Thursday, August 4, 2011

Selling to Small Retailers

I suppose someone could decide to sell a product only to small stores as a matter of 'conscience.' The idea being that 'big box stores' are icky.

There seems to be a more common-sense reason for wanting a lot of small-to-medium accounts, instead of a handful of huge accounts.

Let's say that XYZ Widgets sells 100 units a month to 1,000 stores. I haven't a clue what their widgets are, and it doesn't matter. Their chief competitor is PDQ Widgets, that sells the same number of widgets a month: 100,000.

The difference is that PDQ Widgets sells 50,000 units a month to one major retailer, 40,000 units monthly to another big chain, and 10,000 a month to about a dozen smaller accounts.

Then the 40,000 widget per month chain decided that they'd start stocking a different brand of widget. One of XYZ Widgets' accounts quit buying, too.

But PDQ lost 40% of their income - while XYZ lost 0.1% of theirs. 'Nuf said.

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