In the March issue we discussed the key issues affecting the vendor-distributor relationship. Sales brokers play a very important role in this relationship. They are usually the ones who “sell in” new products and cultivate the relationships with foodservice end-users. Given their unique perspective, it’s worth asking: How do sales brokers perceive the current state of foodservice distribution?
The truth is, many sales brokers believe the service levels of distributors have diminished in the recent past. Consider the roles distributors have traditionally served in the past:
- Sales: Through the Distributor Sales Representative (DSR), the distributor has acted as an extension of the manufacturer.
- Delivery: The distributor has delivered the product that the manufacturer’s sales force has sold.
- Value Added Services: The distributor has introduced new products, developed merchandising and recipes, provided menu consulting, built traffic, increased check amounts, and assisted with market research.
These days, however, as distributors have added more products and brands, it has become increasingly difficult for DSRs to understand the Unique Selling Propositions and “sell in” each supplier’s products. As a result, distributors have become merely order takers, leaving the sales burden to fall on the sales brokers and manufacturers themselves. In the words of one DSR, “We’ve got so much to worry about, and so little time.”1
In addition, DSRs rarely introduce new products, but rather wait until the “new” products have been advertised and “sold in” by manufacturers and sales brokers. It seems that the only way for a distributor to “sell in” or gain incremental sales volume is to offer temporary price reductions (TPRs) or cash spiffs.
Most industry representatives agree that distributors continue to perform delivery functions. However, the service levels for drayage have also decreased. Because most large distributors have a need to conduct activities which shelter additional income (food shows, manufacturer’s charge backs, rebates, sales spiffs, incentive trips, and branch shows, for instance), some sales brokers believe that distributors are not focused on providing superior logistics services.
Finally, distributors today may be unwilling or simply unable to provide unique value-added services because of the sameness of information they receive from logistics providers. The “customized” materials a distributor receives from a given supplier—the training videos, factory tours, ride widths, spec sheets, and marketing materials–are typically the same materials every other distributor has received. The lack of differentiation makes it difficult for the distributor to provide unique value.
What services can distributors begin to offer manufacturers that will truly add value? Ray Thomas, Sales Manager of Morton & Associates, a leading Pacific Northwest sales broker, wants to see more collaboration from distributors for the significant trade dollars manufacturers spend on distributor programs. Distributors could offer preferential placement in their catalogs, feature a “monthly special” without a mandatory sales spiff paid for by the manufacturer, create flyer ads, or offer a new product more attention during sales calls to end-user customers.
“I’d also like to see more from them in terms of suggesting better logistics,” says Thomas. Distributors could suggest unique or innovative means of gaining efficiencies and driving out costs in the supply chain. Distributors are logistics experts, and they should continually seek ways to optimize delivery systems.
U.S. foodservice distributors benchmark productivity and profitability, often at the expense of customer service to the vendors they represent. Distributors would add more value by measuring and increasing performance, particularly vis-á-vis the trade dollars spent by their suppliers.
–Peter M. Guyer
Peter M. Guyer is the Founder and President of ATHENA MARKETING INTERNATIONAL (athenaintl.com), an international marketing, consulting and business development firm serving food and beverage manufacturers. Tel. (206) 749-9255.
1 Technomics, Inc.