Why Retailers Should Look at Distributors as Collaborators, Not Middlemen

When I first started my business back in 2015, I was ordering products from a single wholesale distributor, and directly ordering products from a handful of companies. Back when it was only me managing inventory and selecting products, I quickly learned how much knowledge I was missing — knowledge I needed in order to run an online retail business smoothly. I was over-ordering products that didn’t sell, not ordering enough of something that would fly off the shelves, and wanted to avoid drop-shipping at all costs — I wanted my shop’s packages to be custom-made with love.

Back then, I even hand-wrote thank you notes for each order. Times were different! I quickly stopped having the time for all the cute personal touches I’d had the energy for in the early days. In the first space I shipped out of, incoming packages were stolen. In the second space, incoming packages were locked away in a mailroom that I could only access via a building manager who was very hard to reach. In my third space, and the last space I personally managed, we often had to call the mail carriers to remind them we needed them to pick up our outgoing mail. A lot of energy was spent on logistics, order fulfillment, and all the mundane annoyances that come with running an online retail store that no one thinks about when they’re starting a business.

Given my skill set, I was not meant to be a warehouse manager. When I began Spectrum, I wanted to have a business I could really be proud of — but my love of sex toys, sex education and interacting with customers completely eclipsed my ability to realize how many logistical skills I lacked. Still, I refused to rely on drop-shipping; I had too many special requests and customizable aspects of my orders to ever envision someone else helping me fulfill orders.

As I began working with more wholesale distributors, and many more product brands directly, I realized that a lot of what I needed lay a mere five miles from my space in Detroit. I’d been working with a local distributor for just under a year, carting product from their warehouse to mine in my CR-V. It was convenient, yet I’d be doing this run multiple times a week, still spending my energy on logistics, not education and sex toys.

Speaking with the distributor’s team, I quickly realized that we had shared values when it comes to the pleasure products industry, and I decided to go for it. At first, it felt like I was dropping my firstborn off with a new babysitter for the first time. There was certainly a learning curve in the first few months as I worked with the distributor to have their team fulfill orders in the specific fashion we had established. It took a lot of communication and physical time at the warehouse to get everything set up, but two years later, I can’t imagine how it would be possible for me to scale up without larger systems in place for my inventory and order fulfillment.

All of this is to say, I think more small businesses would massively benefit from working with a wholesaler to create a shipping fulfillment partnership that isn’t simply “drop-shipping.” I have found it has been a very mutually beneficial partnership, and as a result, I never run out of staple products like lube or Magic Wands.

There is a fear that having a wholesaler as a go-between takes away from our margins and prevents us from getting better deals that might be available if we purchase directly from a brand. While that may be true in dollars and cents per unit, it is all made up for in the time and money I am not managing warehouse staff, or receiving a massive amount of inventory by hand, or needing to calculate inbound shipping as an additional cost. I value the time it has freed up so my team and I can do what we do best: talk about sex and sex toys!

Ultimately, every retailer is going to want something different, but I think this collaging together of practices helps small business owners avoid having to reinvent the wheel, as I did while trying to wear the hat of warehouse manager among my many other hats. It is natural to resist entrusting your customer-facing final product, the order, to someone who isn’t you or working for you directly, but there are so many ways to strike a balance where the retailer and wholesaler can support each other through a partnership like this. While I am an online-only retailer, I can only imagine how helpful this model could be for physical brick-and-mortar stores whose priority is in-person sales and who don’t have the time or staff for a full-fledged shipping operation on top of that.

Despite giving up a bit of our margin, the value of working with a wholesaler is even more instrumental to our success. When I look back at the success of the business, I know we wouldn’t have been able to achieve this without a solid distribution partner.

Why Retailers Should Look at Distributors as Collaborators, Not Middlemen by Zoë Ligon originally appeared in XBIZ

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