You have a great product and you are ready to get it to market. Choosing your path to market can be difficult. Do you go at it alone or rely on a distributor to help you get there? Let’s say you have already opted to partner with a distributor. What are you looking for in a partner?
Here is a checklist we have made to help you make this process easier.
Below are a few more questions you may want to consider.
Why are you choosing Distribution?
For new product introductions at small companies, choosing a distributor can be the most critical decision you make in getting your product to market. Your image is fragile at this point, and you may need the individuals that are presenting on your behalf to have complete buy-in to your philosophy and marketing strategy to make sure that it is implemented the way you want.
Conversely, you may be willing to hand the reigns over to multiple distributors in different markets and have a go at what they think may work for them. Let them be the guinea pigs and see who has the most success and draw from the most successful approach.
For existing brands that may already have a foothold, your choice of a distributor may be based on your decision to try a new strategy or path to market.
Scope of Engagement - How much of the work do you want your distributor to do?
Are you looking to hand the product over and you simply want to churn out volume? Do you want to control the marketing and narrative around the product? This will dictate what kind of distribution partner you need.
What are your Goals - Market Share? Volume? Perception?
Are you looking for a strategic, surgical approach to the market, or are you shooting for a large swath of awareness and hoping that a corresponding volume of orders will follow? Are you hoping that people see you as the leader, the innovator or you don’t care if you are perceived as an also-ran. Where do you want your brand to fall in terms of market perception?
What audience are you targeting?
Do you care who your distribution partner is presenting to/targeting for your product? Do you want them going to the trades or do you want them getting owners or contractors buy-in? Maybe you want them downstream getting architects and designers to be aware of your products for the longer term, or larger projects.
What is your sampling strategy and what are your distributor’s expectations?
Are you going to provide as many samples as needed free of charge? Are you going to provide a marketing allowance? Is the marketing allowance tied to sales? Are you going to charge for samples? What does your distributor expect? Many product manufacturers see samples as the cost of doing business, but others can not afford to provide these free of charge, especially as they are trying to build traction in the market. Make sure expectations and financial capabilities are aligned.
Do you have a Universal marketing strategy, or is their latitude based on local markets?
Can your Chicago distributor change his strategy based on market conditions? Create their own collateral? Target their own audience? Can your West Coast distributor develop an environmental story that suits local ordinances?
Where does your product fit in the portfolio?
Do you want to be a big fish in a small pond or a small fish in a big pond or an exotic fish in a tank? All these options have different ramifications. You may garner the attention of the sales team because you drive large volume, because you are more profitable, or simple because you are appealing and interesting. All of these require careful thought and strategy and should be considered up front. Partnering with a distributor where you get lost because you do not have appeal among other products can be a disaster for your brand.
How do you plan to measure the success of your distributor?
Do you have a way to measure success? Is it just sales? Are there forward looking metrics like samples placed, opportunities underway and quotes provided that can help you evaluate not just the current success of a distributor in the moment, but metrics that can help you foresee future success, or perhaps more importantly, an impending decline. Having reporting as part of a strategy will quickly alert you to a lack of attention from a distributor, and you will know early on if the resources are channeled away from your product.
Do they have the right equipment to handle your product? Do they have the space to grow with you? Could they be a consignment partner if you needed to stage material locally? Can they unload your material, store it properly and ship it properly?
Depending on the format of your product, there can be storage issues if special length pallets, crates or A-frames are required for storage or shipping. Identifying these special requirements up front is a key part of verifying logistics capabilities in distribution.
Is your distributor stocking or non-stocking and at what level?
Depending on the number of SKUs of product and popularity of SKUs, it may or may not make sense for a distributor to stock all or some of your products. Deciding what level will be required up front is key. Oftentimes, it may not make sense to stock initially, until a baseline demand is established and the distributor can make a decision about what stock makes sense for their market. Other times, it may be that the an initial commitment is required to get stock locally to cut down on shipping costs, and so the distributor has skin in the game. For multi-SKU business, this can be dangerous if the distributor makes a substantial investment and the material does not move. This can result in bitterness and animosity, thus setting this expectation fairly critical.
How does your distributor measure their success?
Sales are not enough to make a distributor a successful partner, so what are they doing internally to make sure they are successful and stay in business? What business systems and infrastructure do they have in place to track their performance. What accounting, CRM or inventory systems do they have? How do they quote, track samples and manage the inflows and outflows of product?
Small companies may choose distribution as their initial path to market while larger companies may be switching partners or trying a new strategy.
Regardless of your size, this checklist will get you a lot closer than a simple Google search. Find similar products that have demonstrated success (not too similar, but complementary, or with like-minded values) and see which partners they use.
Your distributor is only as good as the people that work there. Choosing a true partner that wants success for your brand as much as you do is ideal. Sketching out a framework using a checklist like this will get you a lot closer than tossing search engine darts into the electronic ether. Good luck!