An interview with Keith Ohta, President of Hawaii Candy. Keith’s company also provided distribution services to local producers.

HFMA: What does a distributor do?

KO: A distributor delivers, invoices, and possibly merchandises the goods at retailers.

HFMA: What about selling. Will a distributor do that?

KO: If you are selling on the mainland, sales would be done by a broker. A broker finds and works with a distributor and sells your products.

HFMA: Are there differences between a local distribution program and a mainland distribution program?

KO: Yes. It is more likely that local manufacturers will work with just a distributor. The distributor typically works with the manufacturer to formulate a sales plan and a course of action. The distributor usually is the one who has direct contact with the targeted buyers/retailers to sell the products and programs, deliver and invoice the goods and possibly merchandise the products. The distributor usually purchases the inventory from the manufacturer whereas the broker receives an agreed upon commission percentage of sales. In the case of the mainland, a broker is more necessary because of the vast areas that need to be covered. There may be several distributors in a given state with possibly a single broker.

HFMA: How much will a distributor cost?

KO: Distributor margins vary from company to company. The selling margin range may be anywhere from 15% to 30% of sales depending on the company and the product.

HFMA: How do I find the right distributor?

KO: Finding the right distributor is key to success. A good start is to ask other manufacturers who use distributors, ask the buyers you are targeting for their recommendations, and find a distributor who sells products similar to yours.

HFMA: Do I need a distributor?

KO: In many cases you do. If you do not have an in-house sales staff, a distributor would probably be necessary. Many retailers are trying to eliminate the amount of companies they deal with, especially if the manufacturer is very small and has just a few sku’s. The distributor already has the necessary contacts and the expertise to help you successfully sell your products.