Direct Store Delivery (DSD) is a crucial concept in the wholesale industry, particularly in wholesale distribution. It refers to the practice of distributing goods directly to individual retail stores.
Wholesale distributors, retailers, and manufacturers alike need to understand how DSD operates. In the wholesale business, category buyers and key stakeholders will frequently inquire about your DSD strategy.
Specifically, DSD involves a distributor selling and delivering products directly to each store, dropping off goods and sometimes even merchandising them. This contrasts with drop shipping or shipping to a central distribution center.
Retail stores, especially large chains, highly value DSD. Even more desirable is Full Service DSD, where the distributor not only delivers but also actively services the account. This includes tasks such as cleaning shelves, merchandising products, and setting up pricing and promotional materials.
Stores appreciate DSD because it alleviates their workload and minimizes the risk of running out of stock. A proficient distributor ensures the retailer is consistently well-stocked.
The significance of being a DSD distributor varies. For small-scale distributors operating within a limited area, DSD is manageable with minimal investment. However, for distributors serving large retail chains across a state or country, DSD requires a substantial investment in sales personnel and delivery vehicles.
While retailers favor DSD, manufacturers often prefer delivering truckloads to central warehouses due to the investment required for DSD. Alternatively, manufacturers can partner with distributors that already have established DSD capabilities, although securing such partnerships can be a lengthy process.
DSD distributors can be broadly categorized into two types: Full Service and Case Droppers.
Full Service DSD distributors deliver products and merchandise them, dedicating time to each store to optimize product placement and presentation.
Case Droppers, on the other hand, deliver cases or pallets of products without providing merchandising services. Store employees are responsible for stocking and arranging the products.
Full Service DSD is generally the optimal approach for maximizing sales and ensuring consistent stock levels. It also allows for better product placement, pricing, and stronger relationships between store staff and the product brand.