Introduction
If you've spent any time trying to scale retail distribution, you've heard both terms — broker and distributor — often used interchangeably by people who should know better. They're not the same thing. They solve different problems, get paid differently, carry different risks, and are right for different moments in your brand's growth.
Choosing the wrong one — or hiring one when you actually need the other — doesn't just waste money. It can stall distribution momentum, damage retailer relationships, and create operational commitments that are difficult to unwind.
What a Distributor Actually Does
A distributor is a logistics and sales intermediary that purchases your product, warehouses it, and resells it to retailers. The key word is purchases — a distributor takes ownership of your inventory.
Distributors provide:
- Warehousing and fulfillment
- Retailer relationships — established accounts across their network
- Route-to-market scale — hundreds of accounts through a single relationship
- Compliance handling — EDI, labeling, and logistics requirements
What distributors cost: Distributors typically operate on a margin of 18% to 30% of the wholesale price, depending on category and volume.
What a Broker Actually Does
A food broker is a sales representative who works on your behalf to secure retail placements — but never takes ownership of your product. Their entire value is their relationships and sales expertise.
Brokers earn a commission — typically 4% to 8% of net sales — in exchange for:
- Pitching your product to retail buyers
- Managing the category review process
- Negotiating promotional programs and sometimes slotting fees
- Providing market intelligence on buyer priorities
The Core Difference: Ownership vs. Representation
- A distributor owns your product temporarily and handles physical movement to retail shelves.
- A broker represents your brand in sales conversations but never touches your product.
When You Need a Broker
A broker is right when your primary constraint is sales access:
- You're entering a new geographic market
- You're targeting a specific retail channel (natural, club, foodservice)
- You're preparing for a major category review
- You want to negotiate reduced slotting fees
- You're not ready to hire a full-time sales team
When You Need a Distributor
A distributor is right when your primary constraint is logistics and retail reach:
- You're entering accounts that require distributor fulfillment (Whole Foods runs almost entirely through UNFI)
- You're scaling beyond what direct store delivery can handle
- You're expanding nationally
- You need working capital support
The Combination Model: When You Need Both
At a certain scale — typically somewhere between $5M and $20M in revenue — most growing CPG brands end up using both:
- The broker manages the retailer relationship: pitching new accounts, negotiating promotional programs, representing the brand in category reviews.
- The distributor handles the physical supply chain: warehousing, compliance, delivery, and order management.
The broker opens the door. The distributor keeps the product flowing once you're through it.
How to Evaluate a Broker
- Which specific retail accounts do they currently manage, and at what volume?
- Do they represent competing brands in your category?
- What does their commission structure include?
- What happens to account relationships if you terminate the agreement?
How to Evaluate a Distributor
- Which retail accounts does this distributor supply?
- What are their minimum order quantities?
- What is their margin, and what services does it cover?
- Who owns the retailer relationships if you leave?
The Bottom Line
Brokers and distributors are complementary, not interchangeable. If your constraint is sales access, start with a broker. If your constraint is logistics at scale, you need a distributor. If you're past $5M in revenue and expanding aggressively, you likely need both — with clearly defined roles for each.