Running a Small Business: What I’ve Learned About Priorities

I’m a small business owner for the first time in my life and I must say, over the past year I’ve learned a lot. I don’t sleep much (I’m working on that) and I assume that many of our LibDib Makers, restaurants, bars and retailers are in the same boat. I’ve spoken to many of you who work long hours, have dumped your life savings into your business, and are working hard every day to make it happen.

Literally every day I get thrown a 100 things and for me, the most important thing I’ve learned is prioritization. Every morning I look at my to-do list and I pick the most important things I need to do that day. Here’s a little insight into what I’ve learned to focus on.

 

LibDib Priority #1 - Staffing

Given my business, staffing is number one. I need to have enough people to get the job done and I need to hire good people. I spend a lot of time making sure the people we hire are doers. I need people working hard and I need people who are flexible. I may ask someone to do a task that isn’t in their job description and I need them to get it done. Luckily, we have an amazing team who are all committed. I couldn’t do it without them.

I also have an amazing right hand man, Rich Brashears.  He is not only the co-founder and CTO of LibDib, but he really operates as the COO. He sleeps much less than I do, and he works twice as hard. He’s truly the reason LibDib has the best engineering team around. And, he’s definitely a cheerleader for all of us.

 

LibDib Priority #2 - Revenue

As the head of LibDib I need to make sure that I’m focusing on things that involve revenue. I put aside a large part of my day to make sure that we are focused on things that make money or that bring in an investment. After all, I have a staff to pay and people who rely on me.

 

LibDib Priority #3 - Is Everything Working?

Every single day I take a look at our systems. Are they working? Is there anything that needs to be improved? I have regular meetings with the team where we report on all processes. As a technology company and a distributor I can tell you, there’s a lot to check. I have a feeling that most of you feel the same way. Making sure things are running smoothly and adjusting things as needed, is super important.

 

LibDib Priority #4 - Networking

As CEO, my job is to network. In fact, this week I’m attending Women of the Vine Executive Summit in New York and the WSWA Women’s Leadership Council in DC. I’m meeting with partners, talking with Makers and overall working the market. I really enjoy this part of the business as I love meeting new people. Also, being able to network with other women in this male-dominated business, is a huge plus.

 

I hope this helps you just a little bit. As you struggle to check off the 100 things on your to-do list, remember that all small business owners deal with it. Once you determine what the 4-5 buckets are each day, you can more easily figure out what’s most important. I don’t have it totally figured out but I know that learning from other business owners has really helped me. And if you can get some sleep at night, that’s just a bonus.

A Message to Retailers: It’s Time to Get Crafty

It seems everyone in the industry is talking about how independent retailers can survive in the age of Amazon. We love Brad Rosen’s article “Did Amazon Just Kill Liquor Retail As We know It?” for that reason. The Amazon acquisition of Whole Foods is scaring a lot of industry people--and rightly so. One of the major reasons I started LibDib was due to consolidation (you can read all about my sales woes in another blog post).

 

Sure, my first frustration was distributor consolidation but it’s happening all around us: consolidation of family brands into large companies, distributors buying up small distributors, and so on. So what does all of this mean to you, the retailers? I’d say it’s time to change it up. It’s time to get crafty,

 

I’m not saying break out that old scrapbooking kit, I’m thinking more Beastie Boys style. It’s time to throw down and show your customers you mean business. It’s time to bring truly small production craft products into your stores.

 

By craft products, I mean stuff that previously was incredibly difficult to get a hold of. We all know that the key to independent retail shops is great customer service. That’s what keeps me coming back to the speciality store in my hood. They understand me and they recommend really great products that they know I will love.

 

And what do consumers love right now? Unique, small production stuff. That’s where LibDib comes in. Since we launched in March we’ve had Makers signing up on our platform each and every day. The majority of these Makers are people with incredible products who couldn’t get distribution and therefore, couldn’t get into your store. Now they can (in California and New York at least, more states coming soon!).  And because we charge a much lower margin than other distributors, you can sell these products at a competitive price. I should also mention that we are web-based so you can order craft products from the comfort of your office or in the back room during inventory counts. Makers ship directly to you and it’s super easy.

 

I’m not saying LibDib is going to save the world from Amazon but I do hope that what we are doing as a company will help all of the small guys survive and thrive. The small retailers, the restaurants, the bars, and the Makers; I want you all to succeed together.

 

So, my message to all of you retailers out there is don’t panic. Just reevaluate and change things up. Start using new technology like LibDib to order products. Change up your product offering and bring in super cool, new stuff that the larger chains just aren’t going to carry. Give your customers some beverage options to get excited about again. Get crafty.

 

Consolidation has given only the large brands a voice and shelf space. It’s time to change that and do distribution and retail differently.

Promoting for Makers: It’s Hard To Do Marketing When It's Your Own Business

Like you, I’m a small business owner and like you, I struggle getting everything done each day. There’s just not enough time! And that’s why many small brands aren’t able to market themselves. They simply don’t have the time or budget to go big. So they go home. I’m here to tell you that you don’t have to give up, there are a few things you can do each week to start (and keep) the marketing ball rolling for your brand.

