Negotiating in Wholesale (Even With Brokers and Distributors)

Wholesalers will ask for a lot (free cases, free fills, etc.)

Have you been in negotiations with a new distributor and they’re asking for a 35% margin? Working with a co-packer and they want you to commit to 15,000 cases per run and, based on your data, you know you can’t sell that many units before the product is past its shelf life? Negotiating in wholesale may seem scary.

Do you feel like the broker, distributor, or store has all the power?

You have power, too. You have the power to walk away if the deal doesn’t work for you and your business.

We feel pressured to say yes just to get our foot in the door. We end up with financial and emotional stress because ultimately it was the wrong decision for the business.

Instead, decide what you are and are not willing to. Be clear, for your business, what you can and cannot afford. You’re building a business that works for you. When you blindly say “yes”, you’re building a business that works for someone else. Easier said than done? 

You have three options here:

1. Just do it. Brands most often do this because they’re so eager to get on the shelves. They justify it as a business expense or investment. You’ll tell yourself it’ll pay itself back. PAUSE. Don’t go down the path because you think you have to. You do not.
2. Negotiate. If you can’t do what they want, what can you do?  All things considered, can you offer something else? This is the power of negotiation. Negotiation is when 2 or more people come to the table with different options and agree on something together. If you just say “no”, you’re not negotiating. So, what can you offer instead? Everything is negotiable. Here are a few ideas: Maybe offer an introductory promotion or a buy-one-get-one for a set period. Or free fill on 2 of your 4 SKU’s. Offer to sponsor their staff party with your beverages. Promise quarterly promotions down the line. There are countless things you can offer. It comes down to what your business can and cannot afford, both financially and from a capacity standpoint. In your own mind, you must be crystal clear, before walking in, what you can and cannot do. Stick to it.
3. Say “no” and don’t negotiate. At first, this often shocks business owners. If a partner (retailer, etc.) asks for something you simply cannot do, you have the power to say no. When you’re negotiating in wholesale, it may feel like you’ll lose the business altogether, but that’s not always true. Stand up for yourself and have the conversation with the broker. Tell them you don’t have the capacity. The partner may say ok, and the relationship moves forward. If they say no, you’re right back where you started. At least you haven’t lost anything.

As a matter of fact, a buyer’s job is to increase sales and margin in their department. Savvy grocery buyers try to negotiate with all vendors. Part of the job, when you negotiate in wholesale, is to negotiate and see what brands can bring to the table as part of establishing the relationship. It is acceptable to say no. You have the power.

In the end, if you say, “No” and they don’t want to work with you, feel confident that you made the right decision for your business. Financially, emotionally, physically. Walk away when something isn’t aligned with your business. 

“No”? Above all, you can handle it. 

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