Alberta Distributors and Wholeseller Marketing
Colony Distribution Inc., based out of Lethbridge, Alberta, was founded in 2005 under current company president Joe Chenier. Here, in the words of Mr. Chenier, our readers are given a rare in-depth analysis of the product evolution for an Alberta-based distributor.
The original plan was to sell boot and shoe covers, specifically, a product called Sho/Booties.
The covers were targeted at the service industry such as plumbing and HVAC companies, electricians, and pretty much any portion of the service industry that would have to enter a residential or business setting where there was concern to keep the customers’ floors and rugs clean – Sho/Booties would reduce charge backs from damaged property.
With this focus on helping the service side of the trades industry to provide better customer service, we added disposable coveralls, disposable gloves, and carpet and laminate floor covering for renovation jobs to our product line.
Our marketing was built around promoting us as the go-to-guys for ensuring the satisfaction of the end-customer’s need for cleanliness. After adding a few more lines that fit with our marketing strategy we decided to expand the breadth of our product line.
One product that we discovered was the Water AlarmTM. This product is a small unit the size of a computer mouse that operates as an early detection system for water leaks. Its targeted use was residential and commercial spaces where water leaks could cause significant damage from units such as sump pumps, hot water tanks, toilets, etc.
If a problem were to arise, the home owner would get early warning and can then contact a plumber. The reason I took this product was that it still fit with my current marketing. I was already carrying lines for workers that entered these spaces and the Water AlarmTM fit.
Unlike the original lines where I had to set up the market and build a group of retail and industrial buyers, the Water AlarmTM fit in so well that marketing overhead was minimized. Fitting in with my current line was important but what was more important was that I saw the real value in this product.
The Water AlarmTM had direct benefits for the end user, primarily peace of mind and the chance to save a lot of money by avoiding water damage. For my resellers, such as plumbing companies, it offered two things:
(1) the margin offered a large profit potential and
(2) the alarm is labelled with the plumber’s business and contact information. In the event of a leak, a home owner doesn’t have to search for a plumber to call. Up to this point all of the products we distributed were very connected.
After the Water AlarmTM I diverted from the original plan simply because a great opportunity came my way. An Eastern Canadian boot company was going out of business and I was offered its inventory at a ridiculously low price. The offer was too good to turn down.
With about 2500 pairs of boots I was now a work and safety boot reseller. However, simply because you get a product at an incredibly low price doesn’t guarantee success. We quickly found out that we didn’t have an established market for the product. Even when we sold them for half of what other retailers were the product wouldn’t move.
Our marketing just wasn’t geared towards this product. We put in about $3000 in advertising but came out at break even. Over, say, 10 years of business, a company might put $250,000 into marketing but even then, that marketing can only carry what it was designed for. Imagine an auto repair shop selling ice cream on the side – it won’t work.
This venture showed us, at a high cost, what our brand limit was in the eyes of our market. Returning to our proven marketing plan after the lesson to stop testing how far we can push things, our latest product line is called Advanz Goggles and Face Shields.
These disposable units cover more expensive permanent goggles/ safety glasses and provide 30 lenses at the turn of a dial. Before I picked up this product line, I had to ensure it offered the end customer a high level of value. Take a guy who is wearing a pair of $20 safety glasses or even $200 prescription glasses. Imagine then, that whatever material that he is working with splashes on his face and coats his safety glasses. This event could be a quick loss of his $20 or $200 investment.
Wearing the Advanz Goggles that have 30 lenses in a small roll to the side allows, for only 35 cents, one turn to clear the splash back and keep the $20 or $200 safety glasses in perfect shape. I saw this value and negotiated for Canada-wide distribution rights. I would recommend joining relevant organizations that support the people your business sells to such as the Canadian Urethane Foam Contractors Association Inc. of which we are members. In dealing with my suppliers I was exposed to a lot of great products.
When you request a manufacturer’s line, one thing they want to know is how strong your marketing is. Taking on a line is a big responsibility in the eyes of a manufacturer. They want to know that you have access to the market, that you have the ability to service the customer, what part of the market you will be targeting, and what part of the market will work – channel selection is important.
Choosing a sales channel is a very strategic decision. We could go retail and hope for greater sales volume but at a lower profit margin, or, we could deepen the distribution channel with, say, provincial distributors. We could also market the product toward plumbing companies which would offer a better margin but at a greatly reduced sales volume.
Manufacturers also want a company with a good ability to inventory the product, which means the size and quality of the warehouse space including racking, forklifts, etc. When it comes down to it, successfully purchasing a line is more about demonstrating how you will manage the product than it is about your ability to simply write a cheque.
In addition, financial resources to carry marketing costs such as brochures, websites, sales staff, etc are important. In order to pick up a manufacturers line, once you only had to bring in 20 or 50 pieces of a product; today, you are more likely to be committed to bringing in 1000s of units (depending on the product of course).
Getting Canadian or even Albertan distribution rights can be a huge commitment. One of the understandings that we must all have as owners and distributors is that having a product is nice, but the real work is taking that product to market, demonstrating its value, building sales channels, and finding consumers who will purchase the product. The initial meetings with manufacturers will seem like hugs and kisses once you enter the market with your new product.