Distributor management: Selection & Profiling
Part 1: SELECTING A DISTRIBUTOR
Our clients, whose business abroad is flourishing, often work with local distributors. Upon further inquiry, however, we often discover unsatisfactory results in terms of turnover. Often the cause is a lack of well-defined agreements. The contact is often established through a trade fair, which is a valuable tool, but the appointment of a distributor is a very serious step that must be carefully considered.
Why choose a distributor?
From a ‘network perspective’: The distributor already knows several of your customers to whom you can present your products. But also from a Supply Chain perspective, as this may be expensive and complex. Especially when dealing with unfeasible delivery requirements. As a result, a local partner is recommended. A third point to be mentioned is from a geographical point of view. Distance can pose problems in terms of your Supply Chain, however, doing business with a large time difference and acting appropriately can also be complicated. The final point is from personal motives. After all, it’s a lot more efficient. Operating in 5 countries with 5 distributors is easier to manage than 5 countries and 50 customers. Please note that a distributor is an extra link, and therefore takes a margin.
Distributor Short List & Profiling
Distributors can be found on the Internet. Browse trade show catalogs and exhibitor lists of trade shows. Check out who other brands work with, speak to your own network and get in touch! Once you have found some of them, it is a matter of finding out if they are relevant. Consider the following angles:
- Commercial: ask about the history of the company, where are they selling, which channel, and to whom. Where does the growth come from and their vision for the coming years.
- Organization: organizational structure, staffing of sales, marketing, order management, how is the DMU structured, etc.
- Supply chain: how is logistics arranged, experience with the Netherlands (if so, by whom), expectations for lead time.
- Marketing: what activities in the field of marketing, experience with social media etc.
- General business: What does cooperation mean for them, margins, pricing ladder in general, which timeframe etc.
Once distributors have been found, the choice of who to work with needs to be made. Exchange of information will be necessary in order to reach agreement. Potential business partners will want to receive prices, samples, specifications, brand information, etc. Know what your category will be like in their country (visit the country!). Keep up the momentum and set up follow up appointments. Visit your potential partner. When everything is settled, such as pricing, conditions and products etc it’s time to finalize the collaboration. This, however, brings new challenges – more about this next time!