B2B Distribution

Koru Distribution Transitions to a B2B Marketplace Model to Stay Competitive in a Changing Industry

About Koru Distribution

Koru Distribution is a Canada-based eco-friendly product distributor that makes green products more affordable and accessible to Canadian buyers and businesses. We interviewed the company’s president and co-founder, Corey Berman, about the early highlights and successes experienced just one month after launching Koru’s marketplace on Nautical Commerce.

The Challenge

When Koru Distribution launched in 2009, the company owned all of its inventory. Like most distributors running under a traditional distribution business model, much of Koru’s capital was locked up in product, and the company depended on inventory turnover. 

Holding inventory comes with inherent risks that distributors must contend with. Koru was no exception to this rule. For every five products that Koru would bring on, one wouldn’t work out — and the revenue lost from dead stock could be significant enough to wipe away a year’s worth of profit. The company found itself in a battle between mitigating excess inventory costs and the desire to expand via new brand partnerships. 

The marketplace model presented an escape from this inventory-risk-vs-product-growth holding pattern. But, with the limited technology of the day — Excel files, PDFs, and, eventually, an ecommerce site — the available functionality wasn’t enough to free Koru from the burden of inventory risk.  

The Solution

Koru launched its marketplace on Nautical’s multi-vendor marketplace platform in September 2023. Transitioning to Nautical enabled the company to adopt a consignment marketplace model. By doing so, it has taken the onus off of Koru staff to manage all their vendors manually, instead empowering their vendors to manage their own product information and orders through Koru’s platform. This means the company will expand offerings while holding significantly less inventory and, in turn, less risk. 

The Benefits of Adopting Nautical’s Technology To Date

Here are some early benefits Koru has experienced from launching a marketplace on Nautical’s platform.

Ability to fearlessly scale

A mere one month into its marketplace journey, Koru has already unlocked capital and drastically reduced the inventory risks it faced under a traditional distribution model. Since Koru now operates as a consignment marketplace on Nautical, it can hold significantly less inventory. Once relieved from all dead stock risks, Koru will be able to focus on new monetization levers and growth initiatives, like online advertising, adding sellers, and expanding its assortment. 

Seller autonomy

As a marketplace, Koru is no longer responsible for managing sellers and their inventory. Nautical’s real-time reporting gives Koru’s sellers the autonomy to build their business on the platform. Koru’s sellers can access an analytics dashboard that shows critical KPIs like throughput, best sellers, and inventory allocation. This is a vast improvement from pre-transformation, where Koru relied on staff to provide sellers with sales reports and metrics. 

Owning its industry

Koru has established itself as the go-to eco-friendly products distributor in Canada, and becoming a marketplace on Nautical has cemented its stronghold. Koru’s primary source of new sellers comes from retail customers who refer suppliers back to Koru as the de facto place to sell products. Nautical has made it possible for Koru to be the one-stop-shop eco-friendly brands and retailers look to because, by eliminating inventory risk, Koru can accept inbound business without hesitation.

Relieved human resources

Nautical’s platform automates marketplace operations, allowing Koru to significantly decrease the labor hours required to manage individual sellers. Before the move to Nautical, Koru’s staff was bogged down by data management and seller requests, like making price changes. Nautical has freed Koru’s staff from these administrative burdens and enabled the company to become far nimbler by automating menial tasks.  

Advice for Distributors

Corey’s takeaway from turning Koru into a marketplace is this: Think of your business as a marketplace, not a distribution business. Corey believes the traditional model of distribution is out of date. Marketplaces are coming and present a much more efficient way of doing business. 

Koru has shown how the marketplace model enables distributors to run lean: Little-to-no sales team, organic customer acquisition, no overhead, and the ability to change course on a dime. Koru’s story exemplifies how running asset-light is a superpower: When distributors get rid of inventory risk, they also get rid of cash flow risk. The result is a strong, resilient distribution business that can scale infinitely.

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Nautical Commerce dashboard graphic