First, when it comes to marketing, set aside some time for it.

Be it 1 hour a week or 5 hours a week, set aside a time each week to work solely on marketing. Start from the beginning. Figure out your competitive set. See what they are doing in social media, online marketing and public relations. Find out where they fit into the market and most likely you’ll find a spot where your products should be. Draft up a quick plan that will get you in front of the accounts and the consumers who could potentially buy your products.

Start your social media channels BUT commit to managing them.

Set up at least a Facebook page, Twitter account and an Instagram account. Add photos, logos and product information and make sure that all social accounts are consistent with naming and imagery. After all, you want it to reflect who you are as a brand and your products. Again, look to your competitive set or even other brands you like and emulate what they are doing. Don’t copy them (obviously), but pick a look and feel that works for you and then stick with it.

Manage your social media.

There is nothing worse for a brand than an abandoned Facebook page. So, once you start, make sure you set aside time each week to post. You don’t have to post every day but at least post a few times a week. Share photos of you working in the vineyard or distilling. Bring people into your story and brand.

Send your product to the people who matter.

Submit your products to competitions. Find out which journalists write about your product category and send them a sample (if they accept samples). Be sure to include marketing materials and tech sheets on your products when you send them.

Hire someone to help.

As a business owner you also need to know when to outsource. So, if you are overwhelmed, ask around and find a marketing consultant. Ask them to create your marketing plan, brochures and social media sites. You can typically secure consultants at competitive rates (the web is great for this). It may seem like you don’t want to spend the money on marketing, but that $500 spend could open up a lot of doors for you.

This is a tough business. We love it, but it’s tough. Compound that with everything you do and it can be overwhelming. Believe me, I know. But if each day or week you work on promoting your brand, over time it will grow. It may take a while for that to happen, but it will increase your brand awareness and hopefully brand loyalty!

How to Work the Market: A Quick Makers Guide to Selling

Working the market. Everyone talks about it but how do you really work a market? Who do you target and how much time should you spend selling? As I mentioned in my last blog post on brokers and selling with any distributor, you have to work the market. It’s part of owning your own brand. And, as distributor who used to sell for my family’s brand, I will tell you that I spent most of my time working the market. Here’s a bit of what I’ve learned.

My first piece of advice is to start local. Consider where you eat on a regular basis, where your friends or family eat, and promote your brand in those locations. Do you go to the same place every Friday night? Do you belong to a country club? Go there and sell. Another way to stay local is to literally map it out. Circle 20 square miles around your home base and work the market there. Introduce yourself to the person who does the purchasing. If they aren’t there, ask who is best person to contact is. Leave a business card behind. Just know that they don’t want to talk to you about buying a product during the busy lunch or dinner hour. They have customers to serve. You could also stop in during the golden hours of 2pm – 5pm.

The next stop is to make appointments, but remember that buyers are very busy. Some restaurants, bars and retailers won’t allow you to just drop in so you should call in advance and see what they prefer. A lot of times they will ask you to make an appointment and that appointment time will be months in advance. Don’t get frustrated. As I said, these are some busy guys and gals. Take the appointment and spend your time preparing for it. Review their beverage list and try to really understand what products they might be in the market for. Come to the appointment prepared.

Retailers are a little more open to appointments as they don’t have service to deal with. Remember that retail is 75% of this business and that independent retailers are looking for small production products. Craft, small production is hot right now and they can make money on those products. That should work to your advantage.

If you are a winery going into New York, take a trip to NY and build a relationship with the RB&Rs you want to do business with. Follow them on social media and reach out them when planning your trip. In NY, you need a solicitor’s license and LibDib can provide that for you if you are going to taste your wines while there. If selling in CA, you can just taste and sample with the appropriate stickers in place (LibDib is happy to provide you with some!) Place sample stickers on the bottles and you’re good to go in the Golden State.

Now you have the basics on how to work the market but how much traveling should you be doing throughout the year? I’d say that depends on you and your schedule. Locally, selling should be non-stop. Any successful Maker will tell you that they are always working the market. We have a small distillery on LibDib who is constantly building their account base. They use LibDib to invite accounts to join, to send suggested orders and even remind accounts to order. Any account will get a text and can order with one click on LibDib. Click here to watch a short video on the process. If you like to travel, do your research before you go and travel to different parts of CA or NY for work trips. Set up appointments and plan your meals strategically. If you really want to work a market that isn’t local, you’ll need to visit annually if not more. (You can also hire a broker which I talked about it my last blog post)

Remember, LibDib is a technology company and a distributor and our amazing engineers work almost around the clock adding new features and making our platform easy for you. We’re less than 6 months old and we’ve accomplished a lot in those few months, but we are always striving to improve our platform. We are also a full-service distributor and can help you out with any questions you may have. Just email us at libdib@libdib.com with any questions or ideas. And, if you have a sales person who wants to be trained on the platform, reach out to us and we can work with you as well.

After all, we’re distribution done differently and we can’t change this industry without you the Maker.

Cheers,

Cheryl Durzy

LibDib Founder & CEO

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.