The Online Community for Food and Beverage Startups

   THE COST OF       NATIONAL       DISTRIBUTION   

💰 How expensive is it to work with National Distributors? Here are my real numbers:Amount Invoiced to KeHE: $32,000.Amount Paid by KeHE: $21,000.Difference: $11,000.That’s $11,000 in chargebacks, fees, and returned products from retailers.That’s 34% of everything we sold them, meaning we lost all of our profit margin and barely broke even.Suffice it to say, we stopped selling to them because it would put us out of business. 

Here's what happened.

In 2019, my brand TeaSquares launched in 180 Jewel Osco (Albertsons) as part of their "Buy Local" Program. Jewel Osco is one of the largest conventional grocers in Chicago, and while we were unsure of how our premium and unique products would do, it was an opportunity to test the channel.Setup with KeHE was fairly easy, just taking a little bit of time with paperwork since this was our first national distributor. I went in generally understanding the cautionary tales of chargebacks and fees, but hadn't lived it myself.At the time, I was focused on manufacturing and fulfilling the order, but didn't have a launch strategy to promote TeaSquares on shelf -- wasn't that the retailer's responsibility? After a few months, I reached back out to the buyer who brought us in, and got a messaging saying they were no longer working for Jewel. Well, that sucked, so I tried messaging the other people we had met. No response. As we started getting checks in from KeHE, we started seeing the "expected" 5-8% fees in deductions, which definitely hurt.Every month we received a new order, so thought things were going ok. Then 7 months into the partnership, we started seeing much larger chargebacks on checks, in the range of $1,200 in fees on a $4,000 invoice. I put in a dispute with KeHE through their website but got a response that it was denied 2 months later. What the hell was this charge?I finally got an answer from KeHE that the charges were from returned product that had expired at Jewel. Oh no! I'd be happy to run promotions or marketing programs to try to move the product off the shelf. I tried reaching back to everyone I could a Jewel, e-mail and phone. No response. I tried going through our KeHE reps, but couldn't get in contact with anyone at Jewel.They were purchasing product, it was expiring in store, and then they were returning it for a full refund. They had NO RISK at all, so didn't care if the product moved.At that point, I stopped fulfilling orders through KeHE and pulled out. This was destroying my business.I share this story so you know how bad it can get. I take responsibility for the failings on my end. I was naive to how the industry worked and made tons of mistakes.

  Here’s my advice to emerging brands:

👉 I highly recommend working with regional distributors to build your business over the national ones until you’ve reached $5 million in sales. Most retailers have preferred regional distributors that would love to have your business.👉Don’t let retailers purchase your product without having a marketing plan in place with them. The vast majority of fees ($8,400) came from products Jewel Osco purchased but returned because they didn’t sell the product. Why not? Our buyer left, and we had no contact. We tried calling Jewel HQ dozens of times, e-mailing everyone we could and even tried working through KeHE to get in touch with their team so we could run marketing plans to move the product off the shelf. Nada. No response. Once the returns started coming in we stopped fulfilling orders.👉Track and Analyze your deductions. If you are selling with National distributors, use a tool like Promomash or Crisp so you know the exact impact these costs have on your business. The codes are purposely hard to read so brands don’t know what they are.Would love to hear your stories and experience working with national distributors. Just reply to this email.

WEEKLY UPDATES

   How to Apply For       A Trademark    

Looking to apply for a trademark for your brand? Take a look at our latest article by Daniel Griffith, which breaks down an overview of the entire process.

• Trademark Clearance Search

• Trademark Application

• Application Review

Read the full article here

Need help applying for a trademark? Request an Introduction to Daniel.

   DO YOUR E-MAILS       NEED A REFERSH?    

YOU'RE DOING IT ALL WRONG. E-mail marketing continues to be one of the best investments for any brand, yet most of us are minimally investing in building ongoing relationships with our customers. MAYBE you're one of the thoughtful ones who have actually built out customer e-mail flows. BUT let me guess, you haven't touched them since you did... am I right?We'll if you're looking for an e-mail refresh, you need to talk with Emilia at Kaleidocopy. I recently worked with her to update my Good Food Brands e-mail flows, and was amazed at the results. For example she helped increase our Abandonded Cart open rates to 89% and a conversation rate to 5.8%. How does she do it? Emilia specializes in creating scroll stoping copy and content that people ACTUALLY want to read.Request an introduction to reresh your e-mail marketing 

   FINANCE THAT       WORKS FOR YOU    

"Thank you for setting up a call with Keith Kohler. I don't say this lightly - it was one of the most productive and meaningful calls I have had recently. He listens, offers suggestions, and is knowledgeable. In short, he is someone I want on my team." - Sharon Chamberlin, Owner, Catalyst 4 FitnessSeriously, if there's one thing you do this week, schedule a call with Keith Kohler. He's agreeded to help every founder in our Foodbevy community create a 2-3 year financing strategy including debt, equity, and alternative investments. REQUEST AN INTRODUCTION TO KEITH

   BOOST SALES WITH       AUTHENTIC FOOD VIDEOS   

If you're a food brand, one of the best pieces of content you can create are videos of people using your products to cook. Crafted helps you partner with creators to make engaging recipe videos of people cooking your products.

Pricing: $199/month, which gets you two recipe videos per month.

Discount: Use code FOODBEVY for $50 off your first month

Website: Cookwithcrafted.com

   CFO SUPPORT       FOR EMERGING BRANDS  

Looking to get a hold of your finances but can't afford a CFO?myPocketCFO is building a digital CFO for emerging CPG brands. Alice built the service to support accounting, analytics, reports, forecasts, integrated financing, and capital options.Trusted by:- B.T.R Bar- Nemi- Twrl M!lk Tea- KindrootTry out their financial services for just $99 for 3 months (a Foodbevy Special), then just $199/month after. Click here for an introduction.

STARTUP TO SCALE PODCAST

92. Building a Retail Launch Strategy

When growing in retail, you have to “Play to win, don’t play not to lose.” This advice from Amber Bylund is the key to succeeding in retail, as it’s a challenging environment for any emerging brand. Amber Bylund is the VP of Sales Strategy at Siddhi.

In this episode we discuss

• How brands should start in retail

• Building a retail launch strategy

• And more

Listen on Apple Podcasts or Spotify

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Mindful Goods is an awesome Amazon expert that can quickly get you started or optimize your pages for strong ROI. Get 10% of their services  use code FOODBEVY.

Maverick allows you to create individually personalized videos (with a customer's name) welcoming them to your community.