BUSINESS TIPS: Managing a Distributorship – Wholesale or Import

What is involved in being a wholesale or import distributor?
This is a very exciting field, in my opinion. It is akin to being a retail buyer in that you need the same ability to spot a volume seller, and to negotiate the optimum deal.You also need sales skills because you are reselling the product. And social and interpersonal skills to enable you to build your client network.

The skill is in buying the right product at a keen price, and generating a profit by making a margin on your sales to your customers, who are themselves in business.

You need to make a decent margin to cover your overheads and generate your profit. Your clients need the “headroom “to make a margin when selling to the end customer.

Why do professional buyers use distributors?

Surely they can get a better price dealing directly with manufacturers? Yes of course, but there are a limited number of hours in a day. A buyer is charged with scouring the Globe for their category of product, but there is a limit to the number of manufacturers that they can personally visit , as well as making their selections, ordering stock, dealing with quality issues, ensuring margins are met, keeping current lines in stock, dealing with customer complaints, producing reports for management ………………

So they come to rely on distributors as an extra set of eyes and ears. A good distributor has the confidence and trust of retail buyers, they have demonstrated a track record, and if they advise a buyer to accompany them to see a range, the buyer will usually make the effort and take the time. While Buyers are on sourcing trips they will visit some manufacturers directly, but will also allocate some time to their best distributors to see what they have found.

The distributor is researching the source market for their own business, which is importing goods to sell domestically. He will also be able to signpost buyers he deals with directly to the manufacturer if appropriate. The buyer then has the choice of whether to purchase direct from the factory, or indirectly via the wholesale distributor.

Another factor is that the distributor gets the opinion of the buyer which may help them make their own decisions.

In turn this ability to attract the attention of the buyers lends kudos to the distributor, and enhances their reputation. They are then sought out by manufacturers looking for a route to market.

So a strong profitable partnership can develop, with everyone winning. The buyer may still purchase directly from the factory, but the distributor will have in place an arrangement where he earns from every sale, whether the retailers purchase is direct from the factory, or indirectly through the wholesale business, where the wholesale distributor imports the goods and sells on to the retailer.

What skills does a distributor need?

They need all the skills necessary for running an import and distribution company –financial skills, management skills, knowledge of shipping and warehousing as well as customer service.

Also of course the social and people skills required to develop trading relationships with manufacturers and retailers, and to understand their business and requirements.

And the ability to read and forecast the market for the products they are purchasing. To overestimate sales and buy stock of the wrong product in depth is the quickest way to undo all the good work you have done for months!!

So a successful distributor must master every facet of the business, from working closely with their clients, both manufacturers and retailers, to managing their own complex business.

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