In this article we will look at how to become a distributor, what rights he has in the market, and what his income consists of. And also what types of distributors exist and why manufacturers need them, how you can become one without having initial capital, and what difficulties you may encounter in the first stages.
Why does a manufacturer need a distributor?
Anyone who has thought about devoting their life to commercial activity 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 about, but few people know what its essence is.
The word “distributor” migrated into the Russian language from English and is literally translated as “distributor” or “distributor”.
A distributor is an intermediate link between manufacturing companies and dealers, as well as retailers or the end consumer. It can be represented by an individual or an entire company.
In practice, the situation is such 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, 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 distinctive feature of a distributor and a dealer is that the former has no financial responsibility for the goods supplied, while the dealer will be forced to answer in full for the quality of the goods supplied.
So, if the essence of the distributor’s work lies in promoting products and creating a network for their distribution, then the essence of the second participant in trade relations is delivering the product to the final buyer.
How to become a “distributor”?
If you look at the root of the matter, then anyone can become a distributor of this or that 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 and distribution of the 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 holder of a certificate endorsed by the management of the manufacturer.
Distributor rights on the sales market
The distributor has the sole right to sell the products of a particular manufacturer in the selected region.
In addition, this “distributor” has the right 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.
Components of a distributor's income
As noted earlier, a special agreement is concluded between the designated intermediary and product manufacturers, according to which he receives the status of a representative of the supplier in the matter of distribution of goods.
In this case, by the decision of the supplier, the following parameters of such cooperation are determined:
- product price;
- the amount of discounts or markups on the wholesale cost of goods;
- region or target audience among buyers;
- product sales period;
- the procedure for mutual settlements.
Thus, the distributor’s income is mostly generated from markups that are set to the wholesale price according to the terms of the contract. Such markups are flexible and depend on the sales period, volumes of goods supplied, form of mutual settlements, etc. These official representatives cover all their costs from the income they receive in the form of markups.
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 go directly to the buyer; indirect, in which products are resold to other intermediaries;
- by territory there are: local or regional distribution; national throughout the country; transnational, where a group of countries operate in one region.
How to become a distributor without investment in your region?
In the age of information technology, when the World Wide Web gives everyone unlimited opportunities, entering such a business has become much easier.
To begin with, the product that you plan to distribute is determined. For these purposes, it will be very useful to study the market situation for the selected product or service.
Once the type of product has been determined, you can begin searching for a manufacturing company. Large manufacturers, as a rule, opt for those distributors who already have a good reputation and have developed their own customer base.
If someone is taking their first steps in this field, then they can start with smaller suppliers.
Now that the type of product has been determined and suppliers have been found, you can start drawing up a business plan. In this case, you should pay attention to such points as the distribution region, the presence of transport infrastructure, the presence or absence of a customer base, staff, experience in this field and plans for the distribution of the selected product.
Only after going through all the indicated stages can you meet with companies and try to conclude agreements with them. During negotiations, you can agree to receive, for example, test samples of a product or a certain period during which goods delivered without payment must be sold.
Work specifics
Agreeing with suppliers regarding products is only half the key to success. In order for the business to flourish, it is necessary to find consumers of the 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 owners of retail outlets in the selected region;
- opening a special group on 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 presence of capital will make it possible to move at a faster pace 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 makes resolving this issue somewhat difficult. Therefore, beginning distributors must make a lot of effort to ensure that the start-up business subsequently becomes successful.
Conclusion
Thus, distribution requires a huge commitment in terms of time, financial resources, etc. In this case, the character and willpower of the person who decides to follow this path can play a huge role.
Distributing is one of the relatively new areas of activity that everyone has heard about, but not everyone knows what exactly distributors do, and they are certainly not aware of how to become a distributor.
To figure out how to master this interesting and profitable profession, let's first find out who a distributor is and what his job is. Translating this word from English, you will immediately understand what we are talking about: “distribution” in Russian means “distribution”. The distributor receives the rights to sell the products of a large manufacturer, which he distributes for sale among dealers - small wholesalers. Goods can be products and intangible cultural objects, such as films, services, copyrights, and technologies.
A distributor is an intermediary between the manufacturer and the dealer, retailer or buyer. It can be one person who takes goods from the factory and delivers them to customer stores, or an entire company that sells the goods of a giant manufacturer around the world. The distributor receives his income from the large discount percentage given to him by the manufacturer.
The distribution chain of goods can be short (manufacturer - distributor - buyer) or long, when the distributor sells the product to a dealer (intermediary), who in turn resells it to the buyer. Such multi-tiered schemes are more often typical for goods from foreign companies, the delivery of which to our market is carried out in several stages. For example, a manufacturer entrusts the sale of large quantities of household chemicals to a distributor located in the capital, who sells them to dealers located in regional centers, and they resell them to smaller dealers in cities and towns.
