Saving Big on Your Convenience Store Distribution
Are you a convenience store distributor and want to save on distribution costs with the right product mix for your clients? Several times both manufacturers and distributors make the mistake of believing that a good product will sell by itself and does not require customer education. They fail to accept the fact retailers would rather have products with proven sales record on their shelves instead of new goods which are yet to make a mark for themselves in the market. Though a few convenience store chains claim that they are saving consumer thousands of dollars by buying directly from manufacturers and eliminating wholesalers it is not so. Few consumers realize that wholesale distributors and retailers complement each other and can deliver goods to them when required in a convenient manner.
Advantages of a wholesale distributor
Modest quantity purchase – If you buy directly from manufacturer you have the added responsibility of breaking the bulk supply into small packs which can be bought by households. If you are a small scale retailer then buying in bulk also blocks your funds in unnecessary inventory which may not be sold. Buying from wholesale distributors reduces your storage and maintenance costs if you sell perishable products like food items or medicines which have a short shelf life.
Distribution and Storage – Wholesale distributors can assure manufacturers of sales in large quantities and also assure convenience stores about required quantity of supplies within prescribed period of time. They have warehouses where products from manufacturers are stored before distribution to grocers, dealers, single stores and c store chains. They generally sell in small quantities to these end retailers depend on their demand to reduce wastage. Buyers prefer to visit stores which can meet a majority of their demands instead of driving into several stores to buy specialty products.
Consolidated supply – Wholesalers bring in products from several manufacturers to the retailers’ making it easy for them to have multiple manufacturers’ products in one shipment. This helps them to cut down on procurement and delivery costs. Large c store chains like Wal-Mart, Target and wholesale warehouse stores like Costco, Sam’s Club and BJ’s club can afford to buy goods in bulk directly from manufacturers as they have a nationwide presence and warehouses. But small grocery stores, single stores and state wide c store chains cannot afford to spend on bulk storage and prefer the consolidated supply facility provided by C store distributors.
Marketing advantage of middlemen – Distributor and dealers acting as middlemen, bring in new products which are trending in the market. They also save money by providing added value of advertising through their own channels for new and existing products along with providing location advantage for easy delivery of required products. Branded electronic products can be sold and delivered via internet but even that requires warehouses and distribution channels at appropriate places to ensure that they are delivered intact to customers.
Managing inventory- Once distributors and retailers are able to recognize and understand demand for various products by customers they will be able to coordinate better with manufacturers to ensure deliveries in time. Seasonal demand for products like ice-creams, juices and other chilled desserts in summer and turkeys during Thanksgiving and Christmas can be met through planned production and delivery schedules. Since the production, procurement and delivery piece is taken care of by wholesale distributors; retailers have to only worry about keeping their store shelves with an assortment of brands and products which will meet customer demand.
How to save on distribution costs in your convenience store business
Specialization – To manage costs convenience stores sometimes rely on specialized distributors who can provide them low end and expensive options of the same product due to their relationship with manufacturers. While this technique may increase the number of distributors you be depending on for your supplies it will reduce your dependence on few and also give you a better price benefits which can be passed onto customers.
Financing – Small single convenience stores and grocery retailers sometimes are unable to make complete payment of all their deliveries and have a system of paying half on delivery and remaining half after products have been sold out. This can turn out to be problematic for distributors and manufacturers who need the funds on time to keep their side of the business in motion. This is where financing comes into place as these store owners work with banks and private financers to meet their payment needs through overdrafts at a negotiable fee which is paid back once the retailer receives payments for his stock.
Managing merchandise – You have to manage your inventory in an effective manner to ensure that your receive margins on every item being sold. Track inventory according to fast, slow and medium movement and also carry out POS counts to reduce chances of merchandise pilfering by customers and employees. Focusing on economic aspect of supply and distribution can help your c store distribution business stay ahead of competitors. Add the advantage of technology to your business by giving value added services to your customers like online orders and delivery of products within certain distance of your convenience store.
Large c store chains work with few large distributors to manage their inventory which has a national presence as then they can give bulk orders for all their stores at the same time. Large chains like Walmart have set up their own distribution chain had a few hurdles in initial years setting the supply chain and delivery system but now they are able to provide advantage of seasonal discounts to customers and also improve their margins. This ability to control transportation schedules, inventory distribution and streamlining deals has encouraged other large convenience store chains like Wesco to set up its own distribution center. Kwik Trip has expanded its distribution center in Wisconsin to include bakery and dairy products manufacturing center which distributes fresh produce to clients on a daily basis. It has been able to pass on the savings earned by removing middleman to customers by selling basic commodities at low rates.