25 Nov The Old Distribution Model is Broken

the old distribution model is brokenFirst, the bad news: The distribution model is broken.

Now, the good news: the forces that are breaking the distribution model are also creating a world of new and better opportunities for any distributor that is willing and able to evolve. This is not a small thing. It’s a development that in my opinion is as radical and cathartic as when a caterpillar turns into a butterfly.

At Qualifirst, our job is not to whine about the changes that are happening around us. Our job is to learn and improve – today – here and now.

That means that we, too, need to radically evolve.

We need to put aside what we think we know about distribution, and look to the road ahead.

This does not mean rejecting our past; instead it means using the best from our past to move forward into the future. It means using the reputation we have built over the past fifty years, delivering top quality goods to the best gourmet stores, restaurants and distributors in North America, as well as using modern technologies, to connect to our customers as individual people, rather than as companies.

We need to evolve from company-to-company connections to people-to-people connections.

Today’s reality:

Today’s reality can be seen in the operations of large players such as Costco and Walmart. They mostly buy direct from manufacturers, they have high turnover, and they can make money at less than one-half the margin of the traditional store. Not only is their cost reduced but so, too, is their margin. This means that their new retail price can actually be lower than their previous wholesale price. That is today’s reality.

Today’s reality can also be seen in the way grocery chains and many independent stores now buy directly from manufacturers. They are buying – and then re-selling – lower-priced, well packaged products that are perceived by consumers as gourmet.

Today’s reality can even be seen in restaurants that import directly from overseas, such as olive oil brought directly from Italy.

In this new economy, any large customer can cut out the distributor. The new distribution model requires either an exclusive product or the willingness to sell to many small customers. “Exclusive” in this context refers to your own unique product with a brand you control.

Qualifirst meets customer needs in a way no one else can

Because we do indeed carry a unique and exclusive range of products that can be purchased by the unit or by the case, in either large or small quantities. Our customers also know they can get quick and reliable delivery. We offer up a complex mix of scarcity, quality, quantity and service that saves our customers a huge amount of time. And it allows them to elevate what they offer their customers – from great to extraordinary.

Tomorrow, our goal will be to meet our customer needs in a way no one else can. We will be able to do this because we will know:

  • when the customer needs to reorder before the customer knows;
  • what the customer needs to buy, based on our knowledge of what similar customers buy;
  • how to connect to our customers as individuals and not as companies;
  • who our new customers should be, even before we reach out to them;
  • how to convince these new customers to join us, by pointing out those who we are already helping in the exact same way.

The technology exists to do all this. It’s up to us to harness it. We must use this technology to connect to customers as people, using the information available to us on websites and social media. It’s all there for us to grab. Our challenge is to take all that information and give it meaning.

Frankly, the distribution model has been changing for many years and Qualifirst has been adapting and continuing to grow along with these changes. In 2015 the Qualifirst “butterfly” will emerge and I am confident our growth will explode by 25% a year.

Focus on the human interaction elements of our jobs

Inside our walls, this evolution will allow our team members to focus on the human interaction elements of their jobs. This will drive both their individual success and our success as a company. This advancement will not remove any decision-making power from the team, but it should save people time and help make some decisions more automatic.

I recognize that nothing is carved in stone; this is an evolving process and we’ll adapt it together as we use it to suit our needs.

I have asked my team members to work together to make this vision a reality in 2015. We will only be able to succeed if everyone contributes wholeheartedly to this process. The process requires an investment of time up front to gather customer preferences, but this too represents a great opportunity for our employees to strengthen their relationships with our customers by addressing their unique needs.

This not only applies to the sales and office team but also to the warehouse team. As all of our team members perceive our food orders being delivered to people and not simply to companies, this will open up opportunities for new levels of service and interaction.

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