It is indisputable that both e-commerce stores and physical; brick and mortar businesses both need distributors. Distributors are intermediaries. They play essential roles in the success or failure of any manufacturing company.
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Why you need Distributors
When manufacturers produce new products, the manufacturer must devise a means of getting the product to target customers. This is where distributors come in.
One of the reasons you need distributors is because distributors share selling risks. Once distributors buy your goods from you, they will be motivated to sell the product because of the stake they have in it. If distributors are unable to make sales as predicted, then the loss would be shared between you, the supplier, and the distributor.
Also, distributors help share credit risks. To prove to their customers that they are trustworthy and loyal, they sometimes make sales on credit to their customers. In situations where customers default on payments, the load would be the distributor’s loss. It won’t, in any way, affect the supplier. Although sometimes, suppliers offer goods on credit to distributors, it is less risky when compared to the risks involved in distributorship.
Distributors are closer to the target market than manufacturers and can, therefore, predict the consumers’ needs sometimes. The distributor’s ability to forecast market needs would help manufacturers produce products of higher value to consumers by relaying their observations to the manufacturers.
To make distributors buy your products, you must be able to convince them through negotiations, which may be difficult sometimes.
Your product prices must not be too high, so distributors can sell at a reasonable price and make profits off sales.
How to Get Distributors
- Target market: Your target market are the group of customers you are willing to reach with your products, the customers you intend to provide your products or services to.
- After locating your target audience, find distribution firms operating within your designated market. Distribution firms have established relationships customers. However, make sure you contact a distribution firm that can market the products you produce.
- Next, reach a consensus on product price. The price agreed upon must cover the cost of manufacturing and also generate enough profit to develop the business
- If your product is of good quality and has a ready market, distributors may be willing to pay a higher price for exclusive rights to the products. Going into exclusivity agreement is dependent on your expansion goals. If the distribution firm does not have the facility for distributing your products across an extensive network or geographical area, do not go into an exclusivity agreement with them.
- Lastly, you sign a distribution contract. After the contract has been signed, you are both free to commence business.