Starting your own enterprise or joining an authorized distribution partnership can be a highly profitable and fulfilling experience with new promising opportunities, creating and stabilizing the basis of your distribution career.
However, getting into an authorized distribution partnership means entering a big industry. And there are certain elements that distributors must follow to guarantee success.
Following the essential steps with extensive planning and solid determination, any given business can obtain a highly profitable and beneficial authorized distribution partnership.
Authorized Distributor vs. Independent Distributor
An authorized distribution partnership is an agreement between the manufacturer and the authorized distributor that allows the latter to sell the given brand of products to their customers. Therefore, authorized distributors are critical players in the relationship between manufacturers and consumers, handling the movement of products from one place to another.
There are multiple reasons why being an authorized distributor will benefit you in the long run, especially when catering to a customer base looking for obsolete electronic parts.
One benefit is receiving the products from a reliable and knowledgeable source. Authorized distributors have direct contact with the original component manufacturers. They ensure certified distributors always obtain the best of their products to provide the vast consumer market with high-quality components. As a result, distributors have the means to acquire parts that are first quality and precisely what is specified by the customers rather than counterfeited components that can hinder their reputation, especially in cases where the failure of an unauthorized component can potentially be deadly.
This makes authorized distributors highly trusted because it means that they receive the best quality products from the manufacturers. As a result, when companies choose an authorized distributor, they feel more secure trusting them with their products; they know where the parts are coming from and that they are authentic.
Moreover, authorized distributors have highly trained and knowledgeable staff regarding the brands sold. They receive special training from the manufacturer on using and distributing its products and equipment, making them more sensitive to learning any information about the brands they sell. Therefore, they become adept at assisting customers with any questions they may have, putting them at ease and earning their trust.
On the other hand, an independent distributor does not have the luxury of having this connection with an original manufacturer, nor do they have the same expertise as trained staff, opting for the black market or fringe gray areas with an abundance of counterfeit components in the supply chain.
How to Become an Authorized Distributor
As you can see, setting up and running a successful authorized distribution partnership is a big deal. So, determining a strategy is vital if you want your company to sell a given manufacturer’s product or service.
In that case, there are three sources to take note of:
- Purchase an already existing business.
- Start your own.
- Buy into an already existing opportunity.
Buying a business that is already running requires prior in-depth research. First, you should decide what the management wants to sell and what customer base they have.
Buying an already existing business also helps you get new distribution opportunities from manufacturers looking for distributors with an established company and a history of service they can look into for assurance.
If buying a business is not an option, you can start from scratch or buy into an existing opportunity, however long it may take to obtain a sufficient customer base.
How to Prepare
The in-depth research needed before venturing out to become an authorized distributor requires extensive planning. For instance, most manufacturers require distributors to write a business plan for the approval process.
To draft a good business plan, make sure that you include the following steps below:
Plan Your Logistics
Although the budget can change based on sales, before starting your business idea, it is vital to have a specific budget upfront regarding equipment, marketing, employee, and other overhead expenses. This way, it will be easier to plan for success.
Review your budget monthly or quarterly and adjust it to provide more funds to prosperous areas and fewer funds to those that are not, making sure that your goals are measurable such as predicted revenue and cash flow, so that you can keep track of them.
After identifying your budgetary capacities, start investing in staff and product purchases and locating a warehouse for product storage. Although it is not an obligation, renting a warehouse to stock products will inevitably lead to more success, especially if it is located close to the customer base. This will help the business to provide much more efficient local delivery on top of global distribution.
Get Sufficient Inventory
Most manufacturers require minimum quantities ordered to become authorized distributors. This is so because, without sufficient inventory, it will be challenging to maintain customers if they do not receive the right amount of orders. On the other hand, if you have too much inventory, you may not be able to sell all of them quickly enough and, as a result, have a lot of capital tied up.
Authorize Your Business
To become an authorized distributor, you must meet specific requirements, and a standard deemed suitable by the manufacturer (i.e., distributing license), which will vary according to the company you are selling to.
After establishing your business as a legal entity, you need to find manufacturers for product sourcing. You can find information on authorized distribution partnerships on the manufacturer’s website or by contacting them directly. Find one that will offer you a mutually beneficial partnership, gathering as much information as possible from manufacturer websites and contacts.
Although taking part in an authorized distribution partnership is a challenging process, with determination and careful planning, its benefits outweigh any hardships that come along with it. Through the strategies laid out in this article, it is possible to create a functional, flexible, and highly-prepared plan to achieve your distribution business goals.