Entering into a new market is always a challenge for any company. One way to reduce the burden is to use local distributors. Nevertheless, the decision to select a distributor shall not be based on simple opportunity but based on a clear strategy and expectations.
1. Be clear on what you expect
Finding a distributor in a foreign market is one of the most strategic decision a company can make as it has such a large impact on your business and growth developments. Take the time to assess exactly your needs and be clear about what is expected from your distributor.
2. Select the right distribution strategy for your business
Two options are available to you:
- End-to-end distribution with the distributor taking care of everything,
- Last mile distribution which can be very costly
In both situations, the number of partners and the internal resources needed to support your distribution strategy will vary.
3. Marketing support
Some partners will only be able to push your products into retail but lack the resources to support any brand development. In such a case, you will need to consider allocating some marketing budget to support your partner and create a brand development. trade your products but lack the resources to push to position correctly your product.
4. Distribution agreement
In order for your partnership to succeed, be clear on the targets, incentives and margins expected. In addition, you will need to consider the following elements:
- Are you looking for an exclusive or shared distributor partnership. In an exclusive partnership, your distributor will not be able to stock any competitors products. To be feasible, an exclusive partnership will require that both parties have scaled largely before considering this option.
Be careful not to forget to ask about your partner’s infrastructures as this will have an impact on the margins of your product. In the event where your partner does not have such infrastructures, you will need to develop your own infrastructures which can be costly and take time. Verify that your distributor has the infrastructure to support the distribution of your product.
6. Assess your partner’s network
As with any distributor, it is important to know if your partner has a large distribution network.