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Feb 23, 2016

How using a wholesaler benefits both brands and retailers

By Louise Ramsay


In an ideal world, a brand would distribute products directly to consumers, pocket the cash and move on. But it doesn’t take much nous to work out that, if it was this easy, more people would be doing it - and hence why the whole glorious smorgasbord of the sports trade works the way it does.

Much like any industry, a sports product can come into this world and end up in a customer’s shopping bag via many different routes. It, however, goes without saying that distribution is key to the success of any product. But while many brands may choose to distribute their own products or use a dedicated company to do it, others have discovered the joys of the wholesaler.

Buying in bulk
For those not in the know, sports wholesalers buy in bulk from brands and are in business to provide products to retailers who couldn’t otherwise access them because their minimum order would be too low to go directly to the supplier or brand. This benefits suppliers, or brands, because it means their products are made available for sale across a wider number of retail outlets. It sounds like a win-win arrangement, so why don’t all brands or suppliers buy into it?

David James, sales director at sports wholesaler Reydon, explains: “There’s a perception that suppliers will make less money. We buy and hold stock in bulk, so we receive a much bigger discount than a brand or supplier would provide to a small store.

“But while a brand in the short term may make less on like-for-like sales, in the long run chances are they can make more money overall. It’s about knowing how best to use resources and expertise to grow and develop a brand.”

Theory explained
The theory about how this works is this: a brand may have 500 accounts with 500 different retailers, but only 100 of them are major clients. They make a lot of money from these, but the other 400, while important, don’t generate as much income.

“We can look after those 400,” James says. “It allows brands to build business at the top end without ignoring the bottom end. We act as an extension of their sales force. From a brand’s perspective, it encourages better economies of scale.”

James explains that it might work out well for a brand to do everything themselves, but it might not give them the same potential for growth that working with a wholesaler can provide.

“A supplier’s expertise is often in managing and developing key accounts,” he says. “Our expertise is in managing lots of smaller accounts. It’s what we do. But while we work in different ways, we have a common goal - to achieve wider distribution and build the brand.”

100 per cent availability
As a wholesaler, Reydon buys in bulk from a supplier and holds the stock, giving retailers 100 per cent availability on a 24-hour basis. Another benefit is that retailers can make small orders.

Often, retailers can find it difficult to buy small quantities of products, as many brands have minimum spends, which means a retailer has to take a risk on buying significant amounts of stock, which might not sell. Through Reydon, a retailer can order as little as one pair of goggles or one cricket bat, if that’s all they need.

Buying from Reydon doesn’t just benefit retailers by allowing them to trial a product with their customer base, but customers too - and if they like it, that’s clearly good for the brand.

“Smaller account holders can also graduate into bigger accounts,” James says. “We nurture them and accept that we might lose them back to the brand or the distributor if their order level goes over a certain barrier. It’s built into our business strategy. It’s good for the brand, a positive.”

Another benefit for a brand is that working with a wholesaler consolidates all their smaller invoices into one, rather than the hundreds they’d be dealing with if they managed all their own accounts.

Reducing complexity
“It obviously makes things more complex for us, but that’s what we do, we’re experts in it,” James says. “Though sometimes, of course, our invoices are consolidated through buying groups such as STAG, Intersport and Retail Sports Ireland.”

James accepts that working with a wholesaler might not be for everyone, but given the number of strong relationships Reydon has developed with brands, he knows first-hand how it can result in growth for everyone.

Summing up, James says: “Brands can be assured that this is a great way to reduce complexity and build for the future.”

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