
Create your own brand. Design the brand name, artwork and labels for each item that you’re going to sell. This is often cheaper than you may think, especially for items that simply use a stick-on label (for example, 35 Lb. Containers). Pricing is usually around $0.12 for each 5x5” vinyl labels, when you buy a total of 6,000.
2. Utilize “Hidden Shipments”
Sometimes it is cheaper to have pallet orders sent directly from your supplier to your customer. Instead of having inventory shipped to your warehouse, and then shipped to your customer, you can cut out some cost by utilizing a “direct shipment”.
Concerned about having the order show up with your suppliers paperwork? Many suppliers will allow you to arrange the shipping (coordinate the pick up when the order is ready, supply the Bill of Lading with your company information, etc) so that everything on the order paperwork points back to your business. This works great in conjunction with a private label brand.
3. Sign a Non-Compete Agreement with your Supplier
If a supplier knows that you’re working with a particular customer, many will sign a “non-compete” agreement, showing that they value and respect your relationship and will not try to go after your customer to gain their business. To finalize this agreement, you will have to provide information about the customer that you’re working with.
Topics: Food Service
