Quick answer: Sell direct to retailers when you want more margin, control and relationships, and can handle logistics, compliance and many accounts. Use distributors when you need reach into many stores or foodservice operators, warehousing and simpler billing, and can afford their margin. Many brands do both: direct for a few large accounts, distributors for the long tail.
Key takeaways
- Direct = more margin, more work.
- Distributor = more reach, less margin.
- Compliance (GTINs, case packs, EDI) matters either way.
- Hybrid models are common.
Side-by-side comparison
| Factor | Direct to retail | Through a distributor |
|---|---|---|
| Margin per unit | Higher | Lower (distributor margin) |
| Reach | Limited to accounts you win and serve | Many stores and operators |
| Logistics | You ship to each account or DC | Distributor warehouses and delivers |
| Order size | Often larger, fewer accounts | Many small orders consolidated |
| Billing | Many invoices and payment terms | One main customer |
| Compliance | Each retailer's rules | Distributor's rules (plus some retailer rules) |
| Data | Direct sell-through data | Often less visibility |
| Relationships | Direct with buyers | Through distributor reps |
| Cash flow | Retailer terms (often net 30–90) | Distributor terms |
The economics
Illustrative branded tumbler, $24 MSRP:
| Path | You sell at | Your landed cost | Your gross profit |
|---|---|---|---|
| Direct to retailer (50% retail margin) | $12.00 | $4.20 | $7.80 |
| Through distributor (30% distributor margin) | $8.40 | $4.20 | $4.20 |
Direct looks better per unit, but subtract your extra costs: freight to many locations, EDI and compliance tools, chargebacks, account management and slower payment. See our wholesale vs. retail pricing guide.
Compliance work you take on when going direct
- Packaging hierarchy: SPS Commerce notes that pack-quantity and barcode mismatches are common compliance defects that trigger fees. See our case pack configuration guide.
- EDI: purchase orders (850), ship notices (856) and invoices (810) must match shipments; see this overview of the core X12 documents and our EDI guide.
- Routing guides: carriers, appointment windows and labels.
- Chargebacks: see our chargebacks guide.
When direct makes sense
- A few large accounts make up most of your volume.
- You have staff (or a 3PL) to handle compliance and shipping.
- You want close relationships with buyers and data on sell-through.
- Your margins can absorb freight to many destinations.
When a distributor makes sense
- You want to reach many independent stores or foodservice operators.
- You lack warehousing or fulfillment capacity.
- Retailers prefer to buy through their existing distributors.
- You'd rather manage one customer than dozens.
Hybrid models
- Direct for key accounts, distributor for everyone else
- Distributor for foodservice, direct for retail
- Regional distributors in some markets, direct in your home region
Set clear rules to avoid channel conflict: consistent MSRP, defined territories and no undercutting partners.
Questions to ask a distributor
- What margin and fees (slotting, marketing, freight) apply?
- Which accounts and regions do you serve?
- What are your minimums and reorder patterns?
- What sales support will your reps provide?
- What data will you share on sales by account?
- What are payment terms?
Getting ready either way
See our guides to selling to big-box retailers and preparing for a line review.
Merch programs at scale
Affogato Bean produces branded mugs, tumblers and merch for cafés and multi-location brands, quoted at multiple quantities. Talk to us.
General information, not financial or legal advice.
Frequently asked questions
Is it better to sell through a distributor or direct to retailers?
Direct selling usually earns more margin per unit but requires you to handle logistics, compliance and many accounts. Distributors take a margin but provide reach, warehousing and simpler billing. Many brands use both.
How much margin do distributors take?
It varies by category and distributor, often in the range of 20–35% of their selling price. Ask each distributor for their terms and any additional fees.
What do I need to sell direct to big retailers?
Usually GTINs at each packaging level, compliant case packs and labels, EDI capability for orders, ship notices and invoices, insurance, and the capacity to meet delivery windows.
Sources
- SPS Commerce, “Case Pack Configuration: How to Build a Pack That Works at Retail.”
- CData, “EDI for Manufacturers: X12 850, 856, and 810.”
Sources checked October 2026. Statistics are reported as published by each source.