Sales Strategies: Sell it yourself, hire a broker or hire a sales team

You’re on LibDib. You’ve posted your products. You’ve created a nice-looking page. You’ve figured out a competitive retail price. What’s next? Selling.

Ugh you say. We hear you and that’s why we want to put in our two-cents about selling. Many Makers assume that once you get a distributor, they do all of the market work for you. Wrong! With any distributor, you still have to work the market. It’s part of owning your own brand. A typical distributor would require you to create a go-to-market plan and while LibDib.com isn’t traditional, we want you to be successful in selling your products. So, what’s your plan?

You have a few options:

  1. Create a target list of accounts and go after them.

  2. Hire a broker who will charge you a percentage fee but will work the market for you.

  3. Hire a sales person who will charge you a percentage and an up-front fee.

Which option is best? Well, it depends.

When I was selling my family’s wine brand, Vegan Vine, I set up a sales plan that included targeting vegan restaurants. I would give them a call, follow them on social media, look at their menus, and just try to determine where their interests lie. I would then work hard to build a relationship with them. For more of my rambling about how to work a market go here. Incidentally, my next blog post will include my creative ideas on how best to work a market.

If you hire a broker or a sales person, they will work the market for you, hitting the street and creating a relationship. For many Makers, using a broker is super helpful. They do the dirty work and serve as your experts. You can work the market with them several times a year. Brokers make sense for a lot of people.

You can also hire a sales person or sales team to help you out. An independent sales force will work for your brand and call on the accounts that are most likely to buy your products. One of the companies we’ve worked with is BevStrat (www.bevstrat.com) who offers an independent sales force for Makers. They create go-to-market sales plans and can help you implement your sales strategy. BevStrat owner, Brian Rosen, is currently open to new Makers and we hope to work alongside them as we roll LibDib out nationally.

We are also currently in the process of putting together a recommended list of brokers. If you are a broker who works in California and New York and you would like to be included on this list, please email is at libdib@libdib.com.

Remember a goal without a plan is just a wish so make a plan that works for you. Best of luck selling!

 

OND.....Act Now!

OND: October, November, December. The three-month period when distributors do not allow new brands, work-withs, price changes, new product introductions, or pretty much anything supplier related. OND is when 40% of the booze in this country is purchased. If you are a distributor sales rep, its heads down and sell, sell, sell. 

In the old world, if a Maker did not have a distributor lined up by September 1, they could forget being a part of this busy season. There was no access to the market for OND. Sales reps also needed to be trained/tasted, product had to be placed in the warehouse, and OND incentives put in place (good luck with that small suppliers).

That’s all changed with LibDib! We can provide access for OND holiday sales.

Thinking of a gift pack? No problem. Traditional distributors often get worried about post-holiday inventory of gift packs and other specialty items. Via LibDib, Makers have the ability to get creative with their product mix. 

That being said, there are filing deadlines in NY and they are coming up August 23 for October 1 distribution. In California, we have a little more freedom without the price postings issues.

If you want end of the year sales, now is the time.

Get on the LibDib platform, start inviting accounts and suggesting orders. It’s intuitive, easy to use and will hopefully change distribution for businesses of all sizes, everywhere.

Distribution, Done Differently.

LibDib: Our first 100 days....and counting

Wow, it’s been a while since my last blog post! Things have really been crazy in LibDib land (good crazy!) I was in New York twice in June as we officially opened sales there on June 1. While in New York, I met our “on the street” platform ambassador, spoke at a couple of conferences, enjoyed some amazing dinners, and visited our NYC office. 

Over the past month, LibDib has hit some pretty amazing milestones as well. We announced our first 100 days in business via a press release at the end of June and we thrilled to report that we now offer almost 600 craft spirits, wines, ciders and beers on our platform. That number is growing every month and accounts are signing up every single day.

We have several (what I like to call corporate accounts) starting up in California, which we have been nurturing and building since launch. Orders are coming in and expansion partnerships are being developed. These partnerships will ultimately help our Makers sell their products to a larger audience (which is what LibDib is all about).

It’s hard to believe the strides we have made since launching at the end of Q2. We have only just begun our quest to help the alcohol industry in the U.S. evolve for the better. Giving every brand access to the three-tier system is key to its survival—and the brands out there who could not get distribution but now have distribution know what I’m talking about.

