Building Distribution Density

Coming out of the pandemic, most brands looked for new distribution as the cure for slowing e-comm results. Investors were (and still are) asking for a balanced omnichannel approach that prioritized a shift to retail and an eye toward profitability. The issue is that not all distribution is the same and what we have now is a cohort of brands that have a smattering of disconnected distribution instead of a focused approach built around density.

It feels good to see that map fill up with distribution points, to let everyone know you just opened a new retailer or region, and to show new door growth to investors. But, when your distribution is spread thin, so is your strategy.

We hear the term points of distribution when talking about unlocking a new potential distribution center, but even the threshold for that might be ~30 doors, which is not truly distribution density in an area.

Distribution density is about truly building your brand presence in a certain region, it’s having a mix of independents, small chains, and majors carrying the product so that you can dedicate all your attention to driving velocity and building awareness in a region.

What I see when working closely with brands, is that their distribution map is quite spread out. They don’t have clusters of availability, instead, they have a collection of disjointed dots. That spread-out approach then leads to a very thin trade spend strategy because you're trying to hit a wide landscape of accounts somewhat versus a tight grouping of accounts consistently.

Not to mention that most emerging brands have zero store-level data so they are flying blind on where their product is actually being carried. We will touch on this in a bit.

I want to take a quick pause here to outline that if you’re a well-funded brand and have the team to support a national launch with a major retailer, this doesn’t apply as strongly to you.

Launching with a Walmart or Target nationwide and growing that retailer's velocity is a much easier task than being spread out across 1,000+ different stores nationwide with multiple methods of distribution.

If you're one of these unicorn brands you are going to cannibalize the market one major retailer at a time until you have hit your target ACV% and you’re going to support those retailer partners with a well-funded trade strategy.

These brands have the funding, team, product-market fit, and audience to not have to focus just on regional density, they are trying to get to national density as fast as possible.

If you’re not in that bucket, which is most of you, then let’s outline some ways we can focus more on distribution density and less on saying yes to anyone who wants to bring in your product.

Take ownership of your distribution partners.

Are you signing up for every new distribution platform that approaches you? If so, you might have a density problem (There is a Jeff Foxworthy-style joke there somewhere).

Distribution marketplace platforms like Mable, Faire, or Tundra are amazing platforms, but they also empower buyers to pull your product at any time no matter where their stores are located. Those retailers might be great future partners, but having 1-2 stores in a market isn’t going to do anything long-term for your brand.

These platforms are awesome for brands that need to fill in some gaps for their distribution and want to service independent and natural accounts, but they can also lead to your brand being too spread out.

I know Mable enables brands to shut off certain regions which is a great feature. These platforms are a huge unlock for brands, but the last thing you want is to be surprised when you see your product on the shelf at an account and wonder how it got there.

Local DSDs are a great way to maximize your distribution density. They often serve a very concentrated area and they have strong relationships with the local stores. Finding DSDs that are going to scale with you and be able to remain a partner even once you're in the larger national distributors is key.

Distributors like Rainforest do an amazing job helping brands scale in the regions they cover while also understanding that if the brand succeeds they will eventually incorporate a larger national partner.

If you started out with one of the majors such as KeHE or UNFI, that is perfectly fine and you're already set for future success.

You just want to make sure that you are the one guiding where your product should be placed. Being activated into a new DC is exciting and a rush for the team, but if you don’t actually have enough points of distribution, not only to activate that market but to take it over, you should most likely continue to get commitments and aim to activate the DC when you have a larger footprint.

New distribution should be an event

Next week’s issue is going to be all about building velocity ahead of distribution and the brands that do an amazing job of this, but I did want to drop this nugget into this week’s issue as well.

When your brand gets into a new region, it shouldn’t be because a random grouping of stores is ordering some product, it should be calculated, there should be months of planning ahead of time, and you should be involving your customers during the entire process.

When new distribution, regions, and retailers are seen as an event and not just adding doors. You get results like Nectar Seltzer which draws thousands of people when they become available in a new region.

@nectarseltzer

2 years ago we were building Nectar out of my garage....now we have an army in Texas 🤠🤘ty for changing my life. i love yall forever 💙 #dri... See more

More to come on this topic next week, but you can see from this short clip that this brand was eyeing Texas distribution for months if not longer, they kept their customers in the loop as they waited for the right partners, and they showed up and showed out when the product hit the shelf.

This wasn’t just one retailer, this was multiple retailers in a region, this was about opening a region, not an account, and that was felt by everyone.

Build around the anchor.

The anchor is the key. Anchors refer to larger accounts that can usually activate a DC for you. These could be any chain with 10+ stores that move serious volume. The key is to snag an anchor and build from the anchor out.

It’s difficult to have a stranglehold in a region if you aren’t available in one of the predominant chains.

You're going to drive volume from the anchor and trial from the independents, they are going to work in unison as your build out the region, but the anchor is the first step.

You also don’t need to be available in a distributor before approaching an anchor. If you are in the early stages and struggling to find distribution, I would focus on getting interest from an anchor first, having them introduce you to their preferred distribution partner, and then leveraging that partner to open up more stores in the area.

Way too many brands wait for distribution to be in place and then approach the stores, that is backward. Focus on the store, distribution will follow, and then the store will gladly wait for you to get set up if you're communicating clearly with them

Boots on the ground.

Distribution density leads to increased velocity. Merchandising, sampling, store visits — these things all become simpler with density.

If you try to deploy a field team, as an emerging brand, with scattered distribution, it’s going to be difficult to maximize that ROI. You are going to be reliant on third-party providers and you won’t have a clear pulse on how the market is reacting to your product.

You need to be in the stores when you launch in a new region, talking to customers, moving the product, securing multiple facings, and ensuring success.

Whether that’s you or a part-time hire, it gets easier if your accounts are clustered together.

All of this increased output will lead to increased same-store sales and a playbook you can take into other regions.

I would love it if density became synonymous with retail strategy, but unfortunately, the allure of new doors is sometimes too strong.

My view is that unless your brand is a clear unicorn, and you can build a national footprint quickly and through major retailers, that brands that can build distribution density have a clearer path to success than those that don’t.

I hope this issue helps you on your distribution journey and I look forward to next week’s topic; building velocity ahead of distribution.