Founders spend most of their effort on the product and comparatively little on how it will reach buyers. In a small market this is a serious misallocation, because distribution is the constraint far more often than product quality is.
| Route 1 | direct to the end customer |
|---|---|
| Route 2 | direct to retailers |
| Route 3 | through a distributor |
| Route 4 | institutional supply — hotels and the public sector |
The structure in a small market
Two features shape everything.
Concentration. A handful of distributors and a small number of significant retail groups may account for most of the volume in a category. This means your distribution strategy is a decision about a few relationships, not a channel plan.
Personal relationships. Buying decisions are made by people who know the market and each other. A recommendation carries weight that no presentation matches, and a poor first impression is hard to reverse.
These cut both ways, which is worth stating clearly. Getting to the decision-maker is far easier than in a large market — often a single introduction — but there are fewer alternatives if that conversation goes badly.
Route 1 — direct to the customer
Selling yourself, through your own outlet, market stall, or online.
Advantages: full margin, direct customer feedback, complete control of presentation, and you learn what buyers actually want.
Costs: your time, and you carry all the selling effort.
This is usually the right starting route regardless of where you intend to end up, for a reason that is easy to miss: it generates proof. A distributor or retailer asked to take an unproven product is being asked to take a risk. The same conversation after you have sold consistently for six months is entirely different, because you can show what sells, to whom, at what price.
Route 2 — direct to retailers
Approaching shops individually and supplying them yourself.
Advantages: better margin than through a distributor, direct relationships, control of which outlets carry the product.
Costs: you handle deliveries, invoicing, collections and merchandising for every account. That workload scales badly.
What retailers actually want, in rough order of importance:
- Reliable supply — a gap on the shelf is worse to them than a slightly weaker margin
- A product that sells through, not one that occupies space
- Acceptable margin
- Correct labelling, including any legally required information
- Support — replacing damaged stock, taking back what does not sell, helping with display
The first item is the one new suppliers most underestimate. A retailer who runs out and cannot restock will give the space to someone else, and regaining it is much harder than earning it the first time.
Route 3 — through a distributor
The distributor buys from you and sells on, handling logistics and retail relationships.
Advantages: immediate reach across many outlets, no delivery infrastructure needed, one customer to invoice, and their existing relationships work for you.
Costs: a significant margin, loss of direct contact with retailers, and dependence on their priorities among many lines.
Questions to settle before signing anything:
- Is it exclusive, and if so, for what territory and how long?
- What performance is required to keep exclusivity?
- Who sets the retail price, and can you influence it?
- Who pays for marketing and promotions?
- What are the payment terms, and who carries stock risk?
- How does it end, and what happens to stock and customer relationships?
Point two is the one that matters most and is most often omitted. Exclusivity without minimum volumes is a way to have your product locked up and neglected — the distributor holds the territory, gives it little attention, and you cannot go elsewhere.
Always tie exclusivity to performance, and make the remedy automatic rather than requiring a dispute.
Route 4 — institutional supply
Hotels, restaurants, schools, hospitals, and government.
Advantages: large regular volumes, predictable ordering, and a single relationship worth many retail accounts.
Requirements: consistent supply to specification, food safety certification where relevant, ability to invoice on terms, and the working capital to wait for payment.
This is where the constraints discussed in the article on tourism leakage bite: the barrier is usually reliability and paperwork rather than product quality.
Public sector supply typically adds a formal procurement process — registration as a supplier, tender procedures and documentation. Slower to enter, but stable once established.
A sensible sequence
- Sell direct first, to prove demand and learn
- Add a few retailers you can service well
- Approach institutional buyers once you can guarantee consistency
- Consider a distributor when the servicing workload exceeds what you can carry
- Keep some direct sales permanently, for margin and for feedback
Point five is a deliberate choice rather than an oversight. A business that sells entirely through intermediaries loses contact with its customers, and stops learning what they actually think. Retaining one direct channel keeps that connection alive.
Frequently asked questions
What shapes distribution in a small market?
Concentration and personal relationships. Reaching the decision-maker is easier than in a large market, but there are fewer alternatives if the conversation goes badly.
Why start by selling direct?
Because it generates proof. A retailer or distributor asked to take an unproven product is taking a risk; after six months of consistent sales you can show what sells, to whom and at what price.
What do retailers value most?
Reliable supply. A gap on the shelf matters more to them than a slightly weaker margin, and a supplier who runs out will lose the space to someone else.
What is the danger with exclusive distribution?
Exclusivity without minimum volumes lets a distributor hold the territory while giving your product little attention, with no route for you to go elsewhere. Tie exclusivity to performance.
