Creating Distributors Network is one of possible ways to enter the market with minimum costs.
In this case you do not need many employees or resources as sales to End Users are handled by Distributors.
Another benefit is that you do not need to interact with local tax people, Customs or other authorities as this will be done by Distributor.
Also with distributors network you can cover bigger territory than just using your own sales office.
Among negative factors is less control on communication with End Users, so you can not be sure for 100% that your product is positioned correctly and sold for correct application.
This should be considered especially for technically complicated products where engineering advices are so important from the Seller to choose right product for right application.
HINTS:
1. To create effective distributors network it is better to have 2-3 distributors covering the area.
If you create only 1 distributor selected Company-distributor might start to be too demanding, because they will understand that your sales targets are relying only on them.
If you create too many distributors it will most likely be not interesting for distributors as cross competition on the products will be too high meaning contribution margin by distributor should be set to minimum.
2. Please prepare winning arguments for distributors and ensure these arguments are applicable for exact market.
It might be extended warranty, free samples, increased quality, reduced price, variety of choice or combination of above.
3. Please make training to distributors and ensure they understand your product correctly.
4. Please ensure good Customer care and timely reply on questions of distributor.
5. It is always better to have a specialist with local market knowledge coordinating distributors network.
Regards, Yury
In this case you do not need many employees or resources as sales to End Users are handled by Distributors.
Another benefit is that you do not need to interact with local tax people, Customs or other authorities as this will be done by Distributor.
Also with distributors network you can cover bigger territory than just using your own sales office.
Among negative factors is less control on communication with End Users, so you can not be sure for 100% that your product is positioned correctly and sold for correct application.
This should be considered especially for technically complicated products where engineering advices are so important from the Seller to choose right product for right application.
HINTS:
1. To create effective distributors network it is better to have 2-3 distributors covering the area.
If you create only 1 distributor selected Company-distributor might start to be too demanding, because they will understand that your sales targets are relying only on them.
If you create too many distributors it will most likely be not interesting for distributors as cross competition on the products will be too high meaning contribution margin by distributor should be set to minimum.
2. Please prepare winning arguments for distributors and ensure these arguments are applicable for exact market.
It might be extended warranty, free samples, increased quality, reduced price, variety of choice or combination of above.
3. Please make training to distributors and ensure they understand your product correctly.
4. Please ensure good Customer care and timely reply on questions of distributor.
5. It is always better to have a specialist with local market knowledge coordinating distributors network.
Regards, Yury
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