Finding stockists & retail buyers
A retail distributor buys your product outright, holds it in their warehouse, and sells it on to shops in their territory at those shops' wholesale price. They take the credit risk, the warehousing, the picking and the collections, and in exchange they buy from you at a price well below what a shop pays.
For a small brand the question is rarely whether distributors exist in your category. It is whether the work they take off you is worth the margin they take with it, and at your size the answer is usually no for the first year and sometimes yes after that.
Where the margin goes
Work it through with a candle. Retail twenty-six dollars, shop wholesale thirteen, landed cost seven.
Sell direct to a shop and you earn six dollars a unit, and you do the selling, invoicing, chasing and shipping.
Sell through a distributor and they need their own margin to cover warehousing, their sales effort and their credit exposure. A typical arrangement puts your price to them somewhere around nine to ten dollars, and they sell on at thirteen. You earn two to three dollars a unit instead of six.
That is not a small adjustment. It is roughly half your contribution, and it only makes sense if one of three things is true: the distributor reaches shops you genuinely cannot, the volume is large enough that thin margin on many units beats thick margin on few, or your own cost of serving small accounts is so high that two dollars clean beats six dollars with an hour of work attached.
Before agreeing a distributor price, check that the number still clears your floor at the volume they actually commit to, not the volume they describe. The ladder this price sits at the bottom of is covered in tiered wholesale pricing.
What a distributor is not
Three things get called distribution and are not.
A sales agency. Reps sell on commission and never own the stock. You still invoice the shop, ship the order and carry the credit risk, and you pay a commission on what sells. That is a different arrangement with different economics, described in independent sales reps.
A wholesale marketplace. A platform that lists your products to retailers is a channel, not a distributor. You still fulfil, and the platform takes a fee on the order rather than a margin on the goods.
A dropshipper. An operation that lists your product and asks you to ship to their customer is not holding stock or taking risk, and calling it distribution does not change what it is.
The defining test is simple: does the counterparty buy the goods and own them? If yes, it is distribution, and the margin they take is the price of them taking the risk.
When it genuinely makes sense
Four situations where a distributor earns their margin for a small brand.
A market you cannot service. Selling into another country means freight, customs paperwork, local terms expectations, a currency you do not invoice in and shops that will not pay an unknown foreign supplier. A local distributor removes all of that at once, and this is the strongest case of the four.
A channel with buying structures you cannot enter. Some categories, particularly food, beverage and anything sold to pharmacies or garden centres, route almost entirely through intermediaries. Shops in those channels expect to order from a wholesaler who also supplies twenty other things they need, on one invoice, on one delivery.
Volume that would otherwise break your operation. If your candle brand suddenly needs to serve two hundred accounts, the picking, invoicing and chasing becomes a full-time job before the revenue supports hiring for it.
A specialist with real relationships. A distributor who already sells to the exact two hundred shops you want, and whose sales team carries your line into shops on a schedule, is buying you a sales force you could not afford.
When it is the wrong move
Early, mostly.
A brand with no proof of sell-through gives a distributor nothing to sell with, and a distributor who cannot sell your product will simply stop presenting it. Your stock sits in their warehouse and your brand is now absent from the market without you knowing why.
The second failure is losing the customer relationship before you understood it. Sell direct to twenty shops first and you learn which kinds of shops reorder, what sells first, what the objections are and what the display needs to be. Hand that to a distributor on day one and you learn none of it, and you have no way to judge whether they are doing well or badly.
The third is pricing yourself into a corner. Once a distributor price exists, any shop that finds out will want it, and brands that grant distributor pricing to what is really a large retailer end up with a price list nobody believes.
The broader decision about which route a growing DTC brand should take is laid out in DTC brand distribution.
How to evaluate one
Treat it as hiring rather than as selling. The questions are practical.
- Which shops do they currently supply in your category? Ask for names, then check two or three of them yourself.
- How many field reps do they have, and how often do those reps visit a shop?
- What else do they carry that is close to your product, and will yours compete with something they already sell well?
- What volume will they commit to in writing in the first year, and what happens if they miss it?
- What territory are they asking for, and is it exclusive?
- What payment terms do they expect, and what happens if they hold your stock and pay late?
- Who owns the shop relationship if the arrangement ends?
The exclusivity question is where small brands sign away the most. A distributor asking for an exclusive territory before they have sold anything is asking you to bet the market on them. If you grant one, tie it to a volume commitment and an expiry date, and state clearly that missing the volume ends the exclusivity rather than triggering a conversation about it.
Running the relationship once it starts
Three habits keep it healthy.
Ask for sell-through data, not just orders. A distributor placing a large opening order is not evidence of anything until the product has left their warehouse. Ask which shops bought, how often, and what the reorder pattern looks like.
Keep some direct accounts. A handful of shops you serve yourself keeps you connected to what the shelf actually looks like and gives you a reference point for whether the distributor is performing.
Support the sell-in. Send product knowledge sheets for their reps, samples for their showroom and photography they can use. A distributor carries hundreds of lines and puts effort into the ones that are easy to sell.
If you are trying to work out whether your category even runs through intermediaries, that is something you can check rather than guess. Paste a product link into WholesalePilot and look at the preview of the retailers and distributors that stock comparable products: a category where distributors dominate looks completely different from one where brands sell straight to shops, and the answer decides whether this is a route or a detour. What the shop at the end of that chain is thinking is covered in retail buyer.
Questions brands ask about distributors
Can I have several distributors? In different territories, yes. In the same territory, rarely, because they will compete on your price rather than on service.
Do I still need a line sheet? Yes, and a better one. The distributor's reps sell from it, and it has to work in a shop without you in the room.
Who sets the retail price? You suggest it, the distributor passes the suggestion on, and shops decide. Holding the line across an extra link in the chain is harder, which is why brands with distribution tend to write a price floor policy earlier.
What if the distributor wants to buy less often but larger? That is normal and usually good for you, as long as the terms are prepaid or short. A large order on long terms from a single counterparty is the largest credit risk a small brand can take.