LibDib is growing fast and we are getting ready to hire. If you know good sales or marketing people in the San Jose, CA. area, please let them know we have some new opportunities.  Email us at libdib@libdib.com for more information. 

On a fun note, LibDib hosted our official launch party at the end of June. It was so great celebrating with friends, family, investors, Makers and Buyers!  We look forward to annual LibDib Anniversary Parties to celebrate our successes along the way. Click here for a Dropbox with all the pictures from the party. Thanks to everyone who helped us celebrate!

Coming soon on the blog: OND….if you want in, now is the time!

Launch Party Fun!

Launch Party Fun!

The Three Tier System Can (And Will) Work for Everyone

Every day I talk to around three to four Makers about LibDib. Makers who have products on the platform, some who just signed up and others who are exploring their options. I love telling them my long term vision for LibDib and I always share a couple of stories about how LibDib came to be.

When I worked in sales and marketing at my family’s winery there was a consistently frustrating moment for me that happened on a regular basis. A Friendly Retailer from Any State, USA, would leave me a voicemail. Friendly Retailer received a request from a customer for our latest and greatest wine. He wanted to bring in a case for this customer and then begin looking at our other wines. Then the inevitable question: “Who is your distributor in Any State?”

My heart would sink. Why? Because we didn’t have a distributor in Any State, USA. I couldn’t send said Friendly Retailer a case directly because of the legalities of the three-tier system. Sadness would set in. I would call Friendly Retailer back and explain the situation. His ultimate goal was (and always is) to help a customer get what they want. So, he would then give me a list of three or four distributors that he liked and worked with, saying, “Hey, you should call them!”

Early in my career, I would get super excited….of course I would call all of them!  And I thought for sure I’d get distribution because I had a buyer ready to go!

Well, that scenario literally never worked out for me. I would call. If I got a call back there would be a long, long process of sending samples and waiting for the tasting committee to try the wines. Weeks, sometimes months would go by. Upon follow up, two big IFs would be at play:

  1. IF the distributor does not have a competing product in the same price point (unlikely due to the huge proliferation of brands out there and the shrinking number of wholesalers).

  2. IF they are taking on new brands.

IF we got to the next step, we would go on to pricing, marketing dollars and support, a market visit, presenting at the sales meetings and then visiting the market 3 to 4 times a year to work the market and drum up sales.

Wow, that’s some serious up front costs and time (small producer = wears many hats = not a lot of time) to get a case to a retailer that wants to buy it. And by now, at least 2 to 3 months would pass and the retailer would have recommended something else to their customer and moved on.

As Founder and CEO of LibDib, here’s what I want:  I want a someone who lives this same scenario to go to LibDib.com. This producer (a distillery, a winery, brewery etc.) looks at the platform and sees a list of all 50 states. They click on Every State, USA, in which Friendly Retailer is located. They enter their products, they enter their pricing. Maybe they have to wait a day or two, or even a few weeks for compliance. But then….like magic, they have distribution in Any State, USA. They send a personal invitation (check out the new invitation feature training video HERE!) from the platform to Friendly Retailer, who logs on and the first thing they see is the product they requested. A few clicks, and the case is on the way, straight from the winery (maybe a stop and a “rest” depending on laws, but that’s a detail we deal with).

This may sound like fantasy, but a few months into our LibDib launch, this scenario is actually a reality. Granted LibDib is only in California and New York for the time being but these are our first markets. The platform is working and Makers and RB&Rs are joining our platform daily.

Excuse my French, but this is cool shit. We have happy producer, happy retailer, happy customer. The three-tier system works well in this scenario and everyone gets what they want! Yay!

One final thought. Imagine a brand-new producer. All green and excited and ready to take on the world with their awesome new wine/craft gin/vodka/stout. They log on to LibDib.com, pick 10 states they want to sell their products in. Products are priced, submitted and compliance stuff happens. Boom. New stuff is available to buyers within weeks. Oh and don’t forget the LibDib convenience of posting your products once, sales materials all in one place, no aging inventory at distributor warehouse, as well as the ability to work directly with buyers. 

Distribution, done differently. Let’s do this!



 

The Little Things About Logistics

A lot of LibDib Makers have been asking questions about packaging and shipping. It’s really interesting coming from the wine side of things. Wineries have been shipping Direct to Consumer for a number of years now (thanks to great organizations like Free the Grapes and The Coalition for Free Trade). They know where to get their boxes from, how to pack up and how to label. They have accounts with the shippers and if they need licenses or compliance, they know how to get it.

