Remember that cookie manufacturer we started a while ago?

Good news, business has taken off and people can’t get enough of the cookies!

We’re thinking of expanding into retail stores.

But there are a million retail stores, which we have no existing relationship with, and the transportation and storing of our cookies that we have to figure out.

Or do we?

Enter, distributors and wholesalers.

What do they do? Here are two examples.

A distributor like UNFI would buy cookies in bulk from us the manufacturer, store them in warehouses, and handle logistics to supply grocery chains like Whole Foods and Kroger, ensuring broad retail distribution without the manufacturer managing individual store relationships.

A wholesaler like Sysco would purchase cookies in bulk from the manufacturer and resell them in smaller quantities to local cafés, restaurants, and independent grocery stores, allowing businesses to stock up without needing to buy directly from the manufacturer.

Which one should we choose?

Distributor Pros:

• Partnered with national chains, which wholesalers don’t have access to.
• They store, transport, and manage inventory.
• May hep with marketing.

Cons:

• Distributors typically charge a service fee or percentage-based margin rather than just marking up the product. They may also take a cut of the retail price or negotiate pricing directly with retailers.
• They own negotiation with retailers.
• Might require an exclusivity agreement.

Wholesaler Pros:

• Since wholesalers don’t handle logistics or marketing, they take a smaller cut. They buy the product from you in bulk, and mark it up when they sell to a retailer.
• You set the wholesale price,m
• Usually don’t require exclusivity agreements allowing you to work with multiple partners.
• Specialize in selling to independent grocers, convenience stores, and specialty shops, which might not buy from big distributors.

Wholesaler Cons:

• Can’t get you into big national chains.
• No logistics support.
• No marketing assistance.

At the end of the day it depends on what we want to minimize and maximize as a business.

Do we want to scale quickly?

Are we set up to handle that growth?

What’s our ideal profit margin?

Do we want to build out the capacity to store and ship our cookies?

And a million other questions.

Thank goodness we have a rockstar supply chain team.