1. Ask yourself the right questions
You need to ask yourself a few fundamental questions before attempting to distribute your product Gomwi.com . Do you need to create demand for your product, or does it already have some? Do you know whether the distributor would be eager to market your goods? Can you handle the manufacturing volume if you can work out a contract with them? Do you want to grant a manufacturer a license to make your product and distribute it, or do you want to sell straight to the distributor?
2. Profitability is important
Do you have a product that has a distributor-friendly profit margin? Are you able to make enough money from your goods to pay for the wholesale distribution, packaging, shipping, commissions, and marketing costs? In order to make enough money to justify the effort, you will need to turn a profit that justifies the effort.
Check the distributor’s guidelines for additional costs that you will need to factor into the price of your product. If you work with a discount retailer, they will want to reduce your profits to zero in order to maintain their pricing as low as possible.
The average margin split is as follows: If a product costs $1 to create, it will sell for $4 at retail. To wholesalers and direct-purchase retailers, the $4 product will be sold at $2 wholesale. If a product costs $1 to create, big box stores like Walmart might offer to pay $1.25 to the manufacturer. The normal profit margin is that amount.
3. Make sure the distributor you choose is a good fit for your product
You and the distributor begin your cooperation by looking for rival goods in the stores they supply. It will be quite challenging to sell your goods if the store currently carries a comparable one.
Consider where area of the shelf on the big-box retailer’s shelves your product would fit best, and keep in mind that shelf space is their most valuable commodity. When putting together your presentation for the distributor, have this information in mind.
4. The product pitch
Specify who will present your product to the distributor—either you or a representative. They’ll probably ask you about finances and logistics, thus the success of your presentation will depend greatly on your business acumen.
Since it is more probable that your product will go to the next level if the person selling it has industry expertise or a personal relationship with the distributor, it is typical for businesses to employ a broker to pitch their product to them. Although the fee ratio may vary, typically a broker will charge you 5% to represent your product.
Since working with brokers is something we at Mr. Checkout are familiar with, we are aware that some retail brokers engage in unethical business tactics that may harm your brand. Call us for a referral if you’re looking for an honest broker. You could save a tonne of money and a tonne of headaches by doing this.
5. The paperwork must be completed
An application process is frequently required by distributors. However, you should get in touch with them and inform them of your intentions before filing the necessary documentation. Your application might advance through the process more quickly if you have a contact inside the organization.
6. Expect a significant increase in volume
Your volume will probably improve significantly if a distributor decides to carry your line. You should be ready to increase output and let your manufacturer know about this chance.
A lot of work must be spent on maintaining good client relations in order for manufacturing, logistics, and distribution to run well. Additionally, distributor contracts may include clauses that could penalize you for production and shipment delays. In the event that you are unsure about any contracts, have an attorney explain them to you.
If you want to sell your goods through a distributor, make sure to properly analyze the industry, plan for an increase in production, and utilize all of the tools at your disposal to expand your company.