Part 2: Multi-Channel Brands and Distributors
To re-iterate from part 1, the thing 90% of our customers have in common is that they want to focus on sales and distribution and leave the rest to us.
Let’s talk about multi-channel brands first. Some of our customers sell their products all over the place. They have:
- Physical stores they own
- Sell on Amazon
- Sell in other company’s stores
- Sell to jobbers or direct to industry
The list goes on. These companies often have a broad variety of SKUs because each channel has its own unique needs. For example, industrial users often buy chemicals in 5-gallon pails and 55-gallon drums. If you’re selling products inside a store then you probably aren’t selling anything bigger than 5-gallon pails (even 5 gallons weigh 50 lbs for many products) and most products will be in gallons or smaller containers. Also, industrial users can be less cost-conscious depending on their space because one of the things they’re interested in is saving their employees time – so they’re not just looking at the cost of chemicals but also how quickly they enable their employees to get a job done.
Finished product waiting to be shipped:
But these customers have decided that since they have invested so much time with us designing and testing formulas they want to distribute their products wherever the dollars make sense. This contrasts against our e-commerce customers who have a smaller number of SKUs on average, and whose packaging sizes are designed to work with shipping directly to consumers. In fact, one of the things we’re seeing with increasing frequency is these customers adding new channels and form factors to their product lines to grow their sales.
It is common for these types of customers to have different product lines that are designed with specific purposes in mind. For example, one product line sells low-cost shampoos, spray waxes, and tire shine to car washes or body shops, and then another product line makes polishes and compounds – which are products that must ALWAYS compete on quality because the chemical cost is often less impactful to the end user than how well and fast the product preps/treats the surface of the vehicle or whatever it’s working on.
As for distributors – some of our multi-channel companies started out as distributors who wanted to offer their own brand either because they saw an opportunity to make more money through a private label or because they realized there was an opportunity to sell a product that worked better than what they were able to get from someone like Meguiar’s, Carbrite, or one of the other larger companies whose products tend to be less performative in certain categories.
When it comes to fulfillment, we don’t do small-scale individual package shipping except for our largest customers, however – we are happy to store and ship products that are less than truckload (LTL) and which ship on pallets. Hence, some of the distributors we work with don’t even need to have much of their own warehouse space, as long as they are selling to companies who are able to buy products that take up enough space to use a pallet – we just ship the pallet straight where it’s going and cut out a big cost and time savings.
Less than a truckload (LTL) shipment waiting for the 18-wheeler to pick it up.