Becoming A Distributor - Advice

[anthonytaylor]

Hi guys,

I have spotted an opportunity to become a distributor for a US based company.

I am already registered as a sole trader and run an eBay/Amazon business (est 2008) which turns over approx £40,000 with a profit of £15,000 alongside my full-time job in search engine marketing.

As strange as it sounds, i've never had to deal with a supplier before in my business so I am not sure how to approach them.

While I would accept becoming one distributor of many (I have £10k for stock so I don't see this being a problem) what I am ideally looking for is exclusive distribution rights in the UK (followed by Europe)

My research so far indicates they are quite a small company who is actively looking for someone in the UK to distribute their product so there is definitely the opportunity to work with them.

Almost all of the other manufacturers in the marketplace have one single distributor so there is a helpful precedent there.

I already have a local business contact and close friend who is willing to fulfil all orders through his own warehouse and staff so we won't look as though we are trading from a back room!

Any other advice on what information to prepare or what to think about before I give these guys a call?

Am I being a bit unrealistic expecting to go out and secure such a deal, or will the capital I have (up to £20,000, their product full retail is £400) alongside my marketing skills demonstrate my seriousness?

Honest opinions appreciated

 

[Vending Siting Services]

Hello there and welcome to UKBF

This question is quite hard to answer fully without having more information regarding type of product, potential size of the UK market, what is the coverage in the States and how much do they distribute?

Do you know the potential size of the UK market?

How much stock holding can you handle?

Are you insured to handle such goods?

The questions are endless ....

When approaching a company wanting to be their sole distributor for the UK you will have to enter into a contract whereby they will give you targets to reach to ensure you are able to gain as much of the market for their product.

They will need to know how you intend to market, distribute, handle customer service, again the list goes on ....

I suggest you write to them offering yourself as a UK distributor of their products with a view to having an exclusive say after a number of months after you have proved yourself.

We get many emails from countries around the world wanting to be our exclusive distributors for our Snack-a-Can products for their country. When we receive their emails we take each one seriously and so far we have had only a few come on board to distribute our products as the others tend to be small concerns and can't answer the necessary questions that we ask of a distributor.

Hope the above helps and I am sure others will be along shortly to give their opinions and give help.

Kind regards.

Barbara Fellowes

 

[Billmccallum]

How would you plan to sell the product? If you did get a sole distributorship deal, one would assume that they would be looking for national sales campaign, could you provide that?

At a rough guess, I would say that £20K would be nowhere near enough to run a national promotion, let alone bring in the stock.

Making another assumption, if the product retails at £400 and you get it for £200, that means £20K will buy you 100 items. Again, making an assumption, import from the US would need much higher volumes to make it viable.

Even if the size of the item is quite large (but it is only £400) I would hazard a guess that a container load would be at least 2000 items (based on a size of at least 1 cubic foot).

If I were to take on a task like this I would expect at a minimum £100K for first stock shipment and £50K for promotion/marketing.

The big question is are you planning on retail or B2B sales? Retail will involve much higher numbers.

Just one opinion.

 

[Barnie]

Distribution starts at any level, we have opened accounts with £600 right up to £26k, completely depends on the company,brand, product and market.

be honest with them, dont make out you are a huge European master distributor when you are starting out, state your intentions and previous experience though.

One of the problems sometimes is their expectations vs the UK market, US companies whilst small can turn over huge numbers due to geographic, where as the a large company in the UK may turn over 10% of what they do

Just because you have 20k sat in the bank doesn't mean you have to spunk the lot on stock, order what you need to cover the forecast and where you can balance the cost.

TBH its fairly pointless writting any more unless you give a little more info, drop me a pm if you need some help and ill taylor the advice

 

[Versateer]

I've done this for two American companies, one Canadian and for one German company in the US market.

Put yourself in the manufacturers shoes:

- do you have access - control of the sales channels?
- can you manage the country/area (be realistic!)
- do you have experience in their market?
- do you have an achievable revenue forecast?

If you can answer these then start a conversation with them. You really need to know what their expectations and you will find that they have certain ideas about expansion. Americans are best if you meet them and build a relationship so I would just call them and get the ball rolling.

If you need more feedback contact me.

Good luck!

 

[Psl]

"My research so far indicates they are quite a small company who is actively looking for someone in the UK to distribute their product so there is definitely the opportunity to work with them."

Get on a plane and go an see their set up, if you feel OK about the way they are set up, sit down and talk to them and strike deal there and then. The americans love it when we trot over there to do some business with them.
Better to spend £2k now on travel than possibly lose the £20k later.

 

[Billmccallum]

Distribution starts at any level, we have opened accounts with £600 right up to £26k, completely depends on the company,brand, product and market.

be honest with them, dont make out you are a huge European master distributor when you are starting out, state your intentions and previous experience though.

