Distribution 101 for Entrepreneurs
When you start marketing a product, you have a lot of options. You can sell directly from a website or physical storefront, through channel partners or corporate B2B partners, or through distributors.
New business owners often underestimate the power of distributor relationships or get distracted by how long it takes to secure them, but the benefits are too big to ignore: Distributors will buy in bulk from you (helping you generate more revenue) and help you market and promote your products. Mastering these relationships early on has the potential to jumpstart your small business’ success.
How to Secure a Distributor
Ready to reap the benefits? Here are five tips for securing the right distributor for your business:
- Create a website. When you’re first trying to secure a distributor, each one will look at your website to learn more about your company before it decides to place an order. Make sure you have a professional website with all the information a distributor might need: contact information, location, and product information.
- Price correctly. Make sure you’ve researched all the pricing data available for your industry and similar products. Communicate with your distributor about your recommended manufacturer’s suggested retail price so different distributors don’t sell your product at different price points.
- Prepare marketing materials. Distributors will ask for high-resolution images of your products, as well as your sales and marketing materials. Have these ready in digital and print formats.
- Establish payment terms. Once you choose a distributor, clearly define the payment terms in advance. Late payments will affect your cash flow and threaten your production and shipping operations. Consider offering a discount for paying when ordering or within 10 days of placing the order.
- Organize an international plan. If you decide to go international, limit the number of distributors you work with to one or two per country when you’re starting out. Be cautious about requests for exclusivity. Ask to try out the relationship first before partnering with that distributor.
It’s also smart to require payment up front. Only ship your products after you receive the entire payment. Use resources such as the International Trade Administration, the World Trade Center, and the U.S. Bureau of Labor Statistics to help you make this decision.
How to Foster a Strong Distributor Relationship
Once you’ve secured a distributor, your future success will hinge on that relationship. Don’t look at this merely as a means to earn cash for your business — it’s a reciprocal relationship that will help you grow. Here’s how to make that relationship last for years and encourage mutual success:
Communicate early and often. Introduce yourself, and talk to the owner. Get to know your distributor when the relationship begins, and make sure you keep in touch as the company starts selling your products. This open line of communication will give you access to the distributor feedback and customer feedback you need to grow your small, fledgling business.
Focus your energy. Each distribution channel has unique needs. Your company should provide a different strategy for each of them. If possible, focus on one relationship to maximize the value for both you and your distributor. Your efforts will pay off.
- Once distributed, don’t sell directly. If you decide to sell through a distributor, it’s not fair to the distributor to also sell directly. The distributor is already there to do direct sales for you, and you don’t want to end up in a situation in which you’re competing with your distributor. List your distributors on your website, and link your products to them so customers know where to purchase your products.
Securing the right distributor for your business and building a strong relationship can skyrocket your company from a small business to an international powerhouse. Research your product and industry, communicate clearly and often, and enjoy a mutually beneficial relationship that will last for years to come.