You should weigh up the advantages of disadvantages before deciding to supply your food or drink products for a supermarket or retailer to sell. This will help you decide whether it is right for your product and business plan.
Advantages of supplying to supermarkets
The benefits of selling through super markets include:
- Easier to deal with one large customer rather than a number of smaller independent customers.
- Increase in sales with access to a larger customer base.
- Increase in brand awareness of your product with possible nationwide coverage.
- It may be easier to access financial assistance as banks may be more willing to lend to your business if you have a supplier contract with a well-known supermarket.
- Supermarkets have a lot of experience in selling different products and may be able to offer you advice and guidance that will help increase your sales eg product design and packaging. See design for business success.
- Some supermarkets or retailers run business improvement schemes that can help businesses that supply to them improve the efficiency of their processes and grow their operations.
Disadvantages of supplying to supermarkets
Some of the downsides of selling through supermarkets are:
- The price you get for your product will be much less than if you sell direct to customers.
- You could become vulnerable to a drop in demand, price decreases or a squeeze on profit margins from the supermarket.
- You will be under pressure to keep up with demand if your product sells well. You may have to invest in new equipment or expand premises to manufacture more of your products.
- Your product may only be given a trial period on the supermarket shelf.
- Some supermarkets or retailers may insist on being the only exclusive seller of your product or may insist on your selling elsewhere at a higher price.
- Some supermarkets or retailers may audit their supplier to ensure certain criteria are met or insist on a business achieving certain food safety accreditations before being considered as a supplier