The Distributor Dilemma: Hidden Friction in Your Wholesale Channel
Distributors promise scale and simplicity. But for many brands, they deliver complexity, confusion, and lost opportunity.
The Illusion of Scale
If you’re a growing CPG brand, you’ve probably been pitched by a distributor or use one currently. The promise is compelling: immediate access to thousands of retailers, logistics handled, and a frictionless path to scale. But for many brands, the reality is far from ideal.
We’ve heard this story many times from brands: "They said we’d be in 500 stores. Six months later, we don’t know what stores we are in and for those that we are in, we can’t even get a sell-through report."
The Core Pain Points of Working with Distributors
Lack of Visibility
Distributors act as the middle layer between you and the retailers. You often don’t know which stores are carrying your product, how it’s performing, or when it’s out of stock. You lose critical visibility that could help you drive sell-through, launch new SKUs, or build local campaigns.
Slow and Opaque Reordering
Retailers want to restock the products their customers are asking for. But with a distributor in the middle, reordering can be clunky or delayed. In many cases, retailers even give up and reach out to the brand directly, only to be told to go back to the distributor.
This ping-ponging back-and-forth leads to delays, extended stock-outs and you, the brand losing a valuable opportunity to make additional sales and get additional exposure to new customers.
Pricing Pressure and Margin Erosion
Distributors take a meaningful cut, and often forcing brands to lower their prices to remain competitive. Once you factor in shipping, discounts, and trade spend, your margins can erode fast, even as top-line revenue looks healthy.
Misaligned Incentives
Distributors prioritize what sells easiest. They’re not emotionally or strategically invested in your brand. If another brand moves faster or is more profitable, yours might quietly get deprioritized, regardless of long-term potential.
Poor Communication
When issues arise, like missing shipments, incorrect invoices, out-of-stock items, retailers often reach out to the brand first. But because the distributor holds the data and controls fulfillment, you're left scrambling without real answers.
Margin Erosion
Here is an example showing how quickly margins can fade when using a distributor. To achieve the same profits, a brand would need to sell ~5 units through a distributor compared to 1 unit direct:
A Real Example: Wildway Granola
Kyle Koehler, CEO of granola brand Wildway, shared a stark experience with his distributor. When he followed up about a delayed payment, he was shocked to learn he actually owed them $25,000. In another instance, after sending $10,000 worth of granola, he received just $2.50 in return. “The cost to mail the check is more than that,” he said.
A former finance professional turned food entrepreneur, Koehler found it difficult to raise his granola prices. He explained that about half the increase was due to surging distribution expenses.
“Once brands start to realize how much gets shaved off the top, there’s not much choice,” he said. “It’s go out of business or raise my price to weather the storm.”
In contrast, brands like Onesto Foods have used Vanik to work directly with retailers and generate reorders with full control of the relationship without raising prices (and in some cases, lowering prices while achieving greater profit). That’s the whole point of modern wholesale software. You don’t need to blow up your wholesale strategy, but you do need to build a smarter layer on top of it.
What Brands Actually Want
Modern brands are built on connection and data. They want:
Direct relationships with retailers
Control over when and how reorders happen
Better margins
Feedback loops that help improve forecasting, operations, and strategy
Distributors, by nature, block most of that.
How to Make the Most of Distributors (If You're Already Using One)
Not every brand can or should cut out distributors entirely. But if you’re working with one, there are ways to regain control:
Request retailer-level reporting: Push for transparency on where your products are sold and how they’re performing.
Support your top retail accounts directly: Even if fulfillment goes through the distributor, your relationship doesn’t have to. Offer promo materials, check in regularly, and gather feedback.
Automate reorder prompts yourself: Use software like Vanik to detect order frequency and send reminders, even if the final transaction is routed through the distributor.
Negotiate touchpoints: Some distributors will let brands retain contact with key accounts. Ask for permission to handle reorder emails or customer success.
Track your own demand signals: Stay ahead of distributor delays by using your sell-through insights, social mentions, or Shopify data to anticipate restocks.
The goal is to supplement the distributor’s reach with your brand’s intelligence and relationships.
Leverage Alternatives
Software platforms like Vanik allow brands to scale wholesale without giving up the relationship. Brands can:
See who’s buying
Automate timely, personalized reorder flows
Make reordering effortless for retailers
Keep their margins and their data
You don’t have to choose between scale and control. Vanik gives you both.
Conclusion: Own the Relationship, Own the Channel
Distributors aren’t evil. They made sense in a pre-digital world. But for today’s omnichannel brands that value direct relationships and data, they increasingly feel like a liability.
The future belongs to brands that keep their retail relationships close.
Ready to see how Vanik can help your brand take back control of its retailer relationships? Get in touch to learn more.
