Having previously owned a brokerage, and being on the vendor side for many years, this is a question I have asked myself often of late, and not lightly. There has been a significant shift and consolidation of Natural Products brokers over the last year. This has implications for stakeholders across the industry. These developments include:

1. The acquisition of iLevelBrands by Hanson Faso Sales and Marketing
2. The acquisition of Presence Marketing/Dynamic Presence by PLTFRM
3. The acquisition of Nature’s Trading by Precision Sales and Marketing
4. The acquisition of Maximum Marketing by Alliance Sales and Marketing
5. The unfortunate closing of Main Street Sales and Marketing

These are only the items that are publicly known. More than likely, there are other closures and consolidations that are not readily known. In addition, many longtime brokers and principals are reaching an age of decision (retire/sell/close). Also, economic conditions and costs make it more difficult for the smaller to medium-sized broker to be financially viable. They simply don’t have economies of scale. When you add all of these together, there is great change ahead for Natural Product manufacturers, and those who represent them.  

So, what’s driving these changes?  

There isn’t necessarily one factor, but a combination. First, as costs go up, it’s harder for smaller guys to sustain themselves. New brands generate little to no revenue (at least initially), and often when they do, they move on to larger brokers, or their own teams. Second, as more new brands try and fight for retail placement, the more leverage or strong voice you can have, the better. In short, the big dog can have the louder bark. General market conditions, competitive brands, marketing/promotional dollars, and various other conditions can have an effect as well.

I have personally experienced many of these factors. Having owned a brokerage for many years, I often found myself dealing with situations that were beyond my control. These included:

• Management shakeups
• Poaching
• Non-payment
• Whims

As a result, I made the decision to sell out and move back to the brand/manufacturing sides of the industry. I did find that the broker experience was very valuable interacting with many brokers over these many years. Almost like being a “player’s coach.”

And what does all this mean?  

Companies have fewer options available for field representation, and now they need to make even more strategic decisions. Here are a few points to think about:

1) What am I looking for in terms of coverage? Do I need “pioneering,” or brand maintenance?  

This largely depends on whether you are a new-to-market or well-established brand. New brands typically need more attention to gain retail traction. This means your broker needs to be willing to commit to that. Many larger brokers don’t have either the bandwidth, time, or desire to engage in this pioneering exercise. As a result, you may now have fewer options. Smaller brokers (many, the subject of the above acquisitions) have traditionally been willing to take a chance on a new brand with the hope of catching lightning in a bottle. Larger brokers often have dozens (or more) brands under contract already. They are often unwilling or unable to devote resources to a brand that may not produce revenue for months (or longer).

2) Am I willing to pay a retainer?

An alternative for manufacturers is to pay a larger broker a monthly retainer. This guarantees income for the broker. This is paid either as a “draw against commission” (whichever is greater), or as a guarantee for a fixed period of time. This often brings a smaller brand to a larger broker’s attention. That’s the plus. The minus can be (A) It doesn’t guarantee retail success, and (B) It doesn’t guarantee broker attention.

3) Can I hire my own sales force?

You can, but as a new or emerging brand, without significant startup funding, the cash outlay is enormous. You’re looking at:

• Salary
• Benefits (insurance, 401K etc.)
• Car/car allowance/mileage
• Bonus

There are positives to this approach. You have a dedicated sales team, free of conflicts or distractions. In effect, you “own” their brain, rather than simply “renting” with a broker. You’re able to dictate what reporting you require and have more accountability. However, the vendor needs to make the determination if it’s worth the expense.

4) Do I have any other options?

There are other options (limited as they are). One is to bootstrap it and go it alone. Some people call this “Preaching the Gospel” of your brand. This is a very difficult approach, with no guarantee of success. It usually involves a lot of individual travel, many, many phone calls, and (perhaps) just a bit of prayer. Another option is engaging a professional telemarketing organization (yes, they do exist). These organizations act as your electronic sales force. You can structure fees based on number of calls per month as well as specific target geography. However, you have no “feet on the street.” Retailers may not take you as seriously, making it harder to gain placement.

You can also make the decision to go digital-only.  This means trying your luck with Amazon, Walmart.com, Targat.com, etc. Hey, if it hits then you can be in a great position to enter conventional retail later. If it doesn’t, you could be sitting on stale inventory that nobody wants, tying up capital, and tarnishing your brand.

So, what are my conclusions?

As a new and emerging brand, the marketplace is more challenging (and potentially more rewarding) than ever. However, this shift in how to go about that success requires more due diligence than ever before. As with anything today, you need to pay very careful attention to your go-to-market strategy and weigh all factors in determining your best course of action.