Distilleries, on the other hand, do not have that luxury of direct to consumer shipping experience out of their home state. It boggles my mind that spirits cannot be sent direct to consumers outside of state lines; but that is the way it is. So, a lot of our out-of-state distillers are somewhat confused about how to package up their products and ship them to restaurants, bars and retailers (or to our licensed warehouse depending in state regulations). 

Shipping It
First and foremost, we have had the most luck with FedEx. FedEx makes it clear that licensee to licensee shipping is ok. Keep in mind that LibDib is a licensed distributor (we can provide you with those license numbers if needed) and our Makers are all licensees. Restaurants, bars and retailers are also all licensees. So, anywhere a Maker sends a product, whether to our warehouse, or direct to an account, it is a legal (in allowed states), licensed entity. We manually check every license of all buyers on the platform.

An account must be set up with a FedEx account manager and all packages must be labeled for reporting purposes. Be sure to have your shipping options set up and ready to go prior to going “live” on the platform. You don’t want to disappoint any accounts with delayed shipments.

West Coast producers have a GREAT option with Golden State Overnight. GSO does not require a repack and can quote larger shipments like pallets.

Pack it
Packaging is another question the distillers often have, which is something wineries know pretty well. The corrugated boxes and cardboard insert is common and something wineries add on to their shipping costs overall (which we encourage everyone to do).

Need some ideas? Check out these great, affordable options for boxes:

http://gorillashipper.com
http://spiritedshipper.com

Store It
LibDib has excellent partnerships that can help Makers with affordable storage and shipping via preferred Third-Party logistics providers. Storing product in a local warehouse has a number of benefits, including no repacking time or expensive secondary packaging and a speedy delivery. In California, we utilize California Wine Transport. In New York, we are “that close” to signing a deal for a LibDib warehouse.

We can help with transfer, storage and all delivery services. Drop us a line at libdib@libdib.com for more information and rates.

 

 

 

 

 

 

 

A Little Story....

I was thinking this morning about LibDib and why I decided to go on this path of the high-tech start-up, two-sided marketplace, never sleep well again, journey. I was comfortable in my previous job at the family winery. Working hard, but not too crazy. And I enjoyed it.

But I was frustrated. Year after year, I didn’t make sales numbers (which is sort of embarrassing when you work for your Dad). I was frustrated with our distribution and how even after 20 years in the business, my family winery was being left behind. We couldn’t afford the manpower or the cash to compete for our wholesalers’ attention. We had feet on the street. We had incentive programming. We were the squeakiest of squeaky wheels. But it wasn’t enough.

And then this happened. And that’s when I lost my mind.

Clos LaChance (my family’s winery and my former employer) has a secondary brand called The Vegan Vine. We had some distribution set up in a few states based on a little bit of business with a few Whole Foods accounts. The winery’s partner in the brand is John Salley, a former champion NBA player and TV personality. And what a personality he is. I did a couple of ride-with days with him in New York. People literally followed him around and we sold over 50 cases in about 4 hours (best work with I have ever had!). He is so charismatic and just a nice guy.

Anyways, he was on a trip for a different project, in a different state and city all together. One where we had a distributor. A big distributor. He went into a small natural foods/organic restaurant and walked out with a three-case order!

He called me. I called the distributor. They told me to email the manager who would find the right rep. I emailed. Nothing for a few days. John called me to see if the cases had shipped as the restaurant kept asking him. I called the manager. The manager said they would take care of it. Nothing. The restaurant kept calling. I kept calling and emailing. John kept texting me asking why the wine was not being delivered.

This went on (no joke) for about 30 days. When finally, the manager at the distributor told me they didn’t go to that account because they don’t order enough. The distributor had the inventory. I had the order. But the account was not worth it to the distributor. So, I lost the sale.

John, who doesn’t come from the alcohol industry, was pissed. And the guy does not get pissed. He totally all caps texted me. But for him, the most easy-going guy ever, that was dramatic. He kept saying “Cheryl, why can’t you just send them the wine directly. They really liked it!”

I had to explain about the three-tier system. John says “well, then I’ll send them the wine and they can pay me!” After I talked him off that ledge, we both kept scratching our heads and wondering if there wasn’t something else to be done. How can we efficiently get our wine into the hands of accounts that want it?  

So here I am. Liberation Distribution is here to help.

