Why having a Fulfillment Center and Distributor is a good idea

A quick discussion today about having both a fulfillment center (think master distributor) and a distributor in a market makes sense.   We have been thinking about this issue over the past few weeks when companies have come to us both on the importation and exporting sides of the business (we handle a number of foreign companies importation to the US and a number of export products to foreign markets).   Two benefits of having a fulfillment (warehouse) in a market and a distributor:

1. A fulfillment center can both import and store your products so that you have both ease of access to one market but also access to other markets. Here is what we mean by this. Say you are a company that is looking to get into a market like the US or Mexico. one the things we talk about is the fact that you must think regionally even when entering either of these two big markets. Let’s say you ship from Europe. Would it not be easier to ship an entire container to the US instead of a pallet (which are almost the same price) and leave product in the US with the hopes of in the next six months entering Mexico? Would it also be easier to store product in the US, our facility it costs between $15-19 per month per pallet to store it so if you have a container you are only out $300 per month or so. Plus when you do go to Mexico you can say, confidently, “Yes I can get you that product in one (1) week”, instead of, “It will be here in 60 days”.  This can make the product buying experience for a new customer much easier.
2. A fulfillment center can give you a little more protection from a non-responsive or non-cooperative distributor. We actually had an issue close to this with a client who shipped to our facility all their US product and we send it out to their regional distributors.  The client had a problem with one of their regional distributors who didn’t want to continue to sell the product unless they received a better price. The company was able to come to terms with the distributor but the key was that the regional distributor did not have much product to hold over their head.  This made the negotiation with the unreasonable distributor much easier because they did not have to try to recover much product and actually was able to get the distributor to see their side of the story.

Having both a master distributor (fulfillment warehouse) and regional distribution works for some companies but not for all companies and it was works for some markets and not all markets. So if the country is large geographically (US or Mexico scale) or you really want to empower your master distributor who only is there to serve you as the customer with no selling abilities then this model is something to think about in the future.

If you have questions about importing to the United States and master distribution please let us know we would be happy to help.

If you have questions about getting your products into foreign markets we would be happy to chat with you as well., you can visit our Target Markets Program page to learn more about what we can do for US exporters.