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How to Become a Product Distributor
The average distributor makes around $80,000 per year, depending on experience, location and industry. That's a lot compared to other professions. There are thousands of companies who need distributors in every niche you can think of, from health products to sports equipment. To be a product distributor, you need to gain the skills and experience needed to climb the career ladder and start your own business.
The first step to becoming a product distributor is to assess your skills and experience. Make sure you understand the ins and outs of the products you plan to sell, research the market, and team up with reputable manufacturers that live up to their claims.
What Is a Distributor?
Manufacturers have two options for promoting and getting their products to the market. They can either sell directly to customers or use distributors. Those who prefer the first option have their own marketing and sales teams and the resources needed to store, pack and ship goods. Many manufacturers prefer to work with distributors to market and sell their products, identify and vet customers and provide technical support.
Distributors are independent agents who promote and sell a company's products, whether it's clothing, books, construction materials or medications. Depending on the agreement they have with a manufacturer, they may or may not be allowed to work with multiple suppliers. Also, they cannot use the supplier's name as part of their business name.
Distributors are responsible for reaching the target customer in the most direct and cost-efficient manner, with the end goal of maximizing sales. Successful distributors identify prospective clients and anticipate their needs, assist in buying decisions and offer information about the products they sell. They may also handle shipping, advertising, financing or product storage.
Types of Distributors
The types of distributors include wholesale or regional distributors, exclusive distributors, selective distributors, direct distributors and indirect distributors. Their rights and responsibilities depend on the agreements they have with the manufacturers. In general, distributors purchase goods directly from manufacturers and then promote them through a network of retailers. For example, a distributor may buy makeup products from cosmetics wholesalers and sell them to beauty salons in their area.
Intensive distributors typically work for companies that produce mass-market products, such as deodorants, office supplies and soft drinks. These goods are sold in large quantities at low prices and appeal to a wide range of customers. High-end manufacturers, on the other hand, prefer selective or exclusive distribution.
Selective distributors have extensive experience with specific products and typically work in industries with a limited number of retail outlets. This allows manufacturers to maintain a high level of service and set higher prices.
Exclusive distributors, by comparison, work closely with the vendor and may have exclusive rights within a specific city or state. They usually handle all aspects of the sales process, from customer support to after-sales care. These professionals usually work with manufacturers who choose to have few intermediaries.
Duties and Responsibilities
As you learn about the distribution business model, you determine which path you will take. Make sure you have a good understanding of your responsibilities in this role. As a distributor, you are both a customer and a business partner.
On one hand, you work closely with manufacturers to help them reach their sales goals and increase brand awareness. On the other hand, it's important to carefully select the vendors you work with and ensure that their products live up to the claims and meet customers' expectations.
As a distributor, it's your responsibility to identify potential clients and to make sure they receive the right products at the right time and in the right condition. You also need to know the ins and outs of the products you sell, negotiate prices and create value-added packages. Distributors are the middlemen between manufacturers and retailers, so they must put in their best efforts to promote, sell and service the goods they offer. Their duties go beyond taking orders and stocking shelves. Distributors are called upon to:
- Learn, market and demonstrate the features of the products they sell
- Forecast market needs
- Offer customer support and assist with buying decisions
- Develop promotional and marketing strategies
- Provide customers with brochures, product information, technical know-how and manuals
- Maintain detailed records of each transaction
- Handle inventory management
- Coordinate logistics with suppliers
- Ensure on-time delivery
- Manage returns
- Track order-fulfillment rates
- Attend meetings and seminars
- Have the technology and physical facilities necessary to perform their duties
- Negotiate prices, contracts and warranties
- Educate customers about new products
- Provide financing options or credit to customers
Become a Distributor From Home
Depending on the products you sell, you may become a distributor from home. In general, this option works best for distributors who promote digital goods, such as software, ebooks, apps and telecom services. However, in this case, you act more as a reseller or affiliate.
Look for companies who need distributors of accounting software, for example. Make a list of vendors and check their websites to see what products and services they offer. Head over to the Better Business Bureau to check their reputation. Use local business directories, such as Yelp and Yellow Pages, to see how customers feel about the company you're interested in.
When you find a vendor that meets your needs, schedule a phone call or request more information by email. If you decide to go for it, learn about the company's products, target market, sales strategies and goals. Seek potential customers, such as accounting firms, business owners, startup founders and finance professionals. Market the company's products on your website or blog, social networks, forums and other online platforms that appeal to your target audience.
Expand Your Knowledge
In addition to strong marketing skills, distributors need to have in-depth knowledge of the industry they work in. For example, someone with a medical background may choose to distribute pharmaceutical products. This industry is booming, but if you know little about medications and health care, you'll have a hard time finding work and making sales. Consider taking medical courses from an accredited university to expand your knowledge.
Be realistic about where your experience lies. Seek companies who need distributors with your skills and knowledge. A software company, for instance, may prefer distributors who have backgrounds in IT, software development or engineering. Additionally, most jobs in distribution require a bachelor's degree, strong marketing skills and experience in sales.
Consider your educational and professional background. Attend seminars and workshops, take courses and obtain certifications related to the industry that interests you. Also, research the legal requirements concerning specific products, such as medications. For example, pharmaceutical distributors must report sales of controlled substances in Schedules I and II and narcotic substances in Schedule III to the Drug Enforcement Administration (DEA).
Legalize Your Business
Starting a distribution business is no different from starting any other type of business. You register your company, apply for a tax identification number and obtain business licenses and permits. Furthermore, it's necessary to open a bank account and purchase insurance for your vehicles and storage facilities (if applicable). If you have a physical office, you may need zoning permits.
Decide whether you want to operate as a sole proprietor, a limited liability company (LLC) or a partnership. If you're planning to become a distributor from home, you can start as a sole proprietorship. As your business grows, you may register as an LLC to protect your personal assets in case of lawsuits or bankruptcy. Choose a name for your business and register it with your state.
Consider joining distributors associations to receive legal support and expand your professional network. The Southern Association of Wholesale Distributors, the California Distributors Association and the National Association of Wholesaler-Distributors are just a few.
Most companies are legally required to apply for an employer identification number (EIN). As a business owner, you need this nine-digit number to pay tax, apply for licenses, hire staff and open a bank account. Depending on the types of products you sell, you may also need to hold a liquor license, a cigarette/tobacco license, pharmaceutical distribution licenses and so on. Each state has different requirements for distributors, so make sure you research the local laws before launching your business.
Andra Picincu has been offering digital and content marketing / copywriting services since 2009. She holds a BA in Marketing and International Business and a BA in Psychology. Her interests include health, fitness, nutrition, and everything business related.