If you want to send 20 cases to one account in New York, you can do that with LibDib. If you want to try out a new brand, yep…. we are here. If you want to post a couple of tasting room only wines for a few accounts, that is also acceptable (new “choose by account/allocation” feature in CA coming soon).

We are flexible. We allow anyone access to the market who wants it. We are a technology company that can make changes and add features that help our Makers to SELL. We are distribution done differently. Join us and together let’s change the world.

What I have to say about Pricing, which is a lot, but bear with me

Many Makers have been asking us here at LibDib about pricing. They want to know how best to price their products and then submit an offering to restaurants, bars and retailers. My nearly 20 years of experience has given me a little bit of knowledge about what buyers expect when it comes to pricing in a competitive marketplace. However, it is ultimately up to you as the Maker to decide how much you want to be paid for your products. And pricing really does matter. If you price your products too high, buyers might be hard to come by. If you price too low, your products could appear on the shelf for lower than you would prefer.

So, let’s get down to the question at hand: How should you price your products on the LibDib platform?

When I was working at my family’s winery, I would do a simple math problem (I am kind of bad at math, so simple is necessary). The FOB (the price I sell my wine to distributors) price was half of retail. If I sold my wine for $40 per bottle, then I would sell it to the distributor for $20 a bottle or $240 per case. In most cases, the distributor would ask for extra “marketing spend” or Depletion Allowances (DAs) for programming or QDs (Quantity Discounts). So that $240 was never the total amount of money I would receive for my case of wine (that’s a whole other blog post for later).

Keep in mind there is no extra “spend” with LibDib as your distributor.

Let’s look at traditional distribution:

Let’s assume the case is going for $240 as mentioned above. Let’s assume shipping and taxes is about $8 a case, which brings it to $248. Then there’s a 30% margin per case to the restaurant, bar, or retailer, bringing it to around $322.40. Assume a retailer marks it up 40% to the consumer and you are looking at $37.61 per bottle or a total of $451.36 per case. The retailer can add a little margin here as well and sell it for $39.99. But if you are listing it on your web site for $40, most retailers want a little bit of an advantage for giving you shelf space. (Oh and I am just talking about retail here because restaurant pricing is all over the place.)

 Often a $40 bottle of wine retail will show up on the menu at a restaurant for $80. Consider “By-The-Glass” pricing and usually the cost of the bottle is the glass price. A $120 case of wine at $10 a bottle will be $10 a glass. Margins on food are low, so restaurants make it up with the sales of alcohol.

Now, let’s look at the LibDib model and show you where you can save money:

With LibDib you have the choice to save money OR to give the retailer an opportunity to make more margin and therefore choose your product over other commodity items that are traditionally pushed by big distributors.

Half of retail is still $240. Now, add YOUR cost of shipping to this. Say it’s $25, which brings a case total of $265. The LibDib margin is 15% bringing it to $304.75 for the buyer. Assuming the retailer marks it up 40%, the total is $426.65 per case or $35.55 per bottle. Round that up to $36 per bottle. You can keep that $2 (or $24 per case!!) for yourself and put your price in a little higher, or you can offer it to the retailer in extra margin. Make sense?

For more about LibDib’s margin and why it is different in each state, please click here for my previous discussion on the matter.

I often say that the LibDib model saves money. I have demonstrated this above with straight up math (I LOVE math…not).

But in deciding which distribution route to take, Makers also need to consider the “additional” costs of working with a traditional wholesaler that include:

·Incentives: Often to the sales reps in the form of trips to wineries, gift cards, gas cards, and straight up cash. Each state has different rules about that. However, if you can’t afford to be in the incentive game, your competition can. What product do you think the sales rep is going to push? The one that earns an extra $10 per case plus the opportunity to win a trip to Italy? Yep. 

·Billbacks for DA’s, SPA’s, QD’s or FSAs. (OMG that’s a lot of acronyms!)

o   DA: Depletion Allowances

o   SPA: Special Purchase Allowance

o   QD: Quantity Discounts

o   FSA: Floor Stock Adjustment: This is a fun one and can be thousands of dollars. When old inventory needs to be cleared out to make way for new inventory, it gets discounted. End of vintage or a new SKU. Or, when you realize your wholesaler is not doing their job you go to another distributor and they have to pick up aged inventory. You pay the wholesaler laid-in, then discount to the new wholesaler. The joys of cleaning up a mess. Super fun to coordinate (is there a sarcasm font here?).