The difference between a distributor and a dealer is that the former acts on behalf of the manufacturing company and does not receive ownership rights to the product, while the dealer acts on his own behalf, purchasing the product with his own funds.
True, this classification is rather arbitrary, since the statuses of dealer and distributor are not prescribed by law, but are determined exclusively by contracts. Thus, in many cases, a distributor can purchase goods from a supplier at his own expense, thereby effectively becoming large wholesale buyers who resell products to small wholesalers, that is, dealers.
Another difference between a distributor and a dealer is that distributors do not bear financial responsibility for the products supplied. For example, if a company sold a defective product, then returns and exchanges will be made not from the distributor, but from the manufacturer. But the dealer needs to be more careful - he is fully responsible for the quality of the product and solves any problems at his own expense. Distribution work is aimed primarily at creating a distribution network and promoting goods, dealer work is aimed at delivering products to the end consumer.
Consultants of network companies such as Avon and Oriflame are also called distributors - they send an order for products to a direct supplier and receive them by paying their own money or money collected in advance from customers. In this case, they do not bear full financial responsibility, since they can return the goods to the manufacturer if the buyer refuses it (though not all of it, but only partially). But, again, this rule does not work everywhere; in many network companies, distributors must buy all the goods with their own money.
There is such a thing as a general distributor - a company that is granted the main right to distribute goods, as well as an exclusive distributor that owns unique rights. Often manufacturing companies themselves establish distribution companies.
One manufacturing company may have several distributors, and one distributor may have several suppliers.
Of course, the distributor does not sit and wait for dealers to come to him - his responsibilities include promoting the product, finding buyers and expanding the market.
To become an official distributor of a company, you need to sign a special distribution agreement and receive a certificate approved by the general director. The distributor can then distribute the product provided to him by the manufacturer at a price determined by the agreement.
But in this case we are talking about large companies cooperating with supplier companies. If we talk about small businesses, then most likely you will have to work with the manufacturer on a dealer basis with a full purchase of the products.
Where to look for suppliers?
The easiest way is to type the phrase “we are looking for distributors” into the search engine of your Internet browser and familiarize yourself with the manufacturers’ offers. This type of business can be started from scratch, without prior sales experience.
Another option is to determine the section of goods you are interested in, for example, bed linen, and find companies on the Internet that produce the desired products. On the websites of these enterprises there are always contacts - telephone numbers and e-mails. You can call them or write a letter with a proposal for cooperation.
For this it is necessary write a small business plan, which will indicate in which region you are going to work, territory coverage, number of employees, availability of transport, customer base, existing product turnover.
The second step after a preliminary agreement will be to familiarize yourself with the product - for this you need to meet with the supplier and study samples. During this meeting, it is useful to find out some information - how advertising is organized, how many distributors the company already has, whether they overlap with you regionally, what are the terms of delivery.
If the plans are Napoleonic, then before looking for large clients, you need to register an enterprise, find a warehouse, transport, workers, and organize a dealer network. Serious manufacturers prefer to deal with distributors who have already demonstrated their quality work locally.
Becoming a distributor of a foreign company with a larger turnover is much more difficult - for this you need to have experience in similar activities in your own country, an established customer base, understand hidden economic processes, and have significant funds for promoting the product, because it is the distributor who is involved in advertising for the manufacturer.
You can also become a representative of a network company and receive money not only from the difference in purchase and sale prices, but also from the work of attracted consultants. In this case, the difficulty lies in the huge competition.
There is another possibility - to become a professional, you need to work your way up from the very bottom in any large distribution company, gradually rising from merchandiser to sales agent, supervisor, and so on until you reach the level that you consider sufficient for yourself. Along the way, you can receive an economic education. This option is longer and more complex, but promises to achieve greater heights than simple resale of goods.
You can become a representative of one of the most popular cosmetics companies, Avon, and earn money without leaving home, on the official website http://myavon-company.ru
Where to look for buyers?
Again, you can find clients online. An online store is suitable for this, where you will place photographs and descriptions of the goods. If we are talking about mediation between a supplier and a store, then you will have to study in detail all the retail outlets of the selected area. Some of them are also represented on the Internet, but most do not have Internet platforms. Therefore, you will have to walk around the desired area with samples, talk to the owners of retail outlets and get orders from them.
Newspapers and advertisement sites will be a good help - through them you can find clients, partners, and employees.
