Distributors are essential to reaching markets that manufacturers would not otherwise be able to target. Companies often appoint distributors because a local company has existing customers, contacts and relationships and better understands local culture and business practices. The dealer becomes the manufacturer`s direct interlocutor for potential buyers. Although they can make direct sales online, it is in the manufacturer`s interest to also direct visitors to the dealers themselves, thus offering the retailer another opportunity channel. To improve its chances of making this sale, a distributor should set up its own web presence. While online shopping opportunities likely go beyond a retailer`s resources, a website gives the manufacturer something to pass on to the customer and provides the merchant with another marketing opportunity. Usually, local distributors know their local customer base much better than someone sitting at the company`s headquarters 1,000 miles away. The colors of a particular garment to store or the number of boxes of chocolate compared to vanilla ice cream to order at the factory are best evaluated when the seller is closer to the consumer. Similarly, the payment terms to be offered to retailers, how new retailers can be attracted by using the right kind of advertising and other important pieces of the sales puzzle, are best handled by people who know the local conditions. Your first business idea isn`t always the best. If you`ve never thought about where companies get the products they sell to consumers, then don`t open yourself up to the full range of possibilities around you! Instead of becoming a retailer or service provider, there may be a better chance for you to succeed as a distributor.
Some distributors will ask you to sign an agreement stating that they are the only distributor working with your product in a specific geographic region. These exclusive distributors can be the right choice for your business if you are concerned about maintaining your brand image. When you work with multiple distributors, they become the face of your brand, so you need to trust that they will represent you well. However, if you work exclusively with a retailer, you`ll have more control over how they present products and who they sell to, so you can protect your brand a little more. A current challenge for dealers and distributors is the evolution of the relationship with the original manufacturer or franchisor. For example, in the early 1990s, General Motors wanted to establish 10 percent of its dealerships as a factory owner, according to Robert Ulrich in Modern Tire Dealer. GM wanted to keep its brand name with its dealers, many of whom had started selling more than one line of cars under their roofs. Existing independent dealers were concerned that factory-owned dealers would receive preferential treatment in the areas of advertising, service agreements, promotions, and even inventory.
Retailers saw their ability to sell more than one brand as an opportunity to cross-sell into the GM brand if the buyer was initially interested in another brand. Exclusive distribution is the approach of using limited outlets that are only available in certain locations or stores, with the attitude of creating the rarity and exclusivity of an item or brand. It is more common for marketing and distributing luxury brands, although a variety of brands and products sometimes use exclusive distributors. For example, a high-end luxury shoe brand can only have flagship stores in major metropolitan areas, and customers take a special trip to buy. Exclusive distribution agreements allow for better control over contract negotiations, pricing and product distribution, as fewer companies are involved. Before we dive into the difference between wholesaler and distributor, it may be worth looking at what a supply chain is. Companies that hire intensive distributors want their products in as many places as possible, but not companies that work with selective distributors. These brands select the retailers they want to transport their products and then hire a retailer to deliver the products and provide them with quality customer service. This type of distributor usually works in niche industries where retail stores are limited.
For example, an auto parts manufacturer would not be able to sell to grocery stores, so they could work with a selective dealer who can sell and serve the niche dealers who sell their products. It`s easier to see opportunities for retail because we`re exposed to the market every day, but distribution may be a better choice for some entrepreneurs. As a retailer, you should try to target the largest number of consumers or a specialized niche consumer group. Without many different customers, your business might not be able to grow or maintain itself. Competitors will also try to target the same consumers as you, so you`ll work harder to differentiate yourself. Retailers: Retailers sell products and items to consumers online or in physical storefronts, and they purchase from manufacturers and retailers for the purpose of serving as a point of sale for the purchase of products for resale. Retail stores are the most common place where customers can make a purchase, whether at factory outlets, department stores, or online sales platforms. Retail customer service is essential, and retailers often expand their offerings to be competitive, such as . B providing home delivery services.
In our company, we are always looking for ways to grow. Often, introducing a new line that fits our current business model is an easy way because we already have a large customer base. Retailers play a crucial role in ensuring the smooth running of the lines between manufacturers and users. You can accelerate response times, increase a company`s reach, and even create value-added packages. Distributors can buy from manufacturers and sell to retailers or directly to consumers and/or businesses. Distributors can also provide logistics and warehouse support to manufacturers. Direct distributors avoid the intermediary by selling products directly to the store instead of taking them to the retailer`s distribution center. This type of distributor has faster turnaround times, so they can easily fill out items that sell faster than the store expects. Retailers generally like to work with direct distributors because they are served quickly and can meet demand.
Joel Goldstein is a trendsetter, consumer packaged goods strategist and best-selling author. He is the go-to person when trying to bring a new product to retail through grocery, convenience or pharmacy retailers. As a retail expert, Joel can advise you on how to find a sales representative. View full profile › Many distributors turn to their existing customers and try to market new products to them as soon as they are available. The more products you sell to an existing account, the more revenue your business will generate without you having to look for new customers. From the producer to the wholesaler to the retailer and the consumer, like most products used in a daily store where competition between other brands is high, the main advantage of participating in such a two-speed channel comes from the brand value of the products transported – and the support that brands can receive from the manufacturer. However, the relationship is mutual. Well-supported brands will tend to be more expensive. The pressure to store at a high level will be greater and compliance with the manufacturer`s programs will be applied. In turn, a well-run distribution company will ensure the selection of excellent dealers, who in turn contribute significantly to the brand`s image through strong locations and good customer service.