Distributors buy products in bulk from manufacturers and sell these to retail businesses at profit. They move goods from producers to the physical market. For manufacturers to survive, their products have to go from one point to another without damage. A delay in distributing consumables, especially, will be disastrous for the manufacturer because in that case, consumers will go for another brand. So starting a distribution business is a good idea, notwithstanding concerns that more and more retailers are buying goods directly from manufacturers. Here are the steps you need to take before having your warehouse and starting operations.
Choose a Distribution Business Model
There are two main ways in which distributors run their business operations.
- You can purchase goods from wholesalers or manufacturers and resell these to consumers, which in effect will make you a retail distributor.
- Alternatively, you can be a merchant wholesaler that purchases from producers and resells to other retailers or other distributors.
Your choice will mainly depend on what sort of objectives you have set for your company and yourself.
Decide a Product or Product Line
Then, you should discover what type of products to sell. In this regard, you will have to decide whether to focus on a product or offer a bigger variety.
You must do in-depth market research here. Because your product could make or break your business, you will have to spend longer on making that choice.
A good idea at this time is to search for small companies that need a distributor. Large-scale distribution businesses with a huge clientele hardly ever work with those smaller-scale businesses. You should target this niche.
You must spend time considering potential brands, which could attract a great deal of attention in the sector in the years to come.
Identify Your Business Clients
After knowing what to sell, you should start to identify other big wholesalers and retailers that are likely to purchase those items.
Your market research will yield good results at this phase. You will have a potential client list, in addition to the product category they will be keen on selling. Rank the clients around the product quantity they are likely to buy. If you are not sure about a potential client order, visit that client’s store or website and see what groups of products they have. If they are having their own set of distributors, you will have to make an attractive initial offering to convince them to work with you.