At first, most entrepreneurs do everything themselves or together with relatives who are ready to work for the future - they look for manufacturers and a sales market, pick up and deliver goods. Over time, if turnover increases, additional workers are hired. Of course, if you have large start-up capital, then the situation is completely different.
Distribution is a convenient activity for individual entrepreneurship. In this case, a person works for himself, receiving orders from stores and bringing goods to them; all his earnings depend only on his own energy and desire to work. This work will also be a help for mothers on maternity leave or students - taking on a small turnover, you can devote only part of the day to customer service.
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Let's start with what a distributor is. Translated, this means “distribution”. In reality, a distributor is a legal entity engaged in the sale of consumer goods, which are acquired through purchase and sale and a special agreement for any period at its own expense and with further sale of the goods. Sales can be anything: wholesale, online, retail, etc. But in any case, the pricing policy is carried out or based on the recommendations of the product manufacturer.
To understand how well a particular distributor is performing, indicators such as product sales volume and distribution level (both in quality and quantity) in the territory entrusted to the distributor are checked. The distributor begins his work as soon as the purchase of a product is completed for its further resale. Distributors can distribute goods in a certain territory themselves, or hire intermediaries or their own agents for this.
To become a distributor, you must first find the manufacturer of the product. As soon as you find a suitable company, draw up a commercial proposal for cooperation with them. What needs to be included in this proposal:
1. Important information about your company or business (as you remember, only a legal entity can be a distributor);
2. Scope of activity and territorial distribution;
3. The company’s turnover, its mobility;
4. Clientele (it is very important to indicate and tell in detail about your clients in order to attract interest to yourself).
In addition to such a proposal, it is necessary to prepare an overview of the market you are interested in, study its intricacies, collect sales volumes of goods, work out territorial patterns, etc. If, for example, you do not want to work in a specific region of the city, but want to become a regional representative (a remote city), then you will interest the product manufacturer with your knowledge about the region and the demand for the product in it.
Always inquire about the product from the manufacturer, even if you have already found out everything yourself. Ask as much as possible, but on the topic, show your interest. Questions may concern both the product and its quality, delivery and supply, advertising, logistics, competitiveness, loyal conditions and offers. Next comes the most important thing in how to become a distributor: organizing the initial contact of the product with the clientele. The easiest way to do this is to take part in an exhibition of a similar product. This way you can learn about competitors, show off your product and find customers. Let's say you have already established the necessary contact, which means it is time for negotiations leading to a distribution agreement. The main thing at this moment is not to spoil the connection between you, but to establish contact to an ideal state.
Distribution in the modern world
Thus, by concluding an agreement with the manufacturer, you become the official distributor of the product and receive a certificate of conformity. A distributor can be general or exclusive. You can work according to two schemes. The first is purchasing a product from the manufacturer with a distributor discount and receiving free samples of the product. The second scheme of work is represented by the establishment of a new enterprise, which becomes a subsidiary of the manufacturer. Another popular option today is the share participation of the distributor.
Even though you have free product samples, this is not enough to get started. You will need to purchase the first batch of goods from the manufacturer. This is what you need to offer to your clients. So, if you want to become a distributor, you need to have initial capital, at least for the purchase of goods.
Why is distributorship so popular in modern society? The fact is that this work does not take much time; it can be only part of your income, additional income or main one. Recently, girls and women involved in the sale of cosmetics are increasingly becoming distributors, which benefits other women and brings pleasure to the workers themselves. A distributor's income depends directly on sales, and sales, accordingly, depend on how much time you devote to work.
“There is nothing more criminal than coming up with a great idea and not implementing it,” says Donald Trump. If you dream of having your own business (beauty salon or something else), financial independence, nothing should stop you, not even the lack of start-up capital for business development. When there are a lot of ideas for building your own project, but the financial situation is not the best, you can try to become a dealer.
Who is a dealer?
A dealer is an agent of a manufacturer who acts as an intermediary between the manufacturer of a certain product and a person or legal entity wishing to buy it.
In Russia and other countries, there are manufacturers who do not have their own sales offices and wish to sell their goods through dealer networks. For such companies, such cooperation is beneficial. They do not need to spend money on opening retail outlets. At minimal cost, they can quickly convey information about their products to a large circle of potential buyers.
Dealers are divided into several categories depending on their field of activity. There are intermediaries working on the stock exchange. They are participants in the securities market. Another type buys certain products in bulk and sells them to retail customers. There are representatives of large enterprises, for example, automobile holdings, who find buyers and receive a percentage of sales. If you decide to become a dealer, first of all decide in which area you want to work.
