FINDING YOUR DISTRIBUTION CHANNELS
Think Big--Your Product Can Have Several Means of Wholesale Distribution
By James F. Riordan
PART FOUR
When distributing your product through wholesale channels, keep in mind that there are several forms of wholesale distribution. They are:
1. Full Line Distributors--These firms purchase many different products, from many different companies, and provide retail stores with a complete package. Most often, they have large warehouses, which allows them to purchase in huge volume, then break down the cases or master packs and sell individual product in small quantities to the retail stores at a substantial mark-up (usually 30 to 40 percent).2. General Line Distributors--These companies usually carry most of the products that would be carried in a particular type of retail outlet. A good example is the auto parts wholesale warehouse, which sells all types of auto parts to individual auto parts retail stores. The wholesaler generally buys large volumes of fuel pumps, and then sells the pumps to the individual stores, one or two at a time, at a markup of around 10 to 20 percent.
3. Specialty Distributors--These distributors usually specialize in only one type of product, and sell to individual stores and specialty departments in chain stores. A good example is the company that sells only fishing lures to sporting goods stores and sports departments of Wal-Mart type stores.
4. Jobbers--These companies usually specialize in food and sundrie items, and part of their service is setting up displays and racks for "rack sales" in convenience stores, drug stores, grocery stores, etc. These distributors usually carry only well-known brands, and sometimes act as brokers or reps, as well as maintaining a warehouse.
The type of distribution you choose for your product will depend on the channels of distribution you plan to service, the room for markup in your pricing structure, and the types of stores that are available to sell your product in a given area. The ideal product will be one that can be sold through ANY AND ALL of the different types of wholesale distributors listed above.
The above article was taken from James F. Riordan's classic book, HOW TO EVALUATE THE POTENTIAL FOR SUCCESS OF A NEW PRODUCT OR TECHNOLOGY. Riordan's highly-acclaimed, 36-point system is a valuable tool for inventors, product evaluators or anyone interested in the invention process. Each section is followed by a comprehensive questionnaire that can be used to evaluate your product.
The highly-recommended book can be ordered through the Dream Merchant, 2309 Torrance Blvd., Suite 104, Torrance, CA 90501. The phone number is (310) 328-1925.
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