Obviously, the cost of shipping is a big expense. The lower the shipping is, the better solution for everyone. Give us a call and we can help find solutions through our partner warehouses, special common carrier rates and other ways to save on shipping. This is something LibDib Central Command will always be working on for our Makers. As we scale, we hope to provide better solutions for all. The lower the shipping rates, the more dollars available for “feet on the street,” which is the next blog (coming soon).

 

 

Margin, Margin, Margin

Distribution, done differently. That is our motto. And it resonates true in everything that we do. The LibDib model is different than the traditional wholesaler model in a number of ways. Most importantly, our margin is between 15%-20% vs. 30% (or more) that other distributors make on their resales.

Here is a little more detail about this as the percentage varies by product and “ship to” locations.

Regulations vary by state, which is what makes building a platform like LibDib complicated (but incredibly fun work for our brilliant engineering team). At the time of this blog we have two markets available: California and New York. Our goal is to be in every state over the next few years.  Ten states are being researched and we are applying for new licenses as we speak. 

A breakdown of margins by state and by product: 

#1 - California:

Beer from in the state and out of the state = 15% margin.

Wine from in the state and out of the state = 15% margin.

An interesting thing to note is that LibDib (or any distributor of record) is required to pay the state excises taxes in certain situations. Traditional wholesalers add up the FOB cost of the product, plus shipping, plus taxes, then charge margin on top of that number. This is called “laid-in.” So, a $200 case of wine at $.20-.$.30 per gallon (2.378 gallons per case) goes to the tax man, plus $6 shipping has a “laid in” for a total of approximately $206.60. With the distributor margin of 30% the wholesale price of the wine to the buyer is $268.60.

The LibDib model: Same case of wine at $200, plus shipping (let us say $25, but it can be less in some situations, just email us to discuss) totals $225. At a 15% margin you are looking at $258.75 to the buyer.

Liquor from inside the state = 18% margin. Why? As the distributor of record, LibDib pays the state excise taxes for liquor in the state of California. That tax is $3.30-$6.60 per gallon. Hence the increase in margin.

Liquor from out of state has a higher margin. Why? Because in California, liquor from out of the state must make a stop at our licensed warehouse in San Jose. This is called the “at-rest” law. Once the liquor comes to rest on our premises, LibDib delivers it “the last mile.” LibDib covers the cost of that last mile. Hence a higher margin, on top of the tax margin.

#2 - New York:

Wine from in state and out of state in NY = 15% margin.

Spirits from in and out of state in NY = 18% margin.

At this time, LibDib is only selling Wine and Spirits in New York. We need to get a separate office in New York to do beer. Sigh…another story for another time. We are in the process of posting prices with the state for a go-live date of June 1, 2017.

Again, here are those pesky taxes. For wine, it’s $.30 per gallon (no biggie). However, for spirits it’s pretty high at $1.70 per liter (3.78541 per gallon, so could be $15+ per case of 12). Here is where LibDib needs to cover our costs. However, good news is that there are no stops at a warehouse required in New York. Cool!

What does LibDib earn for that margin since the Makers handle most of the delivery and sales? (more on sales and “Feet on the Street” coming soon). We built and will maintain the web (and soon to be mobile) platform that facilitates those sales. We handle all the invoices and collections. We take the A/R risk. In states where credit cards are accepted, we pay the percentage fees back to the card “sharks.” We have the appropriate licenses in each state. We do all the required reporting, pay taxes and work with government entities to get products posted, certified and assigned to territories.  Oh and we have a ton of cool features coming soon that will help sell, sell, sell.

But most importantly, we give ANY Maker of ANY size access to the market if they want it. That is truly something different in the United States where distributor consolidation has kept many small to mid-sized Makers on the sidelines when it comes to Trade Sales. NOT ANYMORE! Consumers want small, craft products. Let’s get them in the market and change distribution now!

Welcome to a new way of doing things. Join us at LibDib.com

The Adult Beverage Version of the Berlin Wall has Fallen

Today, Phase II of Liberation Distribution launched. This is the second phase for reunited brands and retailers. This is the phase where orphaned brands can now find their homes on shelves without having to scale the wall or mire in the that middle area known as the “death strip” That area where you are with a distributor you don’t like or doesn’t sell you as a priority. That is really a slow, painful march towards out of business.