We are adjusting our distribution margins to support the incentives program from 20 to 25 percent. You can now earn more money each quarter!
Want to earn extra money? We have exciting news. We want to reward great performance and create a win-win all around. Each quarter, our team will run a performance report, based on the benchmarks discussed in this article. You will receive your supplier performance report and send us an invoice for what you've earned.
As part of this roll-out, we are adjusting our distribution margins to support the incentives program from 20 to 25 percent. Your distribution price stays the same, meaning you earn the same amount on each purchase order, and now you have the opportunity to earn even more each quarter through our incentives program.
Before we dive into the details, let’s quickly review the pricing supply chain.
How Does Distribution Work?
Distributors manage the logistics of getting products from food manufacturers, like yourself, to businesses that then resell the products to their consumers. This means they order products from you, store it in warehouses, and then distribute to stores, restaurants, hotels, gyms, and more. There are three tiers of pricing as you move across the supply chain:
Distributor Pricing - Price you sell to distributors
Wholesale Pricing - Price distributors sell to retailers
MSRP - Price retailers sell to consumers
The price, in each step of the supply chain, reflects the COGs to sell a product and make a gross profit. Since each operation has different COGs, the margin also varies.
Distributors in the CPG industry typically take a 25% margin.
Updated Union Kitchen Distribution Policy
Starting April 11th, 2022 we are increasing our distribution margin from 20 to 25%. This 25% margin is more in line with the industry standard and what Rainforest Distribution operates with. This increase will affect all members using Union Kitchen Distribution.
Your distribution price stays the same, meaning you earn the same amount on each purchase order, and now you have the opportunity to earn even more each quarter based on the following milestones:
- 1% Margin Returned: Fulfillment Rate - 95% fulfillment rate; zero missed POs
- 1% Margin Returned: 2 New Clients per Quarter - New accounts and re-activated accounts eligible
- 1% Margin Returned: Overall Cases Sold - Over 150 cases per quarter
- 1% Margin Returned: UKG Demos - benefit can only be redeemed once; and minimum 3 stores in a quarter to be eligible
- 1% Margin Returned: Overall Sales - Over $8,000 in sales per quarter
What Does This Change Mean for My Business?
It means you can earn extra money! Each quarter, you will receive a performance report from our distribution team. If you achieve any of the milestones above, send us an invoice at accounting@unionkitchen.com for the amount you have earned that quarter. We will then pay you back for the money you earned!
As a supplier, you are responsible for determining the price you sell your product to the distributor. The wholesale price and MSRP are then set by the distributor and retailer, respectively.
The change in the distributor margin means they will now be selling products at a higher price to wholesalers. In turn, this means your MSRP is may increase. However, the retailer is ultimately responsible for deciding how much they merchandise your product for.
If you do not want your wholesale price or MSRP to go up, you can lower your distribution price. Union Kitchen Distribution will be communicating this change with all of our retail customers. If you have any questions, please feel free to reach out to support@unionkitchen.com.