Modern-day grocery distribution is not quite as glamorous as Leonardo Dicaprio in the Titanic movie. Distribution is among the oldest businesses known to mankind and one that have actually stood the test of time over the years. In this post, the tips, guides, and steps mention here will help you on the path to successfully open, run, and manage your own grocery store distribution business.
1. Choose a Distribution Model
You can run your grocery store distribution business by either following any of the following two routes.
You can purchase grocery products from producers or merchants or wholesalers, then sell directly to consumers. In this way, you have become a retail distributor. Alternatively, you can become a wholesale distributor or merchant – you buy items from the manufacturers and then sell them to retailers or other distributors.
Choosing this distribution model is influenced by the kind of goals and standards you have set for your business.
2. Decide on Which Products to Sell
The next step to take is for you to decide what kind of items you will be selling. Here, you will decide between two important alternatives; you either concentrate on selling one particular product or offering a larger variety of items. Whichever product line you choose will help make your business stand out.
At this point, you should take your time to conduct thorough market research about the product you want to market. You need to know the characteristics of the product, their shelf-life period, and the right place to keep them, and so forth. Remember, your choice of a product has the potential to make or break the business, so be smart in your decision.
Here comes a great tip for you. You need to look for smaller distributors or businesses who want a distributor for their items. The truth is that these big companies already have massive clients, and they hardly mingle with these companies who naturally operate on a much smaller scale distribution. This is the niche your new grocery store distribution business should focus on.
The journey to making a profit in this business is a continuous one. Therefore, it is critical that you spend enough time to look at potential companies that could drop some money in the industry in the years ahead. Your ability to look for potential gold mines is highly admired in the distribution industry, and it will be your certificate for mega profit.
3. Look for Your Customers
It is one thing to know what you want to sell and another to identify those who will purchase them from you. At this point, your duty will be to start to identify retailers and other large-scale buyers who will be interested to purchase those products from you.
Ensure you make reference to the market research you previously conducted. You must have had a list of potential buyers and what category of items they would be interested in. Arrange these buyers in the order of the volume of products they want to buy. Remember that these buyers have already existing suppliers or their own distributors, so your initial offering supposed to be enticing.
Compromising on your profit margin is necessary as you are starting new. This will help you to gather an initial group of companies and retailers who will patronize you in the first instance. Once you capture a few retailers, you can plan on how to increase your profits.
4. Get a Warehouse Ready
The cost of a warehouse is not what you can just stand up and spend. You need to take time and think about it very well because it might be your biggest expense. Look for a warehouse that is big enough to accommodate all your stocks, but not so big that you will end up paying for a lot of empty space that you don’t use.
There are two alternatives you will go for – buying or renting a warehouse. However, all this boils down to your capital for the entire project – the amount you are willing to invest in this business. Buying a warehouse is actually the best option to follow as you won’t have to border yourself about monthly rent or getting kicked out. When you purchase a warehouse, you are completely in control in terms of security and usage.
Getting a warehouse on loan is great if you don’t have money to purchase one. Ensure that the one you are to rent will be close to your customer base in order to reduce expenses on transportation and other logistical issues characterizing the distribution business.
Are You Ready to Go?
It is a good idea to get a working website for your grocery store distribution business. Many B2B eCommerce businesses are shifting their base to the online world to benefit from the massive pool of internet users that visit the internet every second.
As a guide, you need a robust inventory management system in place. This is usually a software that keeps you updated with everything that is entering and leaving your warehouse.
A sound distribution network is vital in this business. Since you are just beginning, you can partner with a local courier company to deliver your products on your behalf for a small fee. When your economy improves, you can buy your own delivery trucks.