The Benefits of Working with Distributors in 2024

There are tons of different decisions to make when it comes to getting your product into new markets. One of the most important decisions is whether to work with distributors or approach national retailers directly. While both options have their pros and cons, there are many benefits of working with distribution partners that make it a valuable choice for many companies.

If you want to grow your customer base and boost your sales, you may benefit greatly from partnering with a distributor, as they can give brands access to a wide range of potential clients and also provide them with useful services to support a brand’s growth. They can help businesses expand their reach, increase sales, improve customer service, and much more. 

In this article, we will explore some of the key benefits of working with distributors, including how they can help businesses streamline their supply chain, access new markets, and improve their bottom line. We will also showcase the best procedures for creating and sustaining a good relationship with them. Whether you’re a small business looking to grow or a large corporation looking to optimize your supply chain, working with distributors can be a smart choice for your business both for your short-term and long-term growth.

The key advantages of partnering with a consumer electronics distributor

These are some of the key advantages of partnering with an electronic distributor in a nutshell:

– Access to a wider customer base 

– Reduced shipping and logistics costs 

– Increased brand visibility and recognition 

– Expertise in local markets and cultures 

– Access to specialized knowledge and resources 

– Increased sales and revenue potential 

– Reduced risk and financial stability

– Improved customer service and support

– Opportunities for expansion and growth 

– Stronger relationships with suppliers and retailers

Distributors are, more often than not, the key link between brands and national retailers, and thus, the advantages of working with distributors are many. Businesses that collaborate with distributors gain access to the network of their clients and their knowledge of product distribution in their local market. Hence, by collaborating with distributors there is great potential in expanding your market reach and boosting your brand’s recognition. We will explore further the benefits of working with distributors in the coming sections.

Strong relationships locally

Distributors have regular meetings with retail buyers in their local market. They usually talk about their current portfolio sales, but most importantly, distributors introduce new products to retail buyers. Retail buyers are always on the lookout for new products to improve and differentiate their product portfolio. Thus, they also prefer to collaborate with distributors that they trust, instead of working directly with brands that they don’t know. 

Retail buyers value and trust the expertise the distributor brings when showing new and innovative products to them and that is the fruit of a relationship built over a long period of time. 

So, getting a distributor to like your product and agree to present it to their buyers is a really good sign. They are putting their name behind the product and that’s why distributors will only show products they believe could fit the retail buyer.

Logistic Infrastructure

Distributors have much more to offer in addition to their valuable network and their retail buyers’ trust. An important element of the distributors’ operations is the logistic infrastructure. This may include facilities for storage, transportation and distribution of the products. Once they have selected a product, they can buy large volumes of that product, sell it to several retail buyers, and with their warehousing capabilities and smart distribution in place, they can ship to many locations on any specific day and time, easily. 

Managing the logistics is normally a huge challenge for a brand, especially if they are overseas, without taking into account the significant costs associated with this. Distribution centers are usually strategically located to minimize transportation costs and ensure timely delivery of the products. In addition to storage, transportation, and distribution facilities, distributors also have robust technology systems in place to effectively manage their logistic operations. This may include inventory management systems, order processing systems, and transportation management systems.

Hence, brands can reduce expenses by working with a distributor and avoid the need to invest in additional logistic infrastructure.

Volume

Distributors typically buy large volumes of products. By purchasing products in large volumes, distributors can negotiate better pricing and terms from manufacturers, which can ultimately benefit the brand. Distributors can pass these cost savings on to retailers and other customers, resulting in lower prices for the end consumer. This can make the brand’s products more competitive in the marketplace and increase sales.

Distributors have the capability to buy large volumes, even containers, to optimize the shipping cost and supply their network. Expanding their product portfolio is not such a high risk if they believe the product will sell well in their market. Nevertheless, to reduce the risk, distributors usually start buying at a low volume. For example, they can initially buy 100 units to test the product out, and if that sells fast and the margin is good, they will increase to 500 and then to 1000 to even tens of thousands or, in other words, full containers. 

Market Insights

Brands can also benefit from working with distributors because distributors have valuable insights into the market. Distributors work closely with retailers and other customers, and they have a deep understanding of what products are selling well and what customers are looking for.

By working with a distributor, a brand can tap into this market intelligence and use it to adjust and/or improve its product development and marketing strategies. The distributor can provide the brand with feedback on how its products are performing in the market, what customers are saying about them, and what improvements could be made.

In addition, distributors can provide brands with valuable information about their competitors. Since distributors work with multiple brands, they have a broad perspective on the competitive landscape and can provide insights into what other brands are doing well and where there may be gaps in the market.

Distributors can also help brands stay up-to-date on market trends and changes. As the market evolves, distributors can provide brands with information on emerging trends and consumer preferences, which can help the brands stay ahead of the curve.

Distributors carry a wide product range and working with a distributor can help your business lower its risk of entering that market. Distributors have experience, expertise, and local insights on consumer preferences, which can help you better adapt your products and services. For example, you may want to expand into a country where your product doesn’t have strong potential due to cultural reasons. In that case, distributors can give you advice to avoid this specific market and choose another more promising market for your product. 

