MLM – A Real Option for Distribution

Seattle PI – Inside Entrepreneurship:

Q: My company markets a pure aloe juice that is a potent wellness beverage. We’ve signed up a grocery sales broker for retail but find that gaining new distribution is very slow. What can we do to expedite product introduction?

Paul N.

Bellevue

A: It’s often hard for ever-optimistic entrepreneurs to accept that a founding business strategy may not turn out to be the best, fastest or most lucrative road to success. To this, I encourage early-stage entrepreneurs to be flexible and opportunistic. There is, as they say, more than one road to Rome.

Unfortunately, your chosen distribution strategy — going retail under your own brand name — is probably the most capital-intensive strategy possible. Why? Because the grocery and drugstore industry has consolidated into about 10 major chains, each with centralized buying offices that favor established brands. Further, retailers charge upfront non-refundable “slotting fees” and offer short time periods (less than six months) for new products to prove sales popularity. As such, young companies don’t have a lot of time to build a sales following. In fact, it’s a risky road where most new products fail.

Now here’s the good news. There are many other less costly ways to successfully distribute your product. Here are four roads to research:

…Multilevel marketing: Some great American brands were established through multilevel marketing — MLM — or direct sales organizations including Tupperware and Avon.

Although starting your own MLM organization takes considerable sales organization expertise, there are dozens of existing MLMs that are searching for new consumable products for their sales forces to sell.