Do you want to start a distribution business but lack ideas on the steps involved? If YES. here are 20 best tips on how to get a distribution deal for a product.
In the business world, there are numerous advantages of contacting and making use of distributors but ultimately the major advantage is that they can sell your products and generate significant income quickly. Also another great benefit of using a distributor is that all established distributors already have good relationships with an existing customer base.
This means that once a distributor gets hold of new products, they can very quickly promote them to their customers and start generating sales. Securing distribution means understanding your potential partner’s market and prepping your brands to succeed.
The word distributor is used to describe a wholesaler who specializes in collecting products of a certain type, say, books or specialty food or auto parts, and provide retailers with one point of contact for ordering the products. Also note that another benefit of using distributors is that they are experienced at both sales and marketing and they understand very well how best to sell to their customers.
These experts are able to take new products and promote them in the most effective way to their resellers to achieve the best sales results. It is as much in their interest to sell your products as it is in yours because they only make a profit when they sell them.
It is easier to find a wholesale supplier if you know exactly which products you need. This is because by using distributors, your business can gain from a much greater distribution channel without the need to have a physical presence in each territory. This means not only can your products reach a much wider consumer range, but you can also make significant financial savings.
Below are 20 Tips on How to Get a Distribution Deal for your product.
20 Best Tips on How to Get a Distribution Deal for a Product
- Choose your Distribution Types
You need to understand that a lot of products can be delivered through multiple channel types. Betting on one type of channel is extremely risky. Even if you land a partner, you may not be able to control their performance. Before you start contacting your target companies, think about the key criteria you’re looking for.
For example, if you’re selling software and you’re going to sell to VARs, you will need to find VARs with the kind of expertise and customer base that enables reps to quickly get your product to the end-users who need it. Here are some examples:
- VAR (value-added reseller)
- Sales agent/ manufacturer’s rep firm
- Direct – Internet
- Direct – catalogue
- Direct – specialized internal sales team
- Develop a retail pitch plan
We strongly suggest you build access to national retail chains by developing a quick retail list of stores you’d like to approach. Also ensure that your product aligns with their current merchandising plans. Then reach out to buyers and distributors and share a pitch package that includes a cover letter, press kit, and product samples.
- Know your industry’s distribution channels
Research has shown that a product can go from manufacturer to retailer in many ways and channels. Not all wholesalers serve the same market. Have it in mind that knowing your industry’s distribution channels, and knowing where you fit in the supply chain can help you find the right wholesale supplier for your retail or online business.
- Go straight to the point
In this new age, buyers from national retail chains will only give you a limited time to pitch your product, so it is very crucial that you are well prepared. We suggest you jump the story telling and go straight to the point. Provide critical data on your products—price points, product warranties, manufacturing capabilities, and data on consumer needs.
- Organised and well prepared Presentation
We advise that you create a presentation that shows the positive attributes of your product. You have to make this presentation show why the distributor should carry your product, a rough estimate of how much money they stand to make and how it will serve their company’s client base.
- Understand their needs
If you conduct your research to know what stores carry your competitors’ products, you will stand to gain from that knowledge and data. It’s also good to find the chains that don’t know they need your type of product yet. Regardless of whichever situation it is, understand how the stores would benefit and make sure they realize it as well.
- Join an industry association
We believe that the easiest way to get the right distributor is through word-of-mouth recommendations. With the advent of technology, you can now your research on the internet, but your best sources of information will be others in your industry and who they are using. This is why by joining an industry association, you will have access to other business owners who have been there before you, seen the good and the bad, and can help guide you in the right direction.
- Brand yourself
Also note that one of the best ways to get into national chains is to build a solid following via social media sites before you ever go in for your first meeting. Make a name for yourself, so they know your brand equity before you step foot in their building.
- Consider starting small
When considering a distribution option, note that competition can be fierce for a deal with a mass distributor or retailer. We believe they are often inundated with new product pitches and rarely take one on. Large retailers and distributors have to consider a potential supplier’s longevity and ability to consistently deliver the product.
This is why if you can address such concerns, it can be very lucrative to sell into a large distribution channel. But it can also be costly if your efforts fail. We suggest you begin with smaller operations outside the big distribution channels. With success there, you can establish a track record.
