by Steve King, President, Pet Industry Distributors Association
Published in Pet Age magazine
Most pet retailers would say that their customer relationships are the most important to the success of their businesses. Others might feel that the relationship they have with employees is essential to a well-run retail operation. But a third relationship—with their wholesaler distributors—is as important as any others in contributing to business success.
If you view your distributors as a necessary evil, perhaps it’s time to take a closer look at how they can serve you better. Consider these five elements of your distributor relationships as essential building blocks in making your store the consumer’s choice for pet supplies in your area.
Automate Your Order Entry
Nothing is more frustrating than receiving your distributor’s delivery and finding products that you didn’t order and not finding products that you did order. Yet if you are still placing orders by phone or fax, the odds are pretty good that you have more than your share of inaccurate shipments. The reason is simple; manual ordering invites keystroke and out-of-stock errors.
Electronic ordering streamlines the process and virtually eliminates errors. You can know immediately if an item is out of stock, and the distributor can suggest substitute items that keep your shelves from being empty. It also allows the distributor to pick and pack your order with less lead time, getting products on your shelves more quickly. And because you receive an order acknowledgement right away, those nasty surprises when your shipment arrives are eliminated.
Order entry doesn’t necessarily mean you have to invest in expensive equipment or software. Many salespeople carry scanners with a wireless link to the distributor’s inventory management system that allows them to build an order with you while in your store. Other distributors can supply you with a scanner to use at your convenience or offer a web store where you can place orders 24/7.
Keep Your Inventory Fresh
Nothing says “Going Out of Business” more than a store filled with dusty, outdated merchandise, torn bags and empty pegs. Keeping your inventory fresh is essential in today’s competitive retail environment. The more your inventory turns, the more profit you’ll see. And with interest rates on the rise, the carrying cost of slow moving or dead stock will only be more of a drag on your bottom line.
Your distributors are happy to help you manage your sets and get your inventory moving. Work with them to identify slow sellers that need to be discounted or discarded. Ask your distributors about take back policies that protect you from items that don’t do well in your store. Let their sales people advise you on the latest fashion, color or design trends that are driving sales.
Communicate, Communicate, Communicate
Open and frequent communication with your distributor reps will alert you to suppliers’ promotional offers, training opportunities and other special events outside of the typical reorder cycle. Be open to new ideas and trying new products and programs that your distributor partners might offer. Distributors will bring you ideas that have already proven successful elsewhere, helping you capture the upside of trending items while neutralizing the risk.
Communication with your distributor partners can also avoid problems when promotions outstrip the ability of suppliers to keep up with demand. Distributor buyers often have better information than manufacturer reps in the field on inventory levels of products on special. Check with your distributors before committing to promotions on items that you may not be able to get in adequate quantities to satisfy demand, leading to angry customers.
Look for Win-Win Solutions
Certain commodity items—think cat litter or pig ears—are low margin, high volume sellers for distributors. If you constantly switch suppliers to save a penny on commodity items, your distributors will view you as a customer who buys only on price and who may not be worth the other value added services that they provide.
A better strategy is to work with your distributors to bundle commodities with other products that have a higher margin for them. For example, if you agree to stock a product that is exclusive to a distributor in exchange for a discounted price on commodity items they carry, the blended margin is higher, as is the total sale. You get the price point you need to compete on commodity items in your marketplace, and the distributor sees higher sales without sacrificing margin—a classic win-win.
Be Important to Someone
The distribution landscape is highly competitive, even with all the consolidation that the pet industry has experienced in recent years. Odds are you have several good, full line distributors serving your market. If you only order a distributor’s specials or spread your orders out among your suppliers evenly, your value as a customer to any one of your suppliers is going to be limited.
Picking one distributor to service all your needs is not practical as no single distributor can carry all the brands or even all the SKUs of a given brand. But by allowing a distributor to earn a significant portion of the overall volume of your business will serve you well in the long run. You are much more likely to have the support of higher management when you need a special delivery or want to place a late order if you have shown your loyalty to that distributor.
There are lots of reasons to cultivate healthy relationships with your distributor partners. Focus on these five, and you will see your sales and your profitability soar!
Steve King is a 35 year veteran of the pet industry. He is currently president of the Pet Industry Distributors Association and executive director of the Pet Care Trust.
Steve King is president of the Pet Industry Distributors Association, which represents wholesaler-distributors of pet products and the manufacturers that go to market through this channel.