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Business Builders: Supply Side of the Equation

Posted: January 24, 2014, 12:25 p.m. EDT

How retailers and distributors should collaborate for mutual success

By Anthony Stoeckert

One of the most important professional partnerships pet store owners have is with distributors—the organizations that influence product stock and prices.

And while it is a vital business relationship first, industry insiders said that a sincere personal element must be present for that partnership to flourish.

It’s important that both sides work together and want each other to succeed, said Heidi Neal, co-owner of Loyal Biscuit Co., which has three locations in Maine.

"There must be a great level of trust in each other and that your rep is looking out for your best interest,” Neal said. "Communication, which works both ways, is key. You must tell them what you need, but they also need to share what they have to offer, not just in terms of product, but in other ways as well, such as promotion dollars and shelving help.”

Four Keys to Success
When choosing a supplier, store owners should consider four things, said Steve King, president of the Pet Industry Distributors Association (PIDA).

The first is product selection, King said.

"Store owners should consider the ‘depth and breadth’ of products a distributor can supply,” he said.

"Consider if a supplier carries popular brands that have ‘customer pull,’ if the supplier represents a wide variety of manufacturers and supplies products for all animal categories. Also look into whether a supplier has specialty areas, such as pet foods, aquatics and bird supplies. If a supplier specializes in bird products, for example, but birds aren’t a big part of your business, you might want to look elsewhere.

"The retailer’s business will determine which distributors meet their needs best,” he added.

Another important consideration is order accuracy, he said, meaning that all of the work and planning that goes into determining what products to carry doesn’t mean much if orders are not filled accurately.

When looking at distributors, determine what systems they have in place to ensure that control, King suggested.

According to King, retailers should know whether the distributor offers electronic ordering tools to increase efficiency in the ordering and inventory process, and uses radio frequency (RF) scanning or other electronic picking tools in its warehouse to help increase accuracy.

"Ask a potential supplier what their shipping accuracy rate is—they all know,” he said.

A third factor is customer service, King said.

"A distributor that is attentive to a retailer’s needs, that is easy to do business with and that values the retailer as a customer is the ideal business partner,” he said. "Exceptional customer care depends on the quality and quantity of sales and customer service personnel that the distributor has available to serve retail customers. Find out in advance what that point of contact will be—a salesperson who calls on your store or a customer service rep who works with you by phone or online—and determine how that contact corresponds with the retailer’s business needs.”

The fourth factor is pricing.

Examine whether a distributor offers value pricing, King said, by which he means competitive prices, prompt, accurate delivery, good fill rates and promotions. Also, find out if the distributor passes along manufacturers’ specials and promotions or offers discounts for volume purchasing, he added.

The Price Is Right
A good retailer-distributor relationship comes down to competitive pricing, personal relationships, sharing information about deals and new products, and the ability to solve problems in a timely manner, said Laurie Wilson, owner of Teca Tu: A Pawsworthy Pet Store & Deli in Santa Fe, N.M.

"We have great relationships with Art Ibarra at Rio Grande Service Center and with Ernest Flores of Central Pet,” she said, adding that both "go out of their way to let us know about great deals and come to the store often to see us and show us new products.”

Does your  supplier offer  you a full set  of keys  for success?

Product selection: Carries brands popular with customers, represents a wide variety of manufacturers and supplies products for all animal categories

Order accuracy: Offers electronic ordering tools to increase efficiency in the ordering and inventory process, and touts a high shipping accuracy rate
Customer service: Employs quality sales and customer service personnel available to serve retail customers in a timely, effective fashion

Value pricing: Offers competitive prices and promotions, and passes along manufacturers’ specials and promotions or offers discounts for volume purchasing

Store owners should look for distributors who want to help grow a retailer’s business, will make owners aware of vendor specials, offer access to better pricing, know the local market and use that knowledge to make suggestions, and have a good fill percentage, said Andy Tesene, co-owner of Two Bostons, which has three locations in Illinois. Also important, he added, is someone who is willing to take on new products, which isn’t always easy to find.

"My distributors work with me to serve my customers, grow my business and therefore increase my buys from them,” Tesene said. "A good distributor will make the retailer aware of specials, trends in the local marketplace and areas to grow business. A good retailer should inform their distributor of new products and trends they are seeing, and provide them with customer feedback from the retail floor.”

But pricing isn’t the only thing to consider. Loyalty and lasting business relationships usually happen when an owner works directly with a distributor, said James Alden, CFO of Pet Food Experts, a distributor in Cumberland, R.I. Owners who aren’t involved in the day-to-day operations often base their decisions on the lowest price available, but Alden said that isn’t always the smart choice.

"If an owner is talking to employees and understanding who’s providing what service, whether it be returns or timely deliveries or fill rate, the longevity will be there,” he said. "It’s up to the distributor to keep the customer by not screwing up.”

Working Together to Fix Mistakes
Of course, mistakes will happen during the course of any relationship.

Jusak Yang Bernhard, co-owner of TailsSpin, which has three locations in Georgia, experienced a recent incident involving a store-sponsored 5K event, the Woof Woof Run/Walk over Pet Cancer, co-sponsored by Wilton, Conn.-based Blue Buffalo.

One of the distributors misread the order and didn’t deliver the Blue Buffalo products that were being featured during the event.

"We had to act very quickly to solve the issue at hand, as we only had a couple of days before the big date,” Bernhard said. "Our relationships allowed us to call on our Blue Buffalo regional rep, the distributor’s inside and outside reps, and along with our store managers, we worked together to find a solution. From these dialogues, TailsSpin was able to get a special next day delivery of the said products.”

The manufacturers and distributors understood how important the issue was and took action to get it solved quickly, Bernhard said.

When complaints arise, distributors should figure out what the issue is and fix it, said Alden.

"If the issue is Pet Food Experts’ fault, then we take responsibility, we compensate the customer and we make it right,” he said. "In very, very rare circumstances, if it’s a situation where it’s just a squeaky-wheel customer that you’re never going to make happy, we struggle how to identify those and what to do with them. But for the most part, you accept responsibility and fix it.”

Good Relationships Equal Good Business
Manufacturers must be part of the equation, said Bernhard.

"All reps must be on the same page to support and maintain the growth,” he said. "That includes growth in business and products. With that, the retailer needs to make sure that all involved understand the retailer’s business plan.”

Face-to-face visits and phone calls are important, Bernhard added, and those communications should result in open and honest relationships, with lots of listening.

"When we opened our store in 2007, we experienced the benefit of developing this type of relationship we have with our sales rep, Mike Schmidt of Summit Pet [Products Distributors Inc. in Greensboro, N.C.],” he said. "We do believe our growth into three stores is partly because of those valuable times that we spend together, learning about trends and products in the pet industry. I remember when he brought up the idea of our exploring raw food and introduced us to a local manufacturer.

"Based on his recommendation, we developed that as part of our product offerings,” Bernhard said. "Mike understood the direction where we wanted to take our company and the clientele that we were trying to develop. He was there when we opened our stores. He was there helping us put up shelves. He was there when we were merchandising our products. That relationship has benefitted all involved, as we became a larger customer of Summit Pet.”



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