How does DSD beverage distribution work?
Grocers and retailers of all sizes depend on their distributors to keep shelves stocked and customers happy. While it makes sense for certain product categories to pull stock from a centralized warehouse, other types are better suited for a more direct route from the manufacturer to the retailer.
One of the categories that benefits most from more direct distribution? The fast-moving SKUs of the beverage aisle. Here, we’ll explore direct store delivery, what it is, how it works, and why it’s ideal for beverage brands and the retailers who carry them.
What is direct store delivery (DSD) distribution?
Direct Store Delivery (DSD) distribution involves a distributor collecting product from a manufacturer and delivering it directly to the retailer. This distribution method bypasses warehouse storage and can be an efficient way to manage inventory that saves both time and labor.
Schedule a consultation with one of Buffalo Market's distribution experts today if you’d like to learn more about how DSD could be a good fit for your brand or retail store.
How is DSD beverage distribution different from centralized beverage distribution?
As its name would suggest, direct store delivery differs from centralized distribution in that the product travels directly from the manufacturer to the retailer.
Some of the biggest differences between these two distribution models include:
- DSD offers less-than-truckload (LTL) freight, meaning the retailer isn't obligated to order large quantities of a SKU in order to receive distribution—and vice versa.
- Because commitment is lower, smaller or unknown brands may have an easier time securing distribution through DSD.
- Some DSD distributors will deliver and merchandise products directly onto the sales floor, saving the retailer on labor costs.
- DSD distributors sometimes shoulder the burden of some—or all—unsold units (called credits).
Why is DSD distribution good for beverage brands?
Beverages are fast-moving SKUs
Beverages are considered a fast-moving consumer good (FMCG). FMCGs are products that either sell quickly due to consumer demand (soft drinks, bottled water) or because they have a short shelf life (dairy, fresh juice).
Items like these need near-constant replenishment to prevent out-of-stocks—the cardinal sin of the consumer packaged goods industry (more on that to follow).
DSD helps ensure shelves are constantly stocked by removing the intermediary step of warehousing, reducing the total time SKUs spend in transit and storage. DSD distributors also make more frequent trips between the manufacturer and retailer. Agencies like Buffalo Market even offer deliveries as frequently as daily.
DSD reduces operating costs
Bypassing the warehouse also removes the burden of transport and storage from the retailer, who would normally be responsible for receiving a shipment of product into their warehouses and storing it until it’s eventually distributed among their various store locations. All of those logistical steps require capital in the form of space, labor, and energy.
With DSD distributors, those resources are included. The distributor provides trucks and drivers, eliminating the need for warehouse square footage, workers to manage it, and the fuel and electricity required to power the whole operation.
DSD streamlines inventory management
Two of the biggest problems plaguing the retail industry are inventory management and out-of-stocks. A recent investigation of seven different European retailers found that more than half of the surveyed SKUs suffered from inventory inaccuracies.
Incorrect inventory counts result in buyers ordering the wrong quantities for replenishment, which in turn leads to faulty reporting and either overstocked or understocked items. Overstocked perishables like dairy turn into food waste—which is bad for your bottom line and the environment.
Understocked goods lead to dreaded stock-outs.
When a high-intent customer goes shopping for a specific product only to find it out of stock, that customer may choose a competing brand or even visit another store. Such a scenario could mean losing that customer, along with the lifetime value of their patronage.
Work with a full-service DSD beverage distributor
Buffalo Market is the fastest, smartest, most customer-centric food and beverage distributor in the industry. Our white-glove DSD service ensures shelves are stocked and merchandised as frequently as every day.
Our proprietary technology collects and analyzes sales data and makes it freely available to our brand and retail partners, giving them unprecedented transparency and control over their distribution.