DISTRIBUTION IS KING

Who is more powerful:

A food manufacturer or the supermarket that shelves the food?

A clothing designer or the department store that decides to carry the clothes?

A musician or the store that carries the music?

The distributor carries the power. You may not like it, but it’s a fact of any business. If you don’t want to accept that this is the order of the world, then don’t go into business.

A story a friend once told me. Around 1994, Pepsi wants to enter the bottled water market. Everyone said they’d never succeed because the market was dominated by Evian and Perrier. Also, nobody would want purified tap water over spring water. They entered the market anyway. Within a few short years, they owned the market. Coca-Cola belatedly launches their water brand in 1999 to catch up. As of 2009, Pepsi’s water brand, Aquafina, was still the #1 selling bottled water in the US.

How did Pepsi succeed with arguably a product that is not as “high end” as spring water brands? The answer was distribution. They leveraged every supermarket and convenience store to make sure their water was available. If they’re not in the store, they can’t sell. If they can’t sell, they don’t lead the market.

Another story. I was working with a musician who was slowly building up DIY success. Steady increases of download sales every week. In one week they sold the equivalent of what they had sold the previous 26 weeks combined. Why? A store featured them on the front page. Distribution wins.

Distributors are more successful because there are less of them and it’s harder to create. He who offers something of high demand that is hard to find will win. One can fight to get more money from a distributor, but only when one has the leverage. Only 3 companies really have that leverage in the music space. Only a few dozen artists really have that leverage in the music space. But even then, you can only get a bit more money. The distributor will always get bigger bucks.

If you’re in this to make money, realize the distributor will be more successful than you no matter who it is and move forward.

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