Marketing

Good distributors offer much more than buying and selling. The best distributors know exactly how to market your product locally, especially if you don’t speak the local language. So, imagine having someone that can help you with all the marketing and legal formalities while speaking the local language which is a key element in negotiations 

Distributors always look for opportunities to get your product to stand out at the retailers as well. Often they can arrange a good deal to get your product in the retailers’ flyers and an extra good spot in-store. When brands work with distributors they can definitely benefit from their deep knowledge and expertise in marketing strategies. In this way, distributors can provide brands with marketing insights to boost their product sales. 

Product Returns

Product returns are common in the business and yet many companies completely underestimate them. Every product will have customer returns, it may happen that a certain batch had some problems in the factory which can result in many products being sent back. Retailers are not fond of returning products to the brands directly, particularly when they are overseas and shipping is costly. Local distributors are then a valuable asset to collect faulty merchandise, store it and return it to the brand when it is convenient. 

This way, if over a period of time, you have tens or hundreds of faulty products, the distributor has stored them and you get them back to investigate and fix the issue and still use the products. If your products are of high value, a distributor will save you thousands of dollars simply by collecting the faulty products and getting them back to you for fixing the issues and still use the products. 

Negotiations with retail buyers

The distributors’ business model is taking a margin on the products they sell. They buy in volume at distribution pricing and sell at higher pricing, the difference of which marks their earning.

However, retailers also take a margin, as they follow a similar business model as well. Distributors understand and know exactly what margin range each of their buyers is expecting and know very well how to negotiate it. This is a real benefit, as their goal is to get the buyer interested, but not give away more margin than needed to get the product listed. Negotiating directly with retail buyers can result in losing much more margin than needed for a brand, which is one of the most costly mistakes a brand can make in the business.

Retailers Paperwork Setup

Paperwork takes time and so distributors can help brands with the paperwork required by retailers when introducing a new product to the market. Here are a few ways in which they can help:

1. One of the most important elements distributors provide is guidance on the specific paperwork requirements for retailers in their local market. This includes providing information on the required documentation, format, and timelines that brands need to follow.

2. Moreover, they work with brands to collect and organize the necessary information for retailers. This involves gathering details on product packaging, material waste, and other relevant information.

3. They also complete the paperwork on behalf of brands, saving them time and resources. This includes filling out forms and submitting documentation to retailers, allowing businesses to focus on other aspects of introducing their products to the market.

4. Distributors ensure that the paperwork meets all necessary local regulations and industry standards. This includes verifying that packaging materials are recyclable or that material waste is properly documented, ensuring that brands are in compliance with local laws and regulations.

5. Most importantly, they follow up with retailers to ensure that the paperwork is accepted and the product is added to their system. This includes providing additional information or making any necessary revisions to the paperwork, ensuring that the process is streamlined and efficient.

Local Quality Standards and Certifications

When brands enter a new market, they often face various challenges. One of the most critical challenges is complying with local regulations and quality standards. This is where distributors play a vital role in helping brands navigate the local regulatory environment and meet the necessary certifications and quality standards.

The first way in which distributors can help brands is by identifying applicable regulations. Distributors have a good understanding of local markets and can help brands understand which regulations apply to their products or services. They can identify any certifications or quality standards required by local authorities or industry associations.

On top of that, once the applicable regulations have been identified, distributors provide guidance on compliance. They can help brands understand the specific requirements for compliance, such as documentation, testing, and other steps needed to meet local standards.

Consequently, this can be particularly beneficial for brands that are new to the market and may not have the necessary relationships or knowledge to deal with local authorities.

Selecting the best distribution partners for your product

– Determine your target market and look for distribution partners who have a strong presence in that market 

– Research the reputation and track record of potential partners to ensure they have a history of successful partnerships 

– Consider the level of support and resources the partner can offer in terms of marketing, sales, and distribution 

– Evaluate the partner’s financial stability and their ability to invest in your product 

– Look for partners who share your values and are committed to building a long-term relationship 

– Negotiate clear terms and expectations for the partnership, including pricing, delivery, and marketing efforts 

– Continuously monitor the partnership and make adjustments as needed to ensure mutual success

Conclusion

There are thousands of distributors out there, but how do you find the right one for your product and brand? Well, that is the main challenge. As we covered in this article, the benefits of working with distribution partners in different markets are tremendous, whether it is to bring in significantly higher sales, reduce logistics and warehousing expenses, gain insights on the local market and establish a strong presence faster in new markets. However, selecting the wrong distributor, that is not verified, could end up costing you more and could damage your brand’s reputation in that market. So, how do you find a pre-vetted distributor? Well, this comes with experience. Too many companies have had to learn the hard way what a good distributor is like. So, if you want to learn how to find distributors for your product, you can check this article.

If you don’t know where to find distributors, you can simply register at Tradesnest, a global B2B platform where brands present their products to distributors and retailers directly. In addition, companies can get professional advice with their sales strategies and they can optimize their trade agreements, pricing, and presentation of their products.

Our team has worked with hundreds of distributors in the past and we have set up a platform to help you find the best pre-vetted distributors. On Tradesnest, you can connect directly with these distributors and introduce your product in over 80 markets around the world. Are you a consumer electronics brand and looking for a smart way to find distribution partners? Sign up on tradesnest.com today and start connecting with the best distributors in the industry today.