PPN #25: Why Your Distribution Strategy Needs a Plan B

Hey there! 👋 

These past few weeks have been... intense for CPG brands.

Between potential 25% tariffs with Canada and Mexico and TikTok's uncertain future in the US, we're seeing a stark reminder: over-dependence on any single channel is risky business.

I get it. When you find a channel that works—whether it's a key distributor, a social platform driving most of your sales, or a marketplace giving you consistent growth—it's tempting to go all in. The numbers look great, the momentum is there, and scaling feels within reach.

But here's what keeps me up at night: I've seen too many promising brands hit a wall because they put all their eggs in one distribution basket. One policy change, one algorithm shift, one fee increase—and suddenly your whole business model needs to pivot.

Want to build a more resilient distribution strategy? At Product & Prosper®, we think about every process in 3 core steps: Audit, Build, and Manage. And today, we’re sharing exactly how to tackle distribution diversification through those steps.

Let’s get into it →

AUDIT: Map Your Current Exposure

• Calculate revenue % by channel - Break down your sales across distributors, direct-to-retailer, DTC, and marketplaces both annually and seasonally. Any channel representing over 50% of revenue is a red flag.

• Identify single points of failure - Look for critical dependencies in your supply chain, distribution network, and key relationships. The goal is to spot what could bring your business to a halt if it disappeared tomorrow.

• Map margin structures across channels - Calculate your true margins including chargebacks, spoilage, and hidden costs like marketing requirements. You need to understand real profitability, not just revenue.

• Document your highest-risk dependencies - List accounts representing over 20% of your business and identify any geographic concentrations or seasonal vulnerabilities. This helps prioritize where to diversify first.

• Understand your true costs by channel - Factor in everything from slotting fees and freight costs to broker commissions and merchandising expenses. Most brands underestimate their real channel costs by 20-30%.

• Audit competitor distribution strategies - Study where your competitors are selling, which channels they're avoiding, and why. Their successes and failures can inform your strategy.

BUILD: Develop Your Distribution Mix

• Research alternative channel options - Explore DSD, independent distributors, B2B marketplaces (like Faire or RangeMe), direct-to-retailer relationships, and foodservice opportunities. Each channel has distinct advantages and operational requirements.

• Create channel-specific pricing structures - Build pricing that accounts for each channel's unique costs and promotional requirements. Leave enough margin for sustainable growth.

• Build operational processes for each channel - Design systems for ordering, fulfillment, quality control, and communication that can scale. Document everything.

• Develop your pitch for new partners - Create compelling, data-driven presentations customized for each channel type. Focus on why you'll succeed in their specific ecosystem.

MANAGE: Execute & Optimize

• Start small in test markets - Choose representative geographic areas to test new channels before broader rollouts. It's better to fail fast and cheap than slow and expensive.

• Track ALL costs religiously - Monitor everything from shipping expenses to promotional costs and labor time. You can't optimize what you don't measure.

• Monitor velocity weekly - Compare performance across channels and watch for patterns that can inform your broader strategy. Weekly monitoring catches issues before they become problems.

• Build direct relationships with key accounts - Maintain regular communication with buyers and operations teams regardless of your distribution model. Strong relationships create resilience.

• Create your own sales database - Don't rely solely on distributor data to understand your business. Build your own system for tracking sales, feedback, and market trends.

The Bottom Line

Listen—I know diversifying distribution feels overwhelming. It's a lot easier to focus all your energy on the channel that's working right now. But the brands that become household names? They're playing the long game.

This isn't just about protecting yourself from tariffs or fee hikes or algorithm changes. It's about building a brand that can weather any storm and seize opportunities when they arise. The time to build those alternative channels isn't when you need them—it's before you need them.

That's exactly why we take this systematic Audit → Build → Manage approach with our clients. When you have a strong foundation and multiple paths to your customer, sudden market shifts become opportunities rather than existential threats.

Worth spending the time to get this right. ❤️ 

Cheers,

CG

P.S. If you are headed to Expo West, Product & Prosper would love to support you at your booth! Hit reply to this email and let us know if you could use a hand. :)

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