Eddie Mugulusi, Founder at Fab Creations.
(In this picture: one of our sales reps makes a delivery to a client)
It feels like it was just yesterday that we started out in manufacturing having little to no experience let alone knowledge on how to successfully launch and distribute a fast moving consumer good (FMG). Before I picked interest in this industry, all I knew was that if I wanted an FMG such as bread or water, I’d simply walk to a nearby shop or supermarket. How, when and by whom these products were delivered along with many other technicalities were non of my business. It did not occur to me then that there exists an elaborate and sometimes complex distribution system through which all goods pass to reach their final consumer.
In today’s world many homes regularly buy items such as milk, soap, cooking oil, match box, curry, lotions among many others. We find these at retail outlets countrywide including supermarkets. By nature these outlets are designed to allow us buy in small quantities. For example it is possible to get a bar of laundry soap and not necessarily an entire box. Now these outlets on the other hand get their inventory from wholesale shops. These by design sell whole items. For example a box of laundry bar soap containing 10 to 25 bars. They get a small margin on each box sold. The same applies to all kinds of products. Now these wholesale shops are usually bulk buyers and get their inventory either direct from the manufacturer or an authorised agent such as a Depot. This brings me to the Agents. These usually run big enterprises and buy direct from manufacturers. I bet you have seen major beer or soda depots around town. They sell their inventory majorly to the wholesalers and occasionally to retailers. Finally we have the manufacturer, who makes the product and releases it to the distribution channel of choice.
I have had to learn and understand how distribution channels work and how to leverage them to grow business. For example, in the early days we sold our products direct to retailers. This was simply too much work. Retailers could only afford to buy a few cartons at a time usually just enough to take them through the week. This meant we had to visit them each week which drove our costs up. The work was also very tiring because we had to visit hundreds of retailers in each district. In many cases you ended up staying in the area for atleast two days. This again came with costs such as accommodation for the team. This approach always led to scarcity because the retailers had no where else to get our products when they ran out. They had to wait for us to visit their area the coming week. Scarcity is no good for business.
In time I understood how distribution channels worked. I figured out which channel was best for us as a business. Today we primarily work with distributors and wholesalers in the districts we supply. They buy in bulk which is really good for business. The distributors carry and sale our products to places we cannot reach. They have increased our product reach by far and have played a major role in boosting our sales numbers.
As a small business owner, it’s important that you too learn about distribution. In this lies the key to effectively and efficiently getting your products from your production facility to the end consumer. This has the power to grow your business.