What do distributors look for in a product?

Are you wondering what do distributors look for in a product? Bringing a new product to market is all about getting it into the hands of your end consumers. Therefore, it is normal to be focused on all the direct-to-consumer (D2C) strategies. Selling your products on your own website and online marketplaces is a great beginning. Once you have got some following and people loving your product, it is time to invest to grow bigger, ideally in new markets.

Here is the part that becomes challenging; spending money on ads to drive traffic is a common way, but you need to have enough sales to be able to continue that strategy.  Not all brands succeed in making this strategy work or even if it does, are the sales enough? The goal is to grow faster and smarter to prevent copycats get in the market first. Well, then this is the time to really think about getting your products on retail shelves. Why? Because 85% of all sales happen in stores worldwide. Can you really afford to miss out on 85%? Little secret; “Amazon is about 1% of the world’s retail business segment” said Andy Jassy, Amazon CEO in a 2019 interview with PBS’ Frontline.

How do you get your product fast in new markets and on retail shelves?

The following process can be lengthy, but it is the easiest, most cost-efficient solution out there. Start partnering up with distributors and national retailers. I am not speaking about the boutique store around the corner from your home, I am talking about large retailers that have tens or hundreds of stores. One way is trying to reach out to these large retail buyers directly, you can read more about it here. However, if you are an emerging brand it might be easier to go through local distributors who already have regular meetings with these retail buyers. 

How do you stand out to distributors?

First, you need to know what distributors look for in a product and how they would view your product and brand.

What is important to know is that distributors take a significant level of risk when it comes to carrying a new product. Even if your product is innovative and attractive, there are a few inescapable red flags that might be raised by inquiries concerning production, quality, and consumer feedback. Additionally, good distribution partners frequently receive a lot more requests for collaboration from brands than they can handle. Therefore, they must carefully consider each opportunity. Their ultimate goal is that each new brand must be able to increase sales and profitability without competing with their existing brands’ portfolio.

We know that there are a lot of new innovative products that may have a good potential of being the next hot item to fly off the shelves. If you have an innovative product and you are ready to expand into new markets and want to learn what do distributors look for in a product, you can check the list below. We gathered a few elements that are at the top of the distributor’s checklist and can help you understand what distributors are looking for. 

What are distributors looking for in a product?

1. High demand or strong potential for growth

Distributors want to invest in products that have a proven track record of sales or that show strong potential for growth because it increases the chances of the product being successful in their market. When a product has high demand, it means that there is a large customer base that is interested in purchasing the product. Subsequently, this increases the likelihood that the distributor will be able to sell a large quantity of the product. 

Even if your sales are good, distributors always send their team to wholesalers and retail buyers to get their opinion on the product. If they pass on the product it is most likely that the distributor will pass too. Sending samples is not enough, you need to show how your product is unique, that the demand for the product is high and how it really solves a problem for your customers. Convince them before they start reaching out to their buyers.

2. Good profit margin

Your product should have a good margin for a distributor, which will help the distributor make money while also keeping prices competitive for customers. 

A good margin means that the distributor can sell the product at a higher price and still make a profit, which is essential for their business.

In case the margin is too low, the distributor may not be able to make a profit or may have to increase the prices. Subsequently, this can make the product less competitive and less appealing to customers. Additionally, a good margin also provides a buffer for the distributor in case of unexpected expenses or market fluctuations. This factor contributes to ensuring the long-term financial stability of the distributor’s business.

3. Good fit for existing product lines and customer base 

It is usually preferable that your product complements the distributor’s existing product lines and appeals to their target customers as they can easily market and sell it to their existing customer base, which can increase the chances of the product being successful. 

When a product is a good fit for existing product lines, it means that it complements the other products that the distributor already offers, which can make it more appealing to customers and increase the likelihood that they will purchase the product. That’s why it is wiser to target distributors that are active in industries of your product’s category. This is not a must, as we have seen great success stories with distributors in other fields. As long as they believe in the product and their clients buy it, opening a new category is possible.

4. Reliability and reputation of the brand

The distributor wants to work with brands that have a good reputation for producing high-quality products and providing good customer service. 

When a product has good reliability, it means that it has a proven track record of being high-quality and able to meet customer needs and expectations, which can increase the likelihood that customers will purchase the product. Additionally, it means that it has a positive image in the market, which can increase customer trust and interest in purchasing the product.

A distributor that carries a product with reliability issues or a bad reputation, may suffer from returns, refunds, and complaints from customers, which can lead to financial losses and damage to their reputation.

5. Unique or differentiated from competitors 

Your product should be unique or differentiated from those offered by competitors to make it stand out in the market. This means that it offers something that other products in the market do not, which can make it more appealing to customers and increase the likelihood that they will purchase the product. Moreover, it can also help the distributor to charge a higher price for the product, as customers are willing to pay a premium for something that they cannot find elsewhere.

6. Easy to market and sell

Your product should be easy to market and sell, with good packaging and marketing materials. Think of packaging, will their retailers be able to place it on shelves or hang it in stores easily? Does it come in a display? Also, on the retail price, is it competitive it their market? Is the product easy to market to its target customers?

7. Can you produce enough on time?

Imagine the sales go well and they want to order thousands of units more, can your production capabilities handle the demand? Not being ready for large volumes is risk distributors don’t like to take. They usually start with 100 units depending on your product and pricing. If it goes to 1,000 or 10,000 can you produce in time and deliver?

8. Compliant with regulations and certifications 

Your product should be compliant with all relevant regulations and certifications to ensure it is safe and legal to sell in the distributor’s market. The intention is to protect the distributor’s reputation and financial stability. 

Each country may have different regulations and may require a different certification. Certifications are not cheap. This can be a deal breaker for many companies. Most distributors know the regulations when it comes to certain products, but it is always good to do your research before entering a new market. A distributor wants to avoid legal or financial penalties, such as fines or lawsuits, which can be costly and damaging.

9. Marketing budget

Marketing may be costly, particularly if you’re introducing a new line of goods. Because it takes time to set up floor shipments, in-store signage, and other marketing materials, the distributor won’t want to invest a lot in creating a product that won’t endure the costs of marketing and promotion.

If you have a marketing budget that is a plus for many distributors. It is not a must, but it will help them get your product at certain retailers. Allocating a small marketing budget for in-store materials or activities will come a long way. 

In summary, before starting to focus on presenting your product to distributors, you have to understand in depth what do distributors look for in a product. Thus, make sure that your product fulfils most if not all of the characteristics above. Also, be ready to build strong connections that will lead to long-term partnerships.

Looking for quality distributors? Check out Tradesnest.com. A global B2B platform for consumer electronics brands and distributors.