| Article also includes: | | | | store. Graingers and Fastenall are examples of |
| -Description of various organizations typically found in | | | | industrial distributors that sell a wide range of products |
| an inventor's distribution channel. | | | | to companies. You also have specialized industrial |
| -Explanation of how to find a distribution channel for | | | | distributors. Some examples would be a pump and |
| your product. | | | | compressor distributors, a distributor that sell products |
| Many inventors have small novelty products where | | | | for high temperature furnaces, or a company that |
| they want their products sold to convenience stores. | | | | supplies safety equipment. These companies typically |
| This has been a difficult market for inventors because | | | | have a high level of technical support to help chose the |
| the distributors are typically rack jobbers who actually | | | | right products and then get the products to work |
| own the merchandise and buy at 40 to 45 percent of | | | | effectively for them. |
| retail. The distributors can be hard to find as they don't | | | | Trade distributors: These are distributors that deal with |
| have a Standard Industrial Classification (SIC) | | | | tradesmen versus industrial or consumer oriented |
| dedicated to them, and most operate on the office | | | | accounts. Plumbing distributors, wood products |
| supplies distributor SIC code. | | | | distributors that sell to contractors, auto parts |
| Recently on a project though, I can across a great | | | | distributors that serve car repair shops are just a few |
| source, Mr. Checkout. According to the website | | | | of the types of distributors that sell to various trades. |
| description "Mr. Checkout is a national organization of | | | | Wholesalers: Wholesalers are also a distribution point |
| (DSD) Direct Store Delivery Wagon-Jobbers, | | | | between manufactures and their customers. While |
| Distributors, Retail Merchandisers and | | | | distributors provide promotion and service, wholesalers |
| Wholesale-to-Distributor Warehouses servicing | | | | typically don't. They also rarely carry products from |
| Convenience and Grocery Stores in the US since | | | | inventors as they purchase very large stocks of |
| 1989. Our DSD / Full-Service Merchandising Distributor | | | | products and serve markets like grocery stores. Like |
| Members call on c-stores weekly." The site has a | | | | distributors they take ownership of the product, but |
| large of services including a Walgreens merchandising | | | | typically only mark the product up 15 to 20 percent. |
| program and a product placement blitz service. | | | | Rack jobbers: Rack jobbers are a specialty type of |
| Everyone should check this site out if you have a | | | | distribution. Most distributors take title to the product |
| product for drug stores, convenience stores or | | | | and then sell it to a store or industrial company that |
| grocery stores. I can't vouch for the association but I | | | | takes title. Rack jobbers instead rent portions of a |
| did find the site had a great deal of helpful information. | | | | store, which might just be a section of a rack, or |
| Over the years I have found that inventors are | | | | endcap positions at the end of the store aisles by the |
| unfamiliar with distribution, which is the channel that a | | | | cash registers. Durable hair care products (brushes, |
| product follows to take to market. Often products are | | | | combs and other product related hair care products) |
| handled by your own direct sales efforts, reps (also | | | | at drug stores are a typical rack jobber item. The rack |
| called manufacturers' sales agents), brokers, specialty | | | | jobber owns the merchandise in the store, replaces it |
| distributors, wholesale distributors, other manufactures | | | | and is only paid for the merchandise when it is sold by |
| with complementary lines, and rack jobbers all who | | | | the store. Typically rack jobbers raise their purchase |
| may play a role in selling a product. The path your | | | | price 50 to 75 percent and then the stores mark the |
| product follows to market is called a distribution | | | | product up an additional 50 percent. |
| channel. For example you may sell a product through a | | | | Selling through other manufacturers: One of the |
| rep to a rack jobber distributor who sells to | | | | reasons companies use reps is that they don't have |
| convenience stores who then sells to the consumer. | | | | enough sales volume on their own to justify a direct |
| Description of terms often used when discussing in the | | | | salesperson. Those companies are often willing to |
| distribution channel: | | | | pickup a line from another company if it puts them in a |
| Direct sales: Indicates that sales are handled by the | | | | position to have their own direct sales force. |
| selling company's own sales force. | | | | How to find agents and distributors. |
| Reps (manufacturers' sales agents): Independent | | | | Step 1: Start by looking for trade associations, trade |
| contractors that promote a Company's line, but have | | | | magazines and trade shows. You can find |
| very limited authority to commit a company to any but | | | | associations and trade magazines with Google |
| its standard sales terms. In effect a salesperson that | | | | searches if you are lucky, or by going to one of your |
