How to Expand into Retail Without Sinking Your Supplement Brand (with Justin Osborne)
Summary — key takeaways
Plan for trade spend and “hidden” retailer costs. Listing/slotting, free fills, co-op, allowances, freight, spoils—these add up fast and can push total trade spend near ~20% (or more) if you’re not careful.
Cash flow will pinch. Retailers pay on terms (e.g., net-30 or longer). Free fills + slow pay = a working-capital squeeze. Model this before you say “yes.”
Sequence your rollout. Start DTC + Amazon → local independents → regional banners → national. Don’t chase 1,000 stores until you can support them.
Measure what retailers care about. Velocity (Sales Per Point of Distribution, SPPD) is the health metric they use to decide who stays on shelf.
Price for tomorrow, not just today. Set MSRP and costs to survive distributor margins and trade spend before you approach retail.
Packaging must sell itself. Five seconds from five feet: What is it? Why you? Why now? Make your front panel do the heavy lifting.
Pick the right partners. Distributors move product; brokers sell it. Use each for what they’re best at and don’t expect either to replace your strategy.
What we cover
The real cost of getting on (and staying on) shelf
How to structure a smart rollout path (and milestones)
Distributors vs. brokers: who does what—and when
Pricing, MOQ realities, and cash-flow planning
Packaging and retail storytelling that actually converts
The one metric retailers watch (and how to improve it)
The real costs: beyond COGS
Trade spend = the dollars you spend with the retailer to move product:
Listing/slotting fees (Canada: cash; U.S.: often free fills—your first order is free to fill every store the first time).
Co-op fees (often a % “pay-to-play” for in-program exposure).
In-store promos (temporary price reductions, features, end-caps, flyers).
Allowances & fees (ONA, freight adders, compliance fees, chargebacks).
Spoils/damages allowance.
These can push your all-in trade spend toward ~20% once everything’s tallied. Layer on payment terms (e.g., net-30/45/60), and you’ll feel the working-capital crunch—especially if you just shipped hundreds of free-fill cases.
Action: Build a P&L with:
MSRP → retailer margin → distributor margin → your net.
Promo calendar assumptions (depth/frequency).
Listing/slotting or free-fill accruals.
Terms and inventory cycle (cash conversion).
If the math only works at national scale, rethink now—scale rarely fixes a broken unit economics.
Rollout strategy that protects cash (and sanity)
Phase 0 – Prove it online.
Start DTC (your site) and Amazon (learn 1P vs. 3P). Validate demand, copy, price, and reviews. Fix returns and CX issues cheaply here.
Phase 1 – Local proof.
Secure 15–30 local independents yourself. If you can’t win a shelf and move units in your backyard, don’t chase chains yet.
Phase 2 – Distributor + broker.
Distributor (e.g., UNFI, Tree of Life, Horizon, etc.) moves product to hundreds of doors and manages store deliveries.
Broker acts as your fractional sales team—they sell you in, book promos, manage the retail relationship.
Tip: Distributors often have a sales arm, but they rep many brands; a broker gives you dedicated sell-in attention.
Phase 3 – Regional chains.
Target regionals (e.g., Metro/Choices/Healthy Planet-type accounts) to build velocity and trade math before going national.
Phase 4 – National banners.
Don’t pitch national chains until you can:
Fund free fills/listing fees + initial promo plan,
Show healthy SPPD velocity regionally, and
Support field activation.
A practical milestone: >$250k annual run-rate with strong regional velocity before you knock on the big doors.
Pro tip: You can do $1M+ in one major city (with 3–4 SKUs) before expanding. Depth > breadth.
Pricing & MOQ: set yourself up to win later
Start with shelf-back pricing. Pick MSRP that survives distributor/broker margins and routine promo depth.
Expect MOQs to hurt at first. It’s easier to lower price later than raise it. If you must start high, tell retailers you’ll sharpen price as volume unlocks tiers.
Keep channel parity. Retail buyers will compare your DTC and Amazon pricing history before authorizing. Don’t undercut them online.
Packaging that sells: “five seconds from five feet”
Your front panel must answer, fast:
What is it? (clear category and format)
Why you? (single, unmistakable POD: best-tasting; clinically substantiated dose; allergen-controlled; plastic-free; etc.)
Why now? (use occasion or outcome—post-workout, travel-ready, tummy-friendly)
Use big, high-contrast typography and a pattern-break color/shape to disrupt the shelf. Put the proof where eyes land: seal(s), number(s), short claim(s) you can substantiate.
Distributors vs. brokers (quick guide)
RoleWhat they doWhen to useDistributorWarehouses, trucks, EDI, compliance, delivers to storesWhen you need physical access to hundreds/thousands of doorsBrokerSells you in, manages buyers, builds promo plans, handles resetsWhen you need sell-in firepower without a full sales team
Find them: Industry shows (Expo West/East, CHFA), their websites, or referrals. Expect retainer and/or commission; interview like a hire.
The one metric retailers care about: SPPD
Sales Per Point of Distribution = your velocity per store. Top-line looks pretty, but velocity keeps you authorized.
Improve SPPD by:
Tight geo: cluster stores to concentrate awareness, demos, and out-of-home.
Fewer SKUs, more depth: don’t fragment your demand.
Consistent promos: planned, not panic.
Retail-ready pack: shelf presence, clear benefit, clean scans, correct case counts.
Local activation: UGC, samples, store staff love (sell sheets + quick training).
Avoid these expansion traps
“Yes” to 1,000 stores without a promo budget. You’ll ship free fills, then watch inventory stall.
Underpricing online. Retail sees it and either demands margin or passes.
Launching 10 SKUs out of the gate. Complexity kills velocity—start tight.
Expecting distributors to “sell it.” They deliver; you drive demand.
Skipping claims/regulatory review. That “tiny” claim can be a big chargeback—or worse.
FAQs
What trade spend should I budget?
Plan a base of 10–15%, then add co-op, spoils, freight, and ad-hoc fees; many brands land ~20%+ all-in during growth.
Do I need both a distributor and a broker?
Often, yes. Distributor = logistics; broker = sell-in and account management. Early on you may hustle independents yourself, then add partners as you scale.
How do I know I’m ready for national retail?
Healthy regional SPPD, watertight unit economics, funded promo plan, clean supply chain, and packaging that communicates in five seconds.
What’s the fastest retail “win” I can go get?
Local independents. Build a tight city footprint, collect velocity data and reviews, then bring that story to regionals.
Next steps
New / pre-launch brands
Book a Signature 1-on-1 Consultation. We’ll map your compliance retail readiness , and stress-test your testing and packaging so you don’t get blindsided by compliance issues..DIY fundamentals
Enroll in SSET (Supplement Startup Essentials Training) to learn which regs apply, how to complete a market/claims brief, and how to find and vet a co-manufacturer—then plug those decisions into a retail-ready plan.Established brands
Contact us for a Retail Expansion Compliance Audit. We’ll review your labels, claims, specifications, supply chain and deliver a prioritized action plan before you scale.