Content Type, Marketing & Sales | April 20, 2017
Launching and marketing a new product is an exciting adventure for the entrepreneur who is working on such a project. While it may be stimulating, this adventure can also be demanding and wide-ranging. There are a lot of challenges to overcome before an entrepreneur can picture their product on the shelves of retailers. For a number of entrepreneurs, product distribution has proven to be a real puzzle. We interviewed Enzymes’ founders, Pascale Hancock and Jocelyn Bondu along with GUSTA’s, Sylvain Karpinski, to give entrepreneurs some key advice on the topic.
The history of both Enzymes and GUSTA started with the development of a distinctive, high-quality product. As consumers become increasingly concerned about their health, they are placing more importance on the quality of the foods they buy. To address this need, Enzymes developed a brand new line of cold-pressed juices that help the consumer adopt a healthier lifestyle. GUSTA responded to this same need by developing a line of vegan deli meats and cheeses that make even the most skeptical carnivores salivate.
To distribute your product, every entrepreneur must be able to convince retailers of its competitive value and in particular, that the clientele likes it too. Although the retailer is responsible for ensuring the product’s sale to the final consumer, the product must be minimally known to the clientele before it can earn a place on the shelf. GUSTA thus opted to do a marketing campaign prior to launching its products. This campaign created a high demand for its vegan deli meats and cheeses before they were even available for sale. Merchants noticed the public’s growing demand for the company’s products and quickly indicated their intention to buy from GUSTA.
“All of our first clients, they contacted us. We did a marketing campaign before the launch. As soon as we were ready, several grocers wanted to have our products,” Sylvain shared.
An entrepreneur launching a new product has two clients to think about: the retailer who buys and resells their products and the final consumer. While the retailer is the direct client―in other words, the one who pays the bill―maintaining a relationship with the final consumer is essential. Retailers buy from the company at the wants and needs of the final consumer.
Simply having a good product is not enough to earn a place on retailers’ shelves. Jocelyn and Pascale from Enzymes had a good understanding of this reality. They made their products known by providing outstanding service to their retail clients. They were able to do so because they were, from the outset, the principal managers of their entire distribution. Participating in each step of their products’ distribution, they frequently visited their clients’ commercial spaces where they restocked the merchandise, rearranged displays, did demonstrations for consumers and developed an excellent relationship with customers.
“If we signed an agreement, it’s because of the service we provided. We built our clientele on that. We never let our retailers down,” Pascale explained. “We’ll never lose a client over losses. We make accommodations, we’ll change the merchandise and go do demonstrations. I think that it’s the relationship we have with them that makes the difference.” For example, the pair made the deliveries themselves at first. They had every kind of juice in their truck, went into the store, restocked the shelves and made the bill. The retailer didn’t have to do a thing. “We gave a lot because we wanted to break into the market,” Jocelyn said. “We really spoiled our clients.”
This close relationship with the client allowed the pair to promote Enzymes’ products as well as to more frequently replenish client’s stock with the most popular products. For example, Enzymes’ best seller is its Immunity juice. Frequent restocking of this very popular product means the client will never run out of it. This translates into better service for the client and has a positive effect on the total volume of sales. Pascale and Jocelyn are categorical when they say that this frequent stock replenishment made all the difference for Enzymes.
Pascale and Jocelyn from Enzymes and Sylvain from GUSTA all agree that you must think about distributors from the very beginning. Any company that wants to distribute its products should start out by including the cost of a distributor in its cost price, whether or not a distributor is involved. This practice will help you avoid an eventual increase in your sale price, once a distributor must finally be included in the process. To set a price that truly takes distribution into account, our three insiders consider a 20% to 30% increase in cost price to be sufficient.
“Sooner or later, for any product, the goal is to have it distributed and for that to happen, you need a distributor,” Pascale explained. “If your price starts out too low and you have to raise it later to cover distribution costs, you may lose points of sale as a result.”
“You really have to take distribution costs into account right from the start, otherwise you’re sunk,” shared Sylvain.
It may be tempting to rely only on your own ways to distribute your product, especially during the start-up phase. Distribution through a distributor is a step that follows the company’s launch, but our three entrepreneur’s insist on the importance of good planning in this area. You must understand that managing your own product distribution is only a temporary and relatively brief phase in the history of a product’s distribution. The key phase in a product’s distribution is the entrance of a distributor who will help the product truly take its share of the market.
Every point of sale serves a separate clientele with its own needs and buying behaviours. Pascale and Jocelyn from Enzymes quickly grasped the importance of diversifying their points of sale so that retailers’ slumps would not have an impact on their company. “Every point of sale has its highs and lows. That doesn’t mean that some points of sale are better than others, just that each one has its own cycle,” Jocelyn said.
There came a time when Pascale and Jocelyn had to find new points of sale and they were surprised by the level of sales made by these new clients. Although their products had initially been intended for natural food stores, they noted that cafés sold their products amazingly well. So they developed completely new avenues for the distribution of their cold-pressed juices.
GUSTA’s Sylvain Karpinski is also developing new distribution channels, a process that will require him to modify the formats, packaging and processing of his products. GUSTA will henceforth focus on the food service sector. “The products are sold in greater quantities and there is no packaging required. The wrapping is much simpler. Sausages are sold in 3-kg packs and the cheeses in 4-kg packs. You could quickly reach a very advantageous volume.”
Modifying the products’ wrapping will be relatively easy for GUSTA. However, restaurant owners also require that certain products be processed. Some, for example, want pre-grated cheese. To respond to this demand and get new orders, GUSTA will have to buy new equipment or partner with another company to ensure the processing of its product.
GUSTA currently has 200 points of sale in Quebec and 50 in Ontario. It distributes in health food stores, greengrocers and more and more, in traditional grocery stores. The food service industry is a brand new market for GUSTA’s vegan deli meats and cheeses.
Enzymes and GUSTA have excellent products. Their quality and distinctive character are undeniable. That said, in the world of distribution, each new point of sale is a hard-won little victory. “We leave several samples. We don’t necessarily have follow-up and people don’t always answer our calls or emails. That’s the hardest part. Sometimes, it takes as many as seven attempts to get a response. There’s a fine line between being tenacious and becoming an annoyance,” Pascale shared.
Whether the scale is large or small, the challenge of distribution remains the same: to be convincing! The entrepreneur hoping to distribute his product must convince both the independent retailer and the buyer for a big chain. Although these two have very different realities, their ultimate goal is the same: to achieve the highest volume of sales possible.
Contrary to what one might think, big chains are not the greediest in terms of margins. Instead, the big chains are the most forgiving with respect to new products trying to break into the market. That said, distribution in partnership with these big players requires compliance with longer and stricter procedures. Thus no distribution method can be said to be perfect.
It’s always the same routine to get a new client: talk about and demonstrate your product, showcase its advantages and prove to the retailer that the final consumer wants to buy it. A routine that appears simple can become demanding over time. That said, pride definitely takes precedence over all the rest when the entrepreneur sees his product on retailers’ shelves.
Written By: Jean-Philippe L’Écuyer, Entrepreneur in Residence, Futurpreneur Canada, email@example.com