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Bringing products to market for nearly 30 years, Rob Horgan paid a visit to CMS Distribution’s London headquarters to see how the company is maintaining its place in the supply chain and what it’s doing to improve its position.
Like a comedian delivering a well drawn-out punch line or a batsman crafting the perfect cricket innings, timing is key to a distributor’s success. Rush a product to market and it will fail to generate its optimal value, hold it back for too long and it could become obsolete, irrelevant or – worst of all – ignored altogether. Thankfully, the team at CMS Distribution have somewhat perfected the art for almost three decades.
No longer is the distributor simply a middleman acting as a stepping-stone between vendor, retailer and reseller. As the team at CMS explained to me, the distributor’s role is always evolving. Now expected to offer services from providing market strategy, marketing advice and product placement, the majority of a distributor’s workload in 2017 takes place in the office, and not in the warehouse. That explains why CMS has recently moved into its swanky new HQ in Old Street, just around the corner from Amazon’s London base.
As managing director David Elder explained, the role of the distributor is becoming ‘increasingly flexible and tailored’ to each individual client’s needs. That said, a distributor’s bread and butter – getting the product out of the warehouse and into the shops – is still a big part of what it does on a day-to-day basis.
“In a broad brushstroke, the main role of a distributor – in this current space – is to find the right time for a product to gain market acceptance,” he said. “This encompasses; when to start, when to go mainstream and when to look for the next big thing. However, we are seeing vendors being much pickier and we have to offer them more flexibility. The role of a distributor is now about finding new services to put on the table, to make sure vendors see the value in distributors and to ensure the distributor’s status in the supply chain is maintained.”
As Elder explained, a move to cut out the vendor began to gather speed around 10 years ago, with many vendors toying with the idea of going directly to retailers. However, in the past few years CMS has seen interest in distributors return as vendors realise the value of outsourcing. “We have seen a lot of vendors buying back into the distributor’s purpose,” he said. “Inevitably companies will actually save a lot of time and money by outsourcing to distributors who are dedicated to getting a product into stores. It should also give a product more chance of success, as a distributor can offer tailored route-to-market schemes to suit each client.”
“The role of a distributor is now about finding new services to put on the table, to make sure vendors see the value in distributors and to ensure the distributor’s status in the supply chain is maintained.”
David Elder, CMS Distribution
While many distributors do not have the time to map out a tailored plan for each product, CMS’s conscious decision to take on fewer clients (between 25-35) means they can offer a more personalised and bespoke service that some of their (larger, in size) competitors simply can’t.
“We pick the vendors that we think are going to work best with us as a partner,” Elder said. “While many distributors will use trade shows to pick up vendors, our reputation means that we don’t have to do that. Instead, most clients will come to us, having been referred by other partners. If we like the product then there is about five of us who will discuss if we want to take the brand on. It obviously needs to be financially and commercially viable for us to do so.”
He added: “Regrettably, there have been occasions in the past where we have had to turn away really interesting products because of something like a returns policy which would make it totally non-profitable for us. That is a real shame, as at the end of the day, the most exciting part of the job is helping to bring these amazing new technologies to the masses. Ultimately we are in this business as we want to find that next multi-million pound product and ride the coat-tails of the supplier.”
Left-to-right: Marketing manager Andrew Miles, marketing executive Jennifer Eltringham, managing director David Elder.
One such vendor that CMS has been shouting about is Fitbit. Now a household name, the team at CMS admit that although they liked the brand as soon as they saw it, they could never have known it would have the success it has. “Just like any product we take on, it is always a bit of a gamble,” Elder said. “As much as you like a product, sometimes they just don’t take off. With Fitbit, we knew it was good but you can never be entirely sure of its success.”
He added: “We were originally referred to them by a previous client. We went to them and instantly liked the product. We pitched to them, telling them how we would take their product to market and how it would be beautifully marketed in-store. Inevitably we won the business because they were passionate about their product and care about what they do with it. They saw us as an investment rather than a get-rich-quick scheme. In the end Fitbit exploded and they have made a lot of money.”
For the majority of products that go through CMS, a tailored market plan will be laid out. For the majority of clients this will begin by slowly feeding a product into the marketplace. “If we take a product on the usual strategy would be to go to a specialist retailer such as Maplin and John Lewis,” Elder explained.
“That way we know, we can spend a lot on the point of sale displays and we can even train up staff on how to use the technology for demonstrations. There is no point putting something straight into Tesco if nobody understands the technology. Equally, knowing how to handle the end of a product’s shelf-cycle and knowing when to go mainstream is an important decision. Dripping a product out before going mainstream gives it a longer shelf-life time, which effectively gives it a better chance of making the money it is worthy of making.”
“We want to find that next multi-million pound product and ride the coat-tails of the supplier.”
David Elder, CMS Distribution
As well as taking control of a product’s route-to-market, distributors have had to become inventive in their quest to stay innovative. Last month CMS launched its first-ever Tech Xpo. Bringing retailers such as John Lewis and Amazon together, the event presented an opportunity for vendors to show off their goods. And as marketing executive Jennifer Eltringham explained, the wheels are already in motion to put more events in place.
“The Tech Xpo was a great success and we are already working on making that an annual event,” she said. “We are always looking to build on our marketing services for vendors. The Xpos are great as we can show of all of our brands at once.
“However, we are looking at offering more personalised services as well. This includes everything from putting on events for clients to working hand-in-hand with PR teams to help design product stands in stores.”
With its fingers seemingly in all the pies available, another area in which CMS is also looking to expand is on social media. Marketing manager Andrew Miles explained: “We are looking at using Twitter to continue to grow the B2B side of the business. Using social media will allow us to connect with more vendors, not just in the UK but all over the world.”
Having acquired distribution companies TNS Connect and Widget in the last 12 months – as well as picking up a gong at the PCR Awards – it is clear to see that CMS is moving in the right direction (a rather full trophy cabinet at HQ reaffirms that). What is encouraging to see is the importance CMS puts on the supply chain and its place in it by moving with the changing demands on a distributor. For the sake of the channel as a whole, long may that continue.
