AboutEric Hofer Expertise Over 27 years experience, with 17 in international FMCG in back office operations and in field sales and data collection, including design, development and deployment of Handhelds, Marketing Equipment (Service, Tracking and Return on Investment), reporting and Vending management. Have participated on the launch of operations in new markets, and re-engineered the back office in several countries.
Experience Designed and led the development and deployment internal ERP system for Pepsi used in On-Premise/Vending in 13 markets.
Designed 2 handheld systems, the latest is now deployed in 4 markets internationally.
Re-engineered the back office functions (settlements, despatch, invoicing, credit control, etc) for over 20 snack, confectionary and beverage operators.
Developing software: Progress, VB, Access, C, Sybase, SA
Organizations Innovative-Selling Solutions
Publications BudapestSun
Education/Credentials State University of New York - BA Economics
NYU - Courant - Graduate work - Computing
Past/Present clients PepsiAmericas
PepsiCola International
PepsiCola Company
British Steel
British Telecom
Britvic (Pepsi's bottler in the UK)
AT&T
BellSouth
Mars Overseas Bottling
Pepsi France
Matutano (Frito-Lay Spain)
Frito-Lay
Pepsi Foods International
Chase Manhattan Bank
Kidder Peabody
National Power
SmithKline Beecham
Mars Overseas Bottling (Pepsi Azerbaijan)
A&P Bottling (Pepsi Serbia & Montenegro)
Iberia Bottlers (Pepsi Georgia)
I'm new to the bevarage industry and wondered if you could let me know a bit about the roles of wholesalers/distributors/agents/brand ambassadors? How would I go about bringing a new premium product to the UK market for example?
Many thanks,
Tom
Answer I can help you to understand the roles of wholesalers and distributors. Ther terms "Agent" and "Brand Ambassador," to me, are not germane. An Agent acts a a representative for a deal, the closest I could come would be in selling a business or setting up a major deal to control a territory. A Brand Ambassador appears to be related selling the concept of a country as a product, such as "Made in America" or "Cool Brittania" (see www.fcw.com/Articles/2009/01/16/Who-are-the-brand-ambassadors.aspx).
There are several overlapping definitions related to "Distributors" and "Wholesalers." Both are used to extend the reach of a manufacturer to a market. Common to both is that a manufacturer will lower pricing (in exchange for volume).
In short, a wholesaler usually (but not always), expects the outlets to come to the wholesaler and collect the product. The distributor generally supports the manufacturer (or "major"), delivering the product. Having said that, the lines are blurry. Businesses tend to grow/adapt to the market. What might have started out solely as a Wholesaler might take on vehicles and deliver.
In general, a major needs to employ different ways to go to market.
In a major metro area, it might run its own fleet (of order takers (CR or SR, meaning customer or sales reps), route sales, and delivery). To augment geography and handling of accounts that are too small, it may hand off to a distributor or wholesaler.
The major might integrate its own selling system such that it takes orders and then posts them to a distributor for expedition. This btw can be risky as the distributor might not make the delivery; or the account may have poor credit relations. Strangely, I've heard this called "Wholesale Assist" of "WAT" - this is where the terminology is strange, for as I said previously, to me a Wholesalers is seditary, waiting mainly for its business-to-business customers to come to it.
Sometimes the distribution for a geographic territory is exclusive. In these situations, the distributor has a different status. My former employer called them "Authorised Distributor Networks" of ADNs.
Either way, these groups fall into a category generally referred to as 3PD (or Third Party Distribution). 3PD poses various challenges:
- the major cannot be sure that the distribution occurs
- the major cannot ensure the professionalism of the distributor
- the major lacks knowledge of what was sold, substituted, etc.
- the major may be obscured as to the channel categorization of accounts (impacting marketing)
- the major, giving 3PD credit, could find itself with uncollectable debts
- the 3PD can get orders to deliver that are inconvenient or costly
- the 3PD might be expected to run several sales systems atop its own
- the 3PD might not have field sales capability; and lacks personnel to develop such.
- the 3PD may violate trade agreements, selling across borders, cut-through into sales territory managed by the major, etc.
On the other hand, there are also advantages.
- in countries where there's a bit of cloudiness when it comes to successfully transacting business, working through 3PD keeps quoted companies more than arms-length from anything that would raise eyebrows of auditors (but which must be done in order to transact locally due to legal and/or cultural mores)
- 3PD reduces a major's capital investment
- 3PD offers a way to instantly access accounts, opening up a new market
- majors can overnight switch 3PD operatives
- 3PDs can mix different product categories so as to make the cost-to-serve viable.
The motivation for a 3PD and a Major differ at a crucial level. For the 3PD its to recoup capital tied up in stock as quickly as possible while minimising product loss; for the major, its to maximise the investment in advertising (brand), the factory, bulk raw deals, etc. The results, for example can be seen in activity. The 3PD would rather skip a repeat visit to an account (e.g. just seen the day before); the major however, wants to be sure the product is on the shelf. The major will want to tie in sales to an advertising promotion to be sure that in every possible targetted outlet, there's product on the shelf. The 3PD would rather reduce inventory and would happily substitute shelf space.
Majors are generally challenged by a lack of clear data when they rely on 3PD. But they usually have to do such as outerlying geographic areas, gilds, etc. are too costly to distribute in. As part of a market strategy, a major will blend its own sales, delivery and 3PD fleets to gain sufficient market coverage; and trades fogginess and control for extended coverage.
There are several groups that consult in this area, helping majors and also 3PDs develop their capabilities.
One group worth looking at is www.salessuite.net. They target small operations (such as 3PDs, and majors investing outside of the big growth markets) to develop their capability. Part of what they offer, that is unique is that they couple their software and processes offered with a programme to improve the capability of the major and its 3PD. Their products also offer an alternative to 3PDs who would otherwise be forced to carry several field systems concurrently in order to report back multiple majors.