Becoming a manufacturer's dealer is not just about representing the products of a certain company, it is about being its regional representative (for example, a manufacturing company). Dealer sales consist of the following stages:
- discussion of cooperation issues, current prices, percentage of sales, etc.;
- make a deal;
- sales of related products of the plant;
- provision of additional services (service, installation, transportation from the factory).
Becoming an exclusive dealer of a manufacturer means gaining the right to solely represent the company in a certain region. This status gives privileges in partnership, since the representative gets rid of competitors and receives special financial conditions.
Becoming an intermediary means taking an intermediate place in the chain “manufacturer – final consumer”. His main role is to find a buyer and complete the transaction.
How to become a manufacturer's dealer?
In order to become a dealer, you need to determine. But the choice of a manufacturer is far from being the only criterion. In order to become an official representative of the plant, you need to prepare.
Qualities required to work as a dealer
Practice shows that not all people can become a dealer, as well as, and reveal themselves in the field of trading. Experts have identified a number of qualities that a person should have:
- activity;
- communication skills;
- ability to negotiate and persuade;
- stress resistance;
- initiative;
- competitiveness.
If you see the above qualities in yourself, you can try to realize yourself in this area and become a dealer.
Advice: when negotiating, you must “exude confidence,” since the main task in this activity is to convince that the proposed product is of the highest quality.
If you are trying to establish cooperation with a representative of a store or other retail chain, convince him that if you take the product for sale, it will literally be swept off the shelf. To do this, you need to be persistent, be able to present the product, indicate its advantages and benefits for the buyer.
It's important to be prepared for rejection. Unsuccessful transactions are an integral part of working as a dealer. Here it is important not to get upset, analyze the mistakes made during negotiations and move on, searching for buyers.
Required Documentation
To become a manufacturer's dealer, you need to prepare a package of documents, since this business is serious and can bring in a lot of money.
In most cases, large manufacturers require the following conditions to be signed in order to sign a partnership agreement:
- you must be a legal entity;
- presence of an office;
- conclusion of a mediation agreement.
For cooperation you must also provide:
- passport details;
- charter (if you are a legal entity);
- memorandum of association;
- tax registration certificate;
- certificate of state registration;
- ownership or lease (sublease) agreement for non-residential premises where the sales location will be organized;
- Bank details.
The list of documents may vary depending on the requirements of the manufacturer. If you plan to work in the automobile business, you need to provide permission to sell vehicles from the traffic police.
Description of activity
After signing a cooperation agreement in a certain region, it is necessary to draw up a promotion strategy and development concept.
At the first stage, conduct an analysis of the market in the assigned territory, the level of demand and options for promoting products. Determine ways to optimize sales and how to interest a potential buyer. Don’t ignore your competitors, monitor their work.
After this, you need to try to build your customer base. To do this, make a list of companies that may be interested in the product being sold. Before arranging a meeting with potential clients, make as many inquiries as possible about them and develop a negotiation methodology. The larger the customer base, the higher the income level will be.
If you want to become a dealer from a prestigious company or large plant, you need to overcome competition from other applicants. In order to have an advantage over them, you need to take into account a number of factors.
First, they pay attention to experience in this field. Secondly, a lot depends on the region of location. If a representative applicant wants to become a dealer in a city that is saturated with regional representatives of this company, most likely he will be refused. If the manufacturer does not have a representative office in this area, he will be more willing to cooperate. The established customer base is especially valued. The decision to partner is also influenced by:
- reputation;
- availability of technical base and work premises;
- the possibility of attracting qualified personnel;
- possibility of warranty service.
How much money do you need to invest?
Investments are required to conduct intermediary activities. To become a manufacturer's dealer, you will not need the same amount of capital as, for example, to build. But most often, investments in the chosen project are needed.
It is difficult to name a specific amount; it all depends on the manufacturing company. But if you manage to agree with the manufacturer to receive the goods for sale, you can avoid large investments. You can pay after the product is sold, but the price in this case will be higher than if you pay in advance.
If you have the opportunity to pay for the goods immediately, then the size of the investment will largely depend on the type of product and the volume of the purchased batch. It is also worth including in the business plan the costs of transportation, rental of warehouses, office space, personnel recruitment, legal and accounting services.
How to become a dealer without investment?
If you were unable to raise start-up capital, you can become a dealer without investment. There are several ways to do this.
Sales of products to order
Perhaps, while looking through the price lists for a certain product, you may have seen the “To order” mark next to the “Price” line. This means that you first need to deposit money into the specified account, after which it will be transferred for use. The algorithm for executing this scheme is as follows:
- the manufacturer signs a contract with the supplier for the supply of products at a dealer price;
- the products are put up for sale at the dealer’s outlet (not the product, but the name of the unit in the price list);
- the buyer makes an advance payment, which makes it possible to purchase the goods from the manufacturer;
- the purchased goods are sent to the buyer, who, in turn, deposits the rest of the money into the dealer’s account.
