Choose Your Distributors Well
Every company knows the power of the retailer in pushing the brand. No wonder, he is the most pampered Channel Partner. The key to a good distribution network is however the distributor. There is little doubt that the distributor is the weakest link in the chain; he neither owns the product (supply), nor the customer (demand). Though this means that he is replaceable and deserves the least margins in the chain; it should not be taken to imply that he is unimportant. He is entirely responsible for ensuring a smooth and profitable supply chain.
Though technically the retailer is the last leg in the supply chain, the distributor is the last one that you as a manufacturer have any control on. Although on paper you may set some parameters and design a strategy on your whiteboard, you practically have no choice in picking retailers and have very limited control in their behaviour with your product. On the other hand, you have complete control in your choice of a distributor and his operational matters. A prudent manufacturer should therefore focus on choosing the right distributors.
Some of the key things you have to undertake would be:
1. Define a Good Distributor
It is very important to define selection parameters (a very good hardware distributor may not be a very good food distributor), such as trade Terms & Conditions, and Service Level agreement before you start looking for distributors. The trade T&C has to be defined for both the relations viz. manufacturer to distributor and distributor to retailer.
2. Hire An Agency Or At Least Depute A Full Time Employee
Do not try to save time or money while hiring a distributor as the cost of changing one is always going to be more.
3. Trust Data Over Pure Intuition
Human bias is the biggest known error in decision making. The number of parameters involved in any decision in Sales & Marketing make it extremely error prone if done without looking at the relevant data and analytics. Use your brain for the effort of finding out why it happened rather than guessing what happened or memorising past data.