Shipping Prices - EU

Like everything in life, they make the relationships and control access to the flow of customers. So they make the rules. The people that control what consumers see what products have a lot of power. They don't really do anything else. They are middle men, through and through.

Entrenched interests are a big part of the cost of goods in this country. They even use lobbying to make laws that protect their model, even though traditional distribution models are kind of archaic in 2019. Just look at the beer distribution industry. It's nuts! They control what beer gets put into what stores and what states. They have passed laws that keep their stranglehold on the industry. You can read about what Stone Brewing did to fight it a decade or so back. They had to form their own distributor to get their products into stores, as Anheuser-Busch, Miller-Coors, and the other big guys paid the distributors to keep them out of stores. It's completely anti-competitive. That's how John McCain made all his money here in Arizona. His wife Cindy inherited a majority stake in Hensley, which is the 3rd largest AB-Inbev distributor in the country. They do almost half a billion dollars in revenue, and all they do it take beer from one place to the other. That's it. They buy beer from the breweries, decide which stores they get to go into, and where in the store they are displayed, then sell them to the stores. They also play a lot of politics to keep their hold on the industry, and keep their market share.

The same goes for the supplement industry, albeit with a bit less government interference than alcohol distribution gets. If you want to get into stores across the country, you need to make relationships with supplement distributors. You are not going to individually contact 10,000 stores to sell them small amounts to supply just their store. These stores get wooed by these distributors, who then handle all their buying for them. If you want access to these stores, you need to woo the distributor that supplies them. Many times these distributors get bribed by the other existing brands to keep new ones out. That's what 5 Hour Energy did for a long time, and still do. They paid the distributors to keep other energy supplement brands out of stores, and paid to keep them away from the register if they were in the stores. The distributors sit in the middle of the brands and the stores, and the stores sit in the middle between the distributors and the consumers. Some of the bigger stores have their own buying departments, and cut out the distributor. So Walmart, Sprouts, Whole Foods, etc. all have their own buying departments, because they are big enough to tell the middle men to go screw themselves. However, those stores fund those departments by taking the margin share that the distributor would have normally gotten. So it is not like brands get better margins going direct to the large stores. It's just those stores get better margins than they would with a distributor in the middle.

I've spoken to the founders of a few supplement brands that are now in stores nationwide. They all told me they hit brick walls for years until they brought investors onboard their companies that had connections. Once those doors were opened, they spread into stores insanely fast. It's all in who you know and how much margin you can give them. We've been hitting walls for the past year or so with Natrium. Everyone loves our products, branding, marketing, etc. However, our shit costs too much for them to want to push it. If we had made the same products in the same packaging/branding, but used only a few cheap ingredients, we could have gotten into tons of stores by now. We just had to use expensive ingredients to achieve the results we wanted. Consumers at large don't really care about how well things work, though. They act like they do, but the data shows they don't. They care about marketing, branding, and hearing other people say that they like them. So you get a market full of cheaply made products, with high margins, that have good branding, packaging, and marketing. It makes it very hard to make things that actually work at a price point that leaves enough margins for all the middle men to get their cuts.