Three Critical Areas to Consider When Looking for a Distribution Partner

Leveraging distribution partners to accelerate your international expansion can be both an efficient and explosive way to accomplish growth goals. But it’s important to consider all aspects of distributor relationships and how they will impact not only your growth, but also your brand.

Consider these three critical areas when vetting current or potential distribution partners and you will likely save time and money.

capabilities

1)    Are they capable? This seems like an obvious question to ask when considering a distribution partnership. But too often brands are chasing a purchase order, or the opportunity to enter a new market, and they forget to consider the fundamentals. Can the distribution partner buy, warehouse, distribute, promote, and service your products?

This question should be approached from two angles. Financially speaking, it is important to confirm that any potential partner can fund not only an initial order, but follow-up orders as well. The last thing you want is to have a successful product in market, without the ability to capitalize on demand.

Separate from the financial aspect of a partnership is whether a partner has the physical means to support your business. Do they have enough warehouse space? Can they store products in a safe and clean environment? Do they have delivery AND reverse logistics procedures for your products?

Again, these questions seem obvious, but I have seen many partnerships initiated without site visits, which means you should be very deliberate with your questions regarding the physical logistics of a potential relationship. 

connections

2)    Do they have the proper connections? One of the main values of partnering with a distributor is their ability to enter a market quickly and professionally. There can sometimes be a miss-conception that distribution partners are nothing more than sales reps with a warehouse. In fact, nothing could be further from the truth. Many distributors may employ sales reps, but they themselves are not the sales reps. Rather, an effective distribution partner will have strong relations with key channels throughout their market – at the corporate level. 

There is still a critical need for an effective sales team to sell your brand, but having established relationships at a higher level, means your distribution partner will likely be able to speed the sales process for their team and build support for your products throughout (retail) organizations in the form of favorable terms and / or funding. A well-rounded, and effective, distribution partner will not only have resources in key businesses areas, they will know how to leverage them for your mutual success.

3)    Do they have a unique skill set? By definition, all distributors are businesses. And generally speaking, they follow a similar construct of buying, selling, and promoting products in their local markets. But not all distributors approach business the same way. Some potential partners are focused on high-velocity, quick turns, and big numbers in order to make their business work. Other distributors may work with a limited number of brands, but invest more time and energy in the “brand building” aspect of their products. Neither strategy wrong, but each offer different approaches to how you will structure your partnership, and ultimately your growth in new markets.

unique skill set

One of my personal experiences was with a distributor that did not operate in the same product category as my company's brand. But the distributor was masterful at handling innovative technology and building foreign brands in their home market. We chose to work with this partner instead of others who were in the same product category and we were thrilled with the results. Our partner was not the obvious choice, but because of a unique skill set, they were the perfect choice for us.

Ultimately, the saying “nothing replaces hard work” holds true when considering a distribution partner. If you are diligent with your process, deliberate with your questioning, and you exercise good judgement while considering the questions above - you will be on the path to finding the right partner for your brand.

For more advice on how to maximize your distribution selection process or build an effective International Business Development strategy, contact Castus via email (hello@castusglobal.com). For ongoing tips, trends, and news - visit our website: http://www.castusglobal.com.