Working with Distributors: It’s Not What You Think It Is
What Amazon & DTC brands need to know before relying on distribution for retail growth
One of the most common things I hear from owners of digitally-native brands is:
“When I’m ready to do retail, I’ll just hire a distributor.”
They say this as if there’s a group of magical middlemen who will: Buy massive quantities of your product, handle all sales and operations, and quietly scale your brand to $100M+ in retail revenue. Their plan is to simply approach the “distributor” and grant them the privilege of handling the channel.
Unfortunately, it simply does not work that way.
Even at a smaller, more realistic scale, distribution is often misunderstood—and misused—by brands entering retail for the first time.
If you treat distributors like a shortcut to retail success, you will almost certainly be disappointed.
So let’s break down:
What distributors actually do
What they don’t do
And how to work with them effectively
🏬 What Do Distributors Actually Do?
At their core, distributors exist to make it easier for retailers to source products.
They sit between brands and retailers, acting as a centralized purchasing and logistics layer.
Here’s what that looks like in practice:
✅ They Simplify Purchasing for Retailers
Retailers can buy multiple brands from one place instead of managing dozens of vendor relationships.
✅ They Provide Operational Convenience
Through consolidated ordering systems, centralized billing and invoicing, and oftentimes warehousing and fulfillment, distributors use efficiencies of scale to make money for themselves and provide smoother service to retailers.
✅ They Buy at a Discount
Distributors purchase your product at a lower price than retailers would (but still above your cost), creating margin for themselves.
❌ What Distributors Do NOT Do
This is where most brands get it wrong.
🚫 They Do NOT “Plug You Into Retail”
A distributor does not automatically place your product into stores.
They give you access to retailers—not guaranteed shelf space. The word “slotting fee” confuses a lot of sellers. You don’t pay money to get placement; you get selected for placement then pay, typically.
🚫 They Do NOT Buy Huge Volumes Upfront
Distributors:
Do not take large inventory positions on initial orders
Often operate lean and order based on demand (or near-demand)
Some don’t warehouse at all
🚫 They Do NOT Make Retail Easy
You are still responsible for:
Driving general awareness and demand – the “pull through”
Having the right packaging/merchandising to make your product stand out
Deploying marketing spend in retailer’s proprietary systems
Distribution can simplify logistics, and help greatly with sell-in where they have relationships, but they do not replace the core components that make brands successful in stores.
🧩 Types of Distributors (And What They Actually Do)
Not all distributors operate the same way. Understanding the differences matters.
🥦 Grocery Distributors
Example: UNFI, KeHE
Focus: Food, beverage, natural products
Role: Supply retailers with shelf-ready inventory
Strength: Scale and retailer relationships
🔧 Hardware Distributors
Example: Orgill, Do it Best
Focus: Massive SKU assortments
Role: Help retailers manage inventory complexity
Strength: Logistics and replenishment systems
🏷️ Off-Price / Liquidation Distributors
Focus: Overstock, excess inventory
Role: Move product quickly at discounted prices
Strength: Cash flow, not brand building
🎁 Specialty / Niche Distributors
Focus: Gift shops, boutiques, hospital stores
Role: Curated assortments for specific retail channels
Strength: Targeted access to niche accounts
⚠️ The Most Important Rule of Distribution
Retailers pull inventory through distributors.
Distributors do NOT push inventory into retailers.
This is the single most important concept to understand.
If retailers are not asking for your product, the distributor will not move it. You must generate demand, both for shoppers and buyers. Distributors can help you get to buyers, but, either through direct pitching efforts or making your product and price irresistible, getting the sale will always be your responsibility in the end.
🚀 How to Actually Succeed with a Distributor
To succeed, you need to drive demand downstream.
That means focusing on the retailers—not the distributor. In distributor-heavy channels like grocery or hardware, you generally have to start from scratch and prove your brand a bit before a distributor will take the risk of bringing you in. To get started:
🛍️ 1. Sell the Retailers First
Sell in by pitching stores directly
Drive sell-through by creating demand at the store level
Aggregate enough retailers asking the distributor for your product
🎪 2. Show Up Where Buyers Are
Go to Trade shows; the distributor-specific ones
Check out regional marketing events for associated stores
Product categories often have associations you can join
You need to build awareness for your brand at the store level. This will bubble up to the distributors eventually, and buyers for the distributors themselves attend these kinds of events.
📣 3. Actively Promote Your Product
Email outreach to stores and distributors
Sampling
Social proof – hype up your good reviews
🧠 4. Support Sell-Through
Retailers reorder what sells. Better sales velocity makes you more appealing.
Help your existing stores sell with:
Promotional support
Staff training and samples
Better displays and signage
🔁 5. Create Word-of-Mouth Demand
If you are doing all of the above well, word of your brand’s success will catch on. As stores succeed with your product. More and more stores will come to you, and, eventually, distributors will come knocking as well.
📉 Set Your Expectations Properly
Distribution is a tool—not an automatic growth engine. They can help you learn the retail game by acting as an intermediary when you are first starting out and are not ready for the logistical burdens. You trade growth for convenience and reliability, which can be the right move for businesses exploring the retail channel that don’t want to take on too much risk.
📄 Be Careful with Distributor Terms
Distributor agreements can quietly hurt your business if you’re not paying attention. The most common structure is that a distributor will pay you directly for goods at a favorable price, and then make money by reselling those to retailers. Other structures built on rebates, commissions, etc., do exist, but those setups can blur the lines on what actually defines a distributor.
In your contracts, keep an eye on:
⚠️ Exclusivity
Limit it geographically or by channel.
Look for mutual exclusivity where you can – try to be the only option they carry in your sub category (this will not always be possible)
Avoid broad, long-term exclusivity.
Never lock yourself out of being able to talk to buyers. You may need to transition those relationships later.
⚠️ Payment Terms
Long payment cycles can strain cash flow. Try to keep it to 90 days or less. Or, look for down payments to free up cash.
⚠️ Hidden Costs
Marketing and slotting fees
Chargebacks/penalties from retailers – be very clear on who is liable for what
Retainers and commissions only make sense in certain structures. Make sure they are not layered on top of a typical buy/resell model
⚠️ Inventory Risk
Understand:
Who owns the product
Who holds the inventory
Who absorbs unsold goods
🤝 The Trade-Off You’re Making
Working with a distributor comes with a cost beyond margin:
You Lose Direct Retail Relationships
Communication with buyers is filtered; you don’t build the relationship
Feedback loops slow down and issues can take longer to fix
You can have less visibility into store-level performance
This can limit your ability to:
Improve your product
Adjust your strategy
Build long-term partnerships
📌 Final Thoughts: Use Distributors the Right Way
Distributors can absolutely play a role in your retail strategy—but only if you use them correctly. Make your market first, then deploy distributors as a tool to supplement your operations.
They are best used to:
Simplify logistics
Expand access
Support scaling efforts
They are not a substitute for sales, marketing, or strategy. If you think a distributor is going to grow your brand in a real way without the right support and context, you will end up disappointed.
🚀 Need Help Navigating Retail Distribution?
I help Amazon and DTC brands:
Build retail go-to-market strategies
Evaluate distributor partnerships
Avoid costly mistakes in wholesale expansion
📩 Reach out if you want help building a retail strategy that actually works.