Outsourcing of sales functions to channel specialists is a common organizational strategy in the USA. Third party service providers include Food Brokers (now formally known as Sales & Marketing Companies), Distributors, Importers, and Merchandising Service Organizations (MSO’s). Most retail channels require a unique approach. This can present challenges in identifying the appropriate partner, as there are more than broker organizations and importers in the Export Solutions database.

How do I determine the right strategy for my brand?
Project Sales by Trade Channel to Determine the Source of Your Volume. In the USA, there are 13 trade channels: Supermarket, Supercenter, Mass, Club, Ethnic,Natural Foods, Convenience, Drug, Dollar Store, Gourmet, Gift,Internet, and Military for most food products. Hardware is important for Non-Food products and department stores for personal care brands. Normally, supermarkets account for 50 % of sales for a food brand, but only 30 % of sales for “non-food” categories like cleaners, personal care, or health care.

Determine the Services Required and the Complexity of Ongoing Maintenance.
Certain categories require a high focus on store level activity and speed to shelf. In other categories, it is sufficient to “sell in” at headquarter level and let the retailers systems execute for their stores.Brokers and MSO’s are the primary options for performing in store work.

Evaluate your Internal Resources.
How many direct people will your organization have focused against customer development and sales execution ? What can your own organization realistically handle ? Do you have people based locally close to the retailer and people with experience against leading retailers or trade channels?

Determine the Channel Specialists
Many companies employ a food broker for the supermarket channel (at minimum: retail services) but prefer to deal directly with Club,Drug, and Dollar Store Channels. Importers and Distributors function well for natural food products, gourmet specialty foods, ethnic foods, and imported brands.

Hybrid Approach May Be Optimal
Wal*Mart prefers to negotiate directly with its vendors. Many manufacturers hire a broker for retail services at Wal*Mart to supplement their own activity at headquarters. Merchandising Services Organizations excel at dedicated, short term projects and handling time consuming reset work.

USA Distributors act as Wholesalers: The USA distributor model is different from the international model. USA distributors are wholesale distributors providing selling, logistics, and collection services. However, they rarely import and do not necessarily work on an exclusive basis by category.

Importers Need Broker Services  Too !
Importers provide a valuable service for international brands. They offer an integrated service portfolio. The larger importers partner with food brokers for better penetration of the supermarket channel. As a rule, an importer alone willnot serve as a complete solution for the USA supermarket channel. A Broker provides local customer expertise on a national basis plus essential retail services.

Avoid “One Man Shows”
Size matters. There are more than 200,00 sales people in the USA consumer goods industry. Everyone claims a “great relationship” with a specific account. This is a start, but the preferred route is to partner with a broker organization  that offers critical mass , category management, and retail services.

Big Brokers- Big Brands
“Big 3” USA brokers maintain over 20,000 employees and a impressive sales, marketing, and administrative services. The Big 3 performance may exceed the capabilities of even the largest multinationals. In the USA , P & G, KraftHeinz,Nestle, and Unilever all depend on brokers for certain categories and services. However, most Big 3 brokers are reluctant to pioneer new companies or represent brands with modest sales revenues.

Battle for Brokers Attention:
Most outsourcing to third parties represents a “shared services” approach where the manufacturer is effectively “renting” a portion of the broker or distributor’s sales force time. These third parties profit by reselling this sales force to many manufacturers, sometimes up to a 1,000 companies in the case of a national broker. A constant battle exists for a manufacturer to get their “fair share” of the sales forces time. On the other hand, manufacturers must be realistic on their performance expectations relative to their amount of compensation to the third party.

The old adage that “No one can execute better than yourself” does not apply in most cases in the United States consumer goods industry. In every sector, there are local specialists with significant critical mass that can execute a well defined brand proposition in an effective and efficient manner. Manufacturers should focus their attention on direct relationships with global leaders such as Wal*Mart & Costco that require a high level of senior management interaction. International brands may require a variety of outsourced partners to optimize results in distinct channels..

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