I have a plan for marketing my new product retail, but I’d like to go to big buyers—wholesale purchasers. How do I do that?
Answer: Channel marketing is tough. I learned the hard way from years working with big box office stores and computer stores. I don’t know your market but in my market each of the major retail chains had a preferred distributor and wouldn’t buy from anybody else. It was very hard to get a new product accepted, and even harder to get a new product from a new company.
I worked with a sales representative company that already had relationships with the chains and the distributors, and charged me a percent of revenue, and it was still tough. Don’t walk into it without knowing how it works in your specific industry and segment, because they are different. Do a good web search to see who might talk to you about it before you leap. If you can’t find anybody else, talk to a blogger or journalist who covers your industry.
And it’s very important to understand the margins through the channels. Margins tend to standardize by industry, not because of any rules, but just common practices. And for most industries you’ll have to sell to a distributor at about 60% of suggested retail price, and your actual revenue will be more like 40% because distributors and retail chains will insist on taking additional percentages for administration and marketing.
Published: December 17, 2013