- Sell at independents
We have talked about starting small but you also need to consider selling at independent shops and even Web shops. The more exposure and sales you get, the better, so you can approach the big retailers and say, “I sell a thousand widgets a day, maybe you’d like to sell them.
- Good strategic fit/explore niches
We suggest you try to find a niche that is not covered by the distributor’s current portfolio. Distributors will work harder and do a better job if they “want you,” rather than you “wanting them.”
- Reach out to the gatekeepers
In this current age, networking is the fastest lane into tight-knit, highly competitive markets. And there is nothing that gets attention faster than a personal introduction. We believe that decision makers are easier to reach than you might expect and may only be one or two levels removed from you. We suggest you make use of LinkedIn and other platforms to discover how your contacts can help you into the gatekeeper’s centre of attention.
- Be ready for the market
You have to make sure that your product is ready for market. The product needs to be fully developed (i.e., no prototypes) prior to contacting distributors. Also we think you should know the price point of your product, how to package it, the best way to market it, and how you’re going to supply the product if demand suddenly skyrockets. Distributors are not interested in representing products that are months away from full production.
- Slow and steady wins the race
The first thing you need to do is to groom your business, establish your brand and get the product into enough local stores before going national. We suggest you ensure your business is ready for the large margins and low volumes they will demand from you just to be in a “national” store. Immediately you feel your company can support that structure, work through regional managers and then continue to work your way up the ladder.
- Establish a Sales and Marketing Plan
A good distributor will strive to know how you are planning to market to retailers and consumers. You need to understand that it is your responsibility to get people to buy your product. The supplier is always ultimately responsible for creating retailer and consumer demand.
We suggest you make use of every marketing resource you can to help drive demand and make sure retailers keep placing orders with your distributor. The most profitable products for your wholesaler and retailers are the ones that move and are replenished repeatedly.
- Prove yourself
We believe that the greatest threat for a lot of retail chains dealing with a small business is whether the supplier is going to be able to keep up. This is why a lot businesses start by supplying smaller stores. It’s not impossible to skip that step, but you have to be able to show that you’ll be able to keep up with demand and handle working with a big chain.
- Profile Your Optimal Distribution Partner
When trying to get a distributor for your product, you need to know about your ideal channel partner in each category. We suggest you focus on a general description. This will help you objectively evaluate different options (and potential investors will prefer to hear this over naming a specific brand). Some things to consider may include;
- What kind of customers does this company need to have?
- What kind of skills and experience will the company need to have to sell this product?
- What kind of geographical territory does the company need to serve?
- Are there any quantitative criteria such as the size of the company, the number of locations, the number of sales reps, the number of customers they have, or the number of years they’ve been in business?
- Dine and sleep with procurement
We believe that a lot of retailers, especially the national ones, would have a procurement/ buying department. These people decide what to buy, from whom, and at what price. Also the individual stores have very little say in such decisions, so your best bet is to eat, sleep, and be best friends with the procurement folks at the retailers.
- Check the Manufacturer first
You might as well start at the source. If you are selling branded items, go directly to the manufacturer of the product. They might sell to you depending on their minimum order requirements.
- Conduct interviews
We strongly suggest you schedule non-sales informational interviews with key decision makers. We advise you offer to take them to lunch or invite them to an industry related event. Prepare 3-7 key questions and inquire about the process from a purely information place. Learn all you can and apply it. Then you’ll be positioned to approach them with a well thought-out plan.
In conclusion, you need to understand that being conversant with what matters to distributors will aid you locate the company that will represent you more quickly. Also do not forget that your distributor is also your customer. Meaning you have to take your time to understand what matters to them when taking on new products.
We believe that different distributors might have a totally different approach to shipping, packaging, etc. But have it in mind that finding the right wholesale distributor can help your product business in a big way.
We all know that the internet has made selling directly to consumers a viable option in lots of different categories from fashion to industrial products. But you will need to have eCommerce capabilities and the means to ship your product to consumers.
Remember that not all distributors are created equal. Distributorships with a larger regional market share are more lucrative customers and should be approached first, assuming your business has the production capacity to meet their needs.