With every launch of a new product or service, perfecting the manufacturing process is only half the battle. You likewise need to find an efficient means to get your product to your target customers. Distributors are entities that buy products directly from manufacturers then sell them to individual retailers. Aside from making your product very attractive to end users, you will want to entice distributors to buy this product.
When trying to make a successful connection with distributors, it is important to keep in mind that their interests and mindset are entirely different from retailers. A distributor is typically more concerned about the profitability of your product, the cost of stocking and fulfilling your product, how scalable your product is, and whether or not you have multiple products in your inventory.
The first two points are paramount for obvious reasons. Retailer or distributor, profit and cost are essential for any business to succeed.
Scalability is also important; especially so if your product is affordable. Let’s say for example the plan is to retail your product for $25 and price it at $15 for retailers. You’ll need to charge the distributor even less – perhaps $12 or $10, or less if possible – so they can make more profit off of your product.
Your ability to supply multiple products is likewise critical for distributors. This ability to supply of any business affects administrative costs. It eliminates the need for seeking out several individual suppliers for just as many products. Distributors prefer a supplier who can deliver a many products as is able.
Before attempting to market your product to a distributor, empathize and ask yourself these questions (these are the questions your distributors will be pondering on before buying your product):
How much profit can I make off of this product? Per unit and in bulk?
Will this product have wider margin (for profit) than a similar product?
Will this supplier’s marketing efforts help drive my own sales?
What is the ideal inventory level to maintain?
How will stocking and fulfilling this product affect cost of distribution?
Is there a market for this product? Does it answer a consumer need that retailers have already identified?
Does or will he have other products that I can likewise sell?
The key is to always remember that distributors will evaluate your product with criteria unique from how end users judge a product. And even if your product is ground-breaking or cutting edge, if your business is not easy to deal with and, more importantly, the distributor won’t make a profit, they will not buy from you.
Upon launching a product, it is possible to eliminate distributors from the equation by going directly to local retailers. Distributors become necessary if your business hits a point wherein it is not logistically feasible to get your products to the retailers or clients. For instance, out-of-state retailers will be easily reached by already-established national level distributors. Ideally, too, you and/or the distributor must be prepared to accept the responsibility of marketing and advertising your product, and you should include stipulations around this in your distribution agreement. Never assume that the distributor will market the product by default. Suppliers and distributors work hand in hand in delivering more products to a wider market.