The Allure (and Risk) of Selling Out to Distributors
Distributors make growth possible. They take on logistics, open doors to new retailers, and can move a high volume of your product quickly. For small-batch producers, it’s validating when a distributor wants everything you can make.
But here’s the risk: wholesale pricing often gives you the slimmest margins. If every jar, bag, or bottle you produce is moving at distributor pricing, you’re limiting the profitability of your most precious resource—your production capacity.
Why You Need to Keep a Slice for Direct Sales
Direct-to-consumer (DTC) sales—whether online, through your own store, or at farmers markets—bring in the highest margins per unit. A $6 product that nets you $2 through a distributor might net you $4+ when you sell it yourself.
- Double your profit per unit on that inventory.
- Build a direct relationship with customers who love your product.
- Give you control over pricing and brand experience.
Finding the Right Balance
You don’t have to choose one channel over the other. Instead, think of it as allocation:
- Commit most of your production to distributors to maintain those relationships and scale your retail presence.
- Reserve 10–30% of your inventory for direct sales. This percentage depends on your production capacity, seasonality, and how strong your DTC channel is.
- Communicate clearly with distributors about your capacity limits—so expectations are managed, and you avoid overpromising.
Practical Ways to Make It Work
- Forecast Demand – Use past production runs and sales history to set realistic allocations for both distributor and direct channels.
- Pre-Schedule Direct Sales – Launch small-batch releases online or through your own email list so you know inventory is moving without sitting idle.
- Build Value in Both Channels – Offer special packaging, bundles, or limited flavors DTC, while keeping your distributor line-up consistent for retail shelves.
- Leverage Pricing Power – Remember: distributors get your base line. DTC can carry your story, your brand, and a premium.
Bottom Line
As a specialty food producer, your production capacity is your most valuable resource. Don’t give it all away at wholesale prices. By balancing distributor relationships with direct-to-consumer opportunities, you’ll not only grow your footprint but also maximize profit and strengthen your brand.
Ready to optimize your sales mix?
GoodsRep helps specialty food producers build smarter channel strategies, price with confidence, and capture the margins they deserve.
