In this article, we will analyze how to become a distributor, what rights he has in the market, what makes up his income. And also what types of distributors exist and why manufacturers need them, how you can become one without initial capital, and what difficulties you may encounter in the early stages.
Why does a manufacturer need a distributor?
Anyone who has thought about devoting their life to commercial activities has probably wondered how to become a distributor. It must be said that distribution is one of the relatively new areas of activity that almost everyone has heard of, but few people know what its essence is.
The word “distributor” migrated into Russian from English and is literally translated as “distributor” or “distributor”.
A distributor is an intermediate link between manufacturers and dealers, as well as retailers or end users. It can be represented by an individual or an entire company.
In practice, the situation develops in such a way that the product distribution chain can be either short, when only the manufacturer, distributor and buyer are involved, or long, when the dealer is also involved.
If we talk about the difference between a distributor and a dealer, then it lies in the fact that the former operates on behalf of the company, while the dealer operates as an independent entity and purchases products at his own expense.
Another distinguishing feature of the distributor and the dealer is the lack of liability for the delivered goods from the first, while the dealer will be forced to fully answer for the quality of the delivered goods.
So, if the essence of the distributor’s work lies in the promotion of products and the creation of a network for its implementation, then the essence of the second participant in trade relations lies in the delivery of the product to the final buyer.
How to become a “distributor”?
If you look at the root of the matter, then everyone can become a distributor of a particular product. To do this, it is enough to have enthusiasm and understand the basics of the market for goods and services that the manufacturer is focused on. Well, it is quite logical that it is necessary to decide on the organization, distribution of products that you want to do.
In order to obtain the official status of a distributor of a particular company, it is necessary to sign a special agreement with the latter and become the owner of a certificate signed by the management of the manufacturer.
Distributor’s rights in the market
The distributor has the sole right to sell the products of a particular manufacturer in the selected region.
In addition, this “distributor” is entitled to receive the agreed volume of goods in accordance with the approved schedule, which is an integral part of the agreement.
In addition, this intermediary has the right to take on the role of a service center for the assigned territory.
The distributor also has the opportunity to take part in advertising campaigns, as well as organize their own information campaigns for the selected product.
Components of a distributor’s income
As noted earlier, a special agreement is concluded between the designated intermediary and the product manufacturers, according to which he receives the status of the supplier’s representative in the distribution of goods.
At the same time, according to the decision of the supplier, the following parameters of such cooperation are determined:
- product price;
- the amount of discounts or markups to the wholesale cost of goods;
- region or target audience among buyers;
- product sales period;
- settlement procedure.
Thus, the distributor’s income is mostly formed from margins, which are set to the wholesale price in accordance with the terms of the contract. Such margins are flexible and depend on the period of sale, the volume of goods supplied, the form of mutual settlements, etc. All their costs are covered by these official representatives at the expense of income received in the form of margins.
Types of distribution activities
Depending on the criterion taken as a basis, the following types of distribution activities are distinguished:
- by the length of the distribution channel: short (when only one intermediary works); long (when the manufacturer is represented by several intermediaries);
- according to the form of interaction between the intermediary and buyers: direct, in which the goods immediately go to the buyer; indirect, in which products are resold to other intermediaries;
- on the territory allocate: local or regional distribution; national throughout the country; transnational, where a group of countries in one region operates.
How to become a distributor without investments in your region?
In the age of information technology, when the World Wide Web gives everyone unlimited opportunities, it has become much easier to enter such a business.
To begin with, the product is determined, the distribution of which is planned to be engaged. For these purposes, it will be very useful to study the market situation for the selected product or service.
After the type of product is determined, you can start searching for a company – manufacturer. Large manufacturers, as a rule, opt for those distributors who already have a good reputation and have developed their own customer base.
If someone takes the first steps in this field, then you can start with smaller suppliers.
Now that the type of product has been determined and suppliers have been found, it is time to write a business plan. In this case, attention should be paid to such points as the distribution region, the presence of transport infrastructure, the presence or absence of a customer base, staff, experience in this area and plans for the distribution of the selected product.
Only after passing all the indicated stages, you can meet with companies and try to conclude contracts with them. In the course of negotiations, it is possible to agree on receiving, for example, test samples of the product or a certain period during which the goods delivered without payment must be sold.
Work specifics
Negotiating with suppliers about products is only half the key to success. In order for a business to flourish, it is necessary to find consumers for products, which is very difficult for those who have just entered this field of activity.
You can try to solve this problem in the following ways:
- direct contact with the owners of retail outlets in the selected region;
- opening a special group in social networks;
- you can also open your own online store;
- try to find business partners by participating in special exhibitions or conferences.
Of course, you can try to start your own business in this area without investing in it. However, the availability of capital will make it possible to move faster in the chosen direction.
Possible initial difficulties
As noted above, distribution is a very contact business. In this case, the presence of counterparties can play a decisive role. And the lack of an established reputation and a big name somewhat complicates the solution of this issue. Therefore, novice distributors must put in a lot of effort to ensure that the budding business becomes successful later.
Conclusion
Thus, distribution requires a huge return in terms of time, financial resources, and so on. In this case, the character and willpower of a person who decides to follow this path can play a huge role.