| represents a variety of companies with non competing | | | | larger libraries, where you can look for The |
| product lines. They typically call on a specific industry, | | | | Encyclopedia of Associations by Gale Research, and |
| and carry product lines where the sales volume isn't | | | | also Gale Research's Directory of Magazines and |
| large enough to justify a direct salesperson. Reps don't | | | | Broadcast Media. Both of these directories have a |
| take title on a product and work commonly on a 5 | | | | wide range of groups for even thee smallest trade |
| percent to 20 percent commission. | | | | associations and trade magazines. |
| Brokers: Brokers are similar in some respects to a rep, | | | | Once you find a list of associations and trade |
| they are independent from the companies they serve | | | | magazines you should go to their site and look for a list |
| and receive a commission but they are more oriented | | | | of manufacturers' representatives or distributors. For |
| towards the buyer than the seller. A rep will not carry | | | | example I went to look for products for the baby |
| competing lines and will have a wide range of | | | | industry in Gale's Encyclopedia of Associations. I found |
| products. A broker has a narrow range of products | | | | the association Juvenile Products Manufacturers |
| and many of them compete. An insurance broker, for | | | | Association. When I went to the web site, jpma.org, I |
| example, carries lines of insurance from many | | | | found they had a list of manufacturers sales agents. |
| companies, and will chose the company that is best | | | | Often the web sites will also have a list of distributors, |
| for his customer. An insurance agent carries only one | | | | similar to the Mr. Checkout web site. |
| company's products, and tries to steer everyone to | | | | Step 2: Develop a list of manufacturers in the industry. |
| buy those products. A clock broker, for example, might | | | | You can find lists of manufacturers in the trade |
| have three stores as customers, and have access to | | | | association and the trade magazines web sites. Trade |
| many lines of clocks. He would then offer clock lines to | | | | magazines will also have a list of trade shows. If you |
| his customers so they would have a constantly | | | | go to the web sites for those trade shows you can |
| changing variety of clocks. Reps are far more | | | | usually get a list of exhibitors. You can make the list |
| common than brokers. | | | | more complete by using your library again. Most bigger |
| Private label: This is a practice where a company | | | | libraries have a service called Reference USA in their |
| makes a product that it sells to another company that | | | | online services. You can also use the service at home |
| markets the product under their brand name. For | | | | once you have the library password. Go to the site |
| example, a toy company might make a toy that is sold | | | | before going to the library to see what information you |
| under the Toys R Us label. Or it might make a toy that | | | | will need. Then look up the SIC codes for a few |
| is sold to Play School and then Play School would sell | | | | companies on the site. SIC stands for Standard |
| it under its label. Private labels sellers own the rights to | | | | Industrial Codes, and typically most companies in the |
| the product and develop and produce the product to | | | | industry will have the same code. Once you have the |
| their specifications. Toys R Us might also create a | | | | SIC Codes you can do a search based on SIC codes |
| develop toys that they have produced by a | | | | and get a list of many of the companies in the industry. |
| manufacturer. That manufacturer would be a contract | | | | Step 3: Go the web sites of companies in the |
| manufacturer, rather than a private label manufacturer, | | | | industries. Some of the companies will list distributors, |
| because it didn't create the product and it doesn't own | | | | and others will list manufactures representatives. Other |
| rights to the product. | | | | companies will be looking for representatives or |
| Specialty retail distributors: Distributors serving small | | | | distributors. Often it pays off to call those companies |
| markets, for example baby stores or bike shops. | | | | and see if they would like to partner with you in |
| These distributors take title to the product and | | | | marketing your products. This is a tactic to consider |
| promote the product and typically carry many | | | | because often manufacturers reps and distributors |
| products from one product inventor oriented | | | | don't want to carry a line that is too small. You and |
| companies. They are a key component in most | | | | your partner company might have enough volume |
| inventor companies' distribution plans. They typical | | | | together to entice distributors or manufacturing reps to |
| mark up (raise their price by) is 35 to 40 percent | | | | carry your product. |
| before selling to retailers. | | | | You can also find representatives at the |
| Industrial distributors: These companies typically sell | | | | manaonline.org, which is the site of the manufacturers' |
| directly to industrial companies, versus selling to a retail | | | | agents' national association web site. |