One of the problems sometimes is their expectations vs the UK market, US companies whilst small can turn over huge numbers due to geographic, where as the a large company in the UK may turn over 10% of what they do

Just because you have 20k sat in the bank doesn't mean you have to spunk the lot on stock, order what you need to cover the forecast and where you can balance the cost.

TBH its fairly pointless writting any more unless you give a little more info, drop me a pm if you need some help and ill taylor the advice

OP states " what I am ideally looking for is exclusive distribution rights in the UK (followed by Europe)"

You say "we have opened accounts with £600 ",

are you seriously advising someone that they can deliver a national distribution set up with £600? Honest opinion...ludicrous!

"Just because you have 20k sat in the bank doesn't mean you have to spunk the lot on stock" Got to seriously challenge your choice of words!

"drop me a pm if you need some help and ill taylor the advice" Don't do the advice on PM. please post it here, I'm very much interested on how you TAILOR it!!!!!!

 

[anthonytaylor]

Just a quick update - had a chat with these guys last night and got a very good response

There's no question of an exclusive distribution deal at the moment, not until I can move 1000 units a year.

At the same time they were very receptive to me distributing their products - they offered 2 models at their distributor costs (30% off) so I can test them out.

Once i'm convinced the product is as good as other people say it is, i'l then import some stock over.

They want me to be able to shift 48 units a quarter (very reasonable) but were happy to put me on a trial where I can take 6 units or more to see how they sell.

When I mentioned that I would be working out of a local business contacts warehouse. he said why - keep your outgoings as low as possible, work from your garage and see how it goes!

Anthony

 

[Paul Kelly ICHYB]

Anthony,

have you worked out what the real UK cost is - include shipping, clearance costs, import duty, VAT etc.

Also, is the product approved or compatible for the UK/EU - if electrical, is it 230v or 110v, is it CE approved, is it RoHS compliant.

Do that dilligence now!

 

[anthonytaylor]

Anthony,

have you worked out what the real UK cost is - include shipping, clearance costs, import duty, VAT etc.

Also, is the product approved or compatible for the UK/EU - if electrical, is it 230v or 110v, is it CE approved, is it RoHS compliant.

Do that dilligence now!

I have calculated import duty, shipping, VAT and any courier surcharge for paying duty on my behalf etc. Clearance costs aren't something i've come across?

RE: your second point - I am discussing the voltage with them at the moment as they are only 110v/220v. I can use a converter for my evaluation purposes until we have a solution.

Caught me out on the CE/RoHS compliant - hadn't even considered that.

This is why I started posting on this forum, so many helpful suggestions that a newbie might not even think of (and could really cause problems later on!)

Thanks very much

 

[Paul Kelly ICHYB]

I posted some shipping/clearance costs here a couple days ago, for reference.

If the item is not CE approved/RoHS certified, do not take the risk of importing without doing your own dilligence/tests/approvals (which may not be cheap) - although, in reality, the chances of getting caught out arer worse than 50/50. However, you will be in a world of pain if you are caught!

 

[mike.davis]

You actually thought you could get an exsclusivity deal with a US based company with 10k to spend on stock? You even boast about having "10k to spend on stock so it shouldn't be a problem"

Yet another case of an ebay company thinking they are bigger than they are.

 

[anthonytaylor]

I posted some shipping/clearance costs here a couple days ago, for reference.

If the item is not CE approved/RoHS certified, do not take the risk of importing without doing your own dilligence/tests/approvals (which may not be cheap) - although, in reality, the chances of getting caught out arer worse than 50/50. However, you will be in a world of pain if you are caught!

I completely agree - i've been reading up CE/RoHS/WEEE tonight and I won't be taking any chances. Whether or not I get caught or not I want to be able to sleep at night!

Just noticed your signature btw - You might have an email off me in a few weeks as your expertise may come in very handy in the months ahead )

Anthony

 

[anthonytaylor]

You actually thought you could get an exsclusivity deal with a US based company with 10k to spend on stock?

No, I didn't that's why I said;

While I would accept becoming one distributor of many (I have £10k for stock so I don't see this being a problem) what I am ideally looking for is exclusive distribution rights in the UK (followed by Europe)

You even boast about having "10k to spend on stock so it shouldn't be a problem"

You haven't read my post properly. I wasn't referring to a exclusivity deal for £10k, merely that they would be happy to work with me as a standard reseller at that level (which they are).

I am insulted that you think I would boast about 10k on a BUSINESS forum - that's dinner money to some of the chaps on here!

Yet another case of an ebay company thinking they are bigger than they are.

Hardly. For a start i'm an individual, not a company and I operate from my garage week nights and weekends so I know exactly how small I am.

Marks and Spencers started out on a market stall and eBay with the sale of a broken laser pen. They didn't get where they are today thinking small did they?

You remind me of an old school teacher - so quick to try and put someone suppress ambition and ideas. At least they bothered to read my work properly before criticising it.

To everyone else, thank you for the advice - it's been a great help.

I have written a list of bullet points based on all your posts and have been researching each of them like crazy