When you're a young brand launching/expanding in offline retail, it is always preferred to choose retail first (vs chasing wholesale). Why?
First, some definitions.
Wholesale: Stores that buy your product in bulk at a high discount (50-70%) and resell to retailers.
Retail: Stores that buy your product in limited quantities and serve end consumers, often at significantly lower margins than wholesale (25-30%).
1) Brand Control: Retail distribution allows FMCG companies to have more control over their brand's presentation on store shelves. They can ensure that their products are displayed prominently and in line with brand image and marketing strategies.
2) Customer Interaction: Retail distribution allows for direct interaction with end customers. Helps build insights into consumer preferences, buying behavior, and trends, which can be used to tailor products and marketing efforts more effectively.
3) Pricing Control: FMCG companies can have better control over pricing in retail distribution. They can set the price at which their products are sold to consumers, which can be critical for maintaining price consistency and brand image.
4) Product Innovation: Retail distribution allows FMCG companies to quickly introduce new products or variations based on consumer feedback and market demand. Agility is good for young brands.
5) Brand Building: Retail distribution can be an essential component of building and strengthening a brand's presence. It allows companies to showcase their entire product range and build brand loyalty among consumers.
6) Marketing and Promotion: FMCG companies can implement marketing and promotional strategies directly at the point of sale in retail distribution. This includes in-store displays, promotions, discounts, and product demonstrations.
7) Consumer Data: Retail distribution channels provide access to valuable consumer data, which can be used for targeted marketing campaigns, product development, and demand forecasting.
8) Seasonal and Regional Variations: FMCG products often have seasonality and regional variations in demand. Retail distribution can help companies tailor their product assortment and stocking levels based on local and seasonal preferences.
9) Product Freshness: For perishable FMCG goods like food items, retail distribution allows companies to ensure product freshness and quality control directly to the end consumer.
10) Bargaining Power: A store's contribution to your business dictates his bargaining power. Even if you get it right, versus retail, an average wholesaler contributes more (in percentage sales) and hence holds much higher bargaining power.
However, it's important to note that retail distribution also comes with challenges, such as the need for a strong sales and distribution network, higher operational costs, and competition for shelf space.
ofScale enables challenger brands to reach offline retail stores without the need of a large sales & distribution network, cost, or complexities.