Why We Are Quitting Some Major Natural Products Distributors

We are all aware of the exponentially rising costs of being in a products distribution business. Amazon, Google and Facebook squeezing small businesses for the remaining few percentage of margin left over after the colossal rise in materials and logistics costs, not to mention record inflation.

Yet another entity which many distribution businesses and retailers need to contend with is a so called ‘partner’ – large national distributors.

A few specific national distributors have become dominant forces in the distribution of foods and general merchandise throughout retail, everywhere from large chains to single location shops.

The problem: while these distributors are very large organizations, they are extremely disorganized, poorly run organizations who do not care about their smaller ‘partners’. We can’t speak directly to how larger corporations view these entities but we do know that many organizations, both suppliers and customers who we have spoken with directly, would jump at the opportunity to cut these large national distributors out of their business and work only with smaller (but much more efficient) distributors and/or develop direct distribution arrangements.

Bottom line is, doing business with these large distributors is painful, time consuming and results in a complete loss. Following are just a few of the issues that our team has had to endure over the past several years due to working with these large distributors:

- Nobody at these organizations knows their responsibilities and they are certainly not willing to accept any responsibility at all.

- It is impossible to communicate efficiently with any individual at these organizations. It takes over 48 hours in the middle of the week + several emails to get a reply to a simple question such as ‘what is the current minimum weight needed for FOB order pickup?’

- For any orders that we ship them, these large distributors who are making enormous profits send several nonsense deductions which cut our low profit margin, ultimately resulting in a net loss for us, their supplier.

- Suppliers are charged heavily to just list products in their catalogs, the honest distributors we work with do not charge for this!

- Even the delivery to some of these large distributors’ warehouses are fraught with complications and inefficiencies. Receiving teams at their Distribution Centers are impossible to work with and they reject our shipments without cause, leading to a double shipping cost as we need to accept the goods back at our own DC.

- Many times, purchase orders do not meet our minimum for free shipping but we provide them with free shipping anyway. This leads to higher freight charges for our products to their destinations.

- We repeatedly receive POs which are extremely low and cannot possibly be fulfilled even though they are told the orders are below minimums ad infinitum!

- These large distributors never keep their offered payment terms and they are always deducting the offered discount past their allotted 45 days payment terms.

We as manufacturers and Brand owners spend millions of Dollars to develop and support our branded products. In order to grow our business we have few choices but to accept using these Large Distributors and to become their slaves, giving up our small margins.

It is not right that a few large organizations have monopolized our industry and they do not care about their business partner’s survival (either Suppliers and/or Customers). We are sure that we can run our businesses without using these larger distributors, in a much more profitable and efficient manner.

For this reason, Maxim will only be distributing our goods through honorable and trustworthy distribution partners going forward and we are seeking additional distributors who can serve our customers efficiently.