A retail distributor is a business that acts as a middleman between product manufacturers and consumers. Typically, a retail distributor buys from manufacturers or wholesalers and markets products to the public, although some sell to other businesses as well. Retail distributors can range in size from an individual selling a single product line out of her home to giant corporations like WalMart and Amazon. In recent years, retail distribution has undergone a revolution with the rise of Internet marketing that offers people the chance to start businesses with modest amounts of capital. If you have dreamed of owning your own business, you may want to become a retail distributor.
Educate yourself about retail distributing. Read up on industry issues and innovations in trade publications (a link to one is at the end of this article). If you don’t have a background in business you might want to take some basic courses in business management and accounting at a community college. For specific topics (especially related to Internet marketing), check out continuing education programs at local universities.
Investigate possible product lines. It’s usually best to concentrate on areas you know. For example, if you are a sports enthusiast, you might consider athletic wear or equipment. Contact manufacturers and get prices, product information, and their policies for selling to distributors. Take the time to find and read market research articles about the industry and products you are considering.
Develop a business plan. Include a detailed estimate of what you will need (store or online website, product handling and storage facilities and inventory). Create a budget plan that includes inventory and shipping costs, advertising, and expenses for rent, salaries and other overhead. Your budget estimate should also show what products you will carry and the expected volume (and a clear explanation of why you think these estimates are realistic).
Create a marketing strategy to make you stand out from the crowd. Start by researching the market for the products you are considering. Find out what your competition is doing. You don’t want to follow the crowd here. The goal is to identify market opportunities and to create a price structure, style and quality of service, and advertising strategy that twill get people in the door—and bring them back as repeat customers. The most successful retail distributors are those who combine solid research with imagination and innovation to develop a retailing concept that grabs the consumer’s attention.
Pay special attention to the possibilities of Internet marketing. This is rapidly becoming essential to become a retail distributor even if most of your trade will be in a physical store. Think of the Internet as a place you can open a branch store at minimal cost as well as conducting advertising and promotional campaigns to bring customers to your physical location.
Raise the capital you need to become a retail distributor. Unless you have enough money of your own, you will need to go to a bank for a business loan. It’s at this point a well developed business and marketing plan will start paying off. Take care to make sure your credit history is in good shape as well. Both of these will be essential to securing financing.
Contact local and state regulatory agencies and make sure you secure all licenses and understand the regulations that apply to our line of business.
Keep your early expectations modest. Only rarely does a start-up break even the first year. Focus on quality and on keeping costs low. You will be wise to base your expected revenues and costs on conservative or even a bit pessimistic estimates. Be prepared to expand to meet market demand only as fast as you can with the resources you have at your disposal. You are far better off growing a little too slowly than if you try to do too much too fast and overextend your business.