Trading and distribution are two of the oldest occupations in the world, and their relevance is not diminished even in the 21st century. Companies involved in this line are some of the most profitable ones as they ensure goods and services reach the hands of customers. There are different types of distribution companies depending on the type of products being distributed. This article will best attempt to explain important aspects of starting a distribution company and shared below are details about them.
Who Is A Distributor?
Before exploring in detail about starting a distribution company, it is important to know who a distributor is. A distributor is someone who moves manufactured products from the manufacturer to the retailer. This is achieved through different types of distribution channels, and this is mainly determined by the type of product. Trading and distribution are more important than any time before in this highly globalized world as it ensures that goods and services from different places reach into the hands of customers. In a nutshell, they form the backbone of the global economy. The steps for starting a distribution business are shared below.
Choosing A Product
The very first step in starting a distribution business is identifying a product that has the following qualities:
- Unique and is a highly remarkable product
- Product from a credible manufacturer/supplier
- Product from a reliable manufacturer/supplier
- Authentic product
- A product that gives a first-mover advantage
The best way to find unique and innovative products is to look for crowd-sourced products.
Managing The Inventory
After you have selected the product for distribution, the next step is determining how to manage the goods, i.e. the product. You can go for the traditional warehousing method or opt for dropshipping. With the advancements in technology, it is more suitable for smaller retailers to opt for the latter method because of its reduced cost. The choice between the two methods is mainly determined by the business model under which the distribution company is operating, as well as the type of product being sold.
The other important step in starting a distribution company is to select the marketing technique. This has a huge impact on the sales of the product initially. To choose the marketing strategy, you must ask the important questions that are listed below.
- What type of product are you selling?
- Where are you going to sell the product?
- How much budget can you allocate for marketing?
- How long can you survive without sales?
- What are the competitors doing?
Based on the answers to the questions, you select the appropriate marketing channel for your product.
These are some of the important points that you must know before starting a distribution business.