This scheme is suitable for goods in the mid-price category. Everyone will buy inexpensive products in the nearest store, albeit at an inflated price, but without waiting. For items that are too expensive, an office or store is required. For example, automobile intermediaries rent large areas for showrooms.
Providing goods for sale
Today, many manufacturers provide their goods for a certain time, during which the intermediary must sell it. After the end of the agreed period, the products must be paid for, and 1-3% higher than if the dealer paid without installments. The possibility of return is specified in the contract. Most often, if the goods are not sold in full, the full price must be paid, which increases the risk of financial losses for the intermediary.
Free testing
In some cases, the manufacturer agrees to send free samples of its products, which help them test and present them to potential buyers. For an intermediary, such a scheme is extremely profitable, but, unfortunately, today manufacturers rarely agree to work under it.
If the idea of becoming a dealer doesn't suit you, consider
Many people dream of becoming a distributor. This is not surprising, because a person holding such a position usually receives a fairly high salary, works on a flexible schedule, travels a lot, does not sit in one place in the office, and even decides for himself exactly how to do his job. As you can see, this profession has many advantages.
There is only one minus, and it is that not everyone knows what exactly the job of a distributor is, and most importantly, how to become one.
To begin with, it is worth understanding that the distributor, no matter what company he works for, is engaged in building a sales market for this company. Well, becoming a distributor is not difficult.
Below is what is required and where you can start.
What does it take to become a distributor?
In fact, anyone can become a distributor. All that is needed for this is a desire to work, and at least a rough understanding of the functioning of the market for goods and services that the company is targeting. And, of course, it goes without saying that you need to start the path to becoming a distributor by choosing an organization whose products you want to distribute.
You can choose both direct manufacturers and intermediary companies. For example, you can be a distributor of a specific Lipton tea, or some wholesale tea store, then you can distribute products from different companies.
In order to choose who to work for, you just need to think about what things or services you would be most happy to sell.
Don't know how to become a company distributor? Follow our advice!
When you have chosen a company whose products or services you want to sell, you should first find out how things work with distributors in this company.
Sometimes it happens that the company itself hires distributors, and sometimes the recruitment of people for this position is carried out by an intermediary company engaged in personnel selection. This information can be found on the Internet, or as a last resort, you can write a letter directly to the company.
Usually the number of distributors is not limited, although there are situations where a company appoints only one wholesale distributor for a particular area.
In any case, you can get into this position even if there are no open vacancies. To do this, you can write a letter to the company, or call the phone number designated for contacts on cooperation issues. However, it is very important to prepare to be competitive. To do this you need:
- Get acquainted with the company's product range;
- Familiarize yourself with the market and the current situation in the sale of company products;
- Develop several proposals to increase sales of the products offered by the company.
How to become a distributor of a foreign company
It is very convenient to work as a distributor in a foreign company, because such companies rarely have a good sales market in our country, therefore, there is a large field of activity, and considerable prospects open up.
In order to become a distributor of any foreign company, you must
- first choose a company,
- get acquainted with its assortment,
- learn about the current situation in sales of the company’s products
- be ready to offer your solution to improve sales.
When contacting a foreign company, you must describe why you are ideally suited to be a distributor abroad, that is, in your region, and how exactly you can help this company expand its sales market.
Step-by-step instructions on how to become a clothing distributor
If you like clothes, becoming a distributor for a company that produces or sells them is a great solution. You can work on both wholesale and retail sales.
After you choose a specific company whose products you want to distribute, and get a job as a distributor, showing your familiarity with the market and competitiveness, you can start working according to the following scheme:
- Assess which category of the population may like the company’s clothing;
- Find stores in the city, including online, that are aimed at selling clothing to a category of people who may be interested in the company’s products;
- Write down the main advantages of your company's clothing, prepare a catalog of its best products, and with this all go shopping, describing how profitable it will be for them to sell the clothing you offer.
The easiest way to get a job as a food distributor is because there are a huge number of food companies, and they constantly need to expand their sales market.
Follow this plan:
- Find a suitable manufacturer or large wholesale store;
- Check out the range;
- Propose your candidacy for the role of distributor, preparing some interesting ideas for more effective product sales;
- Find retail stores that don't already stock your product and convince them to distribute it;
- Go to catering establishments, offering to order your food products.
By acting as described above, you will become not just a distributor, but a good distributor.