To understand mass retail, we must understand the different types of distribution available to you, whether that be a supermarket, a large pharmacy chain such as Walgreens or CVS, or a club store like Costco. You can deliver to them in many different ways. You can deliver to them using direct store delivery, DSD, or have trucks go store to store delivering and sometimes even merchandise with full-service DSD. You can also have warehouse programs where you ship to a warehouse and the warehouse ships directly to the individual stores.
“Your job is to get the product to the warehouse and then you’re done.”
That might sound like a dream, but these methodologies have pros and cons. You also have brokers. You can sell to these accounts using brokers so that you don’t have a sales team, but you rely on third-party sales teams that we call brokers, retail brokers in this case, and they work on a commission from paid sales. You also have drop shipping to the stores.
Drop shipping to the stores is where you ship your product using FedEx, UPS, USPS, etc. You dropship it to every store. This can be expensive, but if you have products with large margins, you can sell directly to the store managers of some chains and then drop your product directly to them. There are many other ways of marketing to the stores, but those are the main ones. In this module, we’ll talk about direct store delivery or DSD.
Direct Store Delivery
Direct store delivery is where you have trucks, or your distributor has trucks, and you go store by store delivering the product. Most of the time, you deliver through the back of the store and in some cases, full-service direct store delivery. They do the merchandising in the stores as well. Now, if you read my book Wholesale MBA, you already know much about this. If you haven’t, you can pick it up.
“Direct store delivery is all about service.”
And by the way, if you want to continue with your wholesale MBA education, these courses are also available as full-length courses where we detail how you can place your product in mass retail or convenience stores. I’ve owned my direct store delivery operations for food service, convenience stores, and mass retail, so it’s something that I like. However, doing it on your own can be expensive because you need infrastructure, a warehouse, drivers, and salespeople. And you can only cover a certain amount of territory, so it is very capital intensive.
“Even with direct store delivery, you have to break down the operation into one, two, or three steps.”
A one-step direct store delivery operation is where your driver is the salesperson and the merchandiser all in one. So, imagine you have a truck, and the truck pulls into a Kroger and in their truck, they have potato chips, bread, milk, or some other product. It can be a dry good it doesn’t have to be food or beverage. It can also be something else your driver or your all-in-one step DSD goes inside the store, checks the inventory maybe you have a rack in the store checks the inventory, goes to the manager assistant manager tells them what you need.
DSD, direct store delivery, has three parts:
Depending on where you are, you’ll need one hundred or one thousand dollars worth of product; that’s the sales part. A person drives the product to the store and leaves it in the warehouse; that’s the delivery part. Once the product is in the store, takes it to the retail floor and places it on the shelf; that’s the merchandising part
“Delivery and merchandising is a three-step approach.”
This is very important because you might have one step, you might have two steps, or you might have three steps. When you have the three steps, maybe you have three different people:
1. a salesperson that visits stores and sells your product
2. a delivery person that only delivers your product
3. a merchandiser that takes the product from the back of the store and places it on the shelf.
Direct Store Delivery