Matchmaking distribution with best profit potential
Staff Staff -- Casual Living, September 1, 2009
To sell or not to sell? That is the question. At this time of the year, which marks the beginning of a new marketing season, one of the main issues facing the sales representative is: Who is going to be carrying my product? This year more than most, the answer to that question is vitally important.
With the negative economic fallout still continuing, the selection of credit-worthy dealers is becoming smaller and smaller. In years past when business was robust, we all could pick and choose more broadly.
The issue of territory distribution is one of the few issues that can actually cause some tension between the independent sales professional and his dealer base. A lot of dealers are very concerned with who you are going to sell for the coming season and are opinionated about your answer.
Although I have rarely seen a dealer clear it with a sales rep to floor a competitive line, some dealers are very strong in recommendations to us. It seems to focus on outlets that are more aggressive in their pricing strategy and promotion. Some dealers assume that if their competitor is selling products at lower prices, they must be buying from you and at a much bigger discount. In reality, the answer most often is that some dealers are able to run their businesses at lower margins and do so profitably.
Over the years, some dealers will request to have items as exclusives in their trading area. Sometimes this means a whole collection and in other instances it means a color and fabric combination. This is extremely difficult, if not impossible, if your manufacturer catalogs all of their products, and only slightly less difficult if your factory offers an assortment that is not cataloged. I have always thought that if a dealer wants an exclusive product at the expense of more distribution then they should be charged a premium for the privilege.
The main concern I have is: If a dealer needs an exclusive product because they need a higher margin then the sales of that product may be inhibited due to the retail price. At the end of the day, the consumer decides what an acceptable margin is.
Professional sales reps take their territories' distribution very seriously. We spend a lot of time analyzing the potential volume in our territories and how best to go after that volume. Each manufacturer has many collections in their line and it is important that all of them get the proper exposure. Not all of these collections represent the volume potential that some of the other ones do, but it is our job to maximize that potential. We are trusted by our factories with making sure the consumer has easy access to the lines we represent.
Going forward, a lot of these issues can go away. The sales representative and the dealer need to sit down and work together for the good of both parties. We must understand what it means to truly be a dealer of XYZ outdoor furniture company and not just cherry-pick the line to put the name in an advertisement.
There needs to be a commitment from both sides to a menu of expected behavior. If we all work together to maximize our profit potential, then the need for a broader-based distribution strategy will not be an issue each and every market.