Starting a product distribution company

[Tommy_G]

I am looking to try and become the UK distriutor for a range of specialist electonric products.

I previously ran a retail business in the industry and know the product inside and out.

my current job is working in small t shirt printing company (manager) where we have the UK licence for a particular brand, and we cover uk distribution ourselves.

now when trying to become a distributor for a brand how would i go about aproaching the manufaturer? go with a business and markeing plan for what we are planning for the brand?
How would i work out cost of stock, how many months stock to carry at a time?
As the uk distributor i assume i would be responsible for all marketing and promotion of the brand in the UK

struggling to see how i work out costs without knowing about the cost of products and previous UK sales, as this is not a new brand to the country and there are already many uk retailers.

 

[Julian]

Could we just clarify some terms first please because I've managed to get myself a bit confused.

You say that you want to become a "distributor" but then at the end of your post say "this is not a new brand to the country and there are already many uk retailers" (emphasis on "retailers"). What are you looking to become, a distributor or a retailer?

In the market that I am familiar with (IT) it is very common for manufacturers to run a two-tier distribution channel where they have very few (sometimes only one) top level distributors who import their products into the country and these distributors then sell the products on to resellers (where a retailer would be a type of reseller) who are the people who actually make the sale to the end users (either businesses or consumers).

Does the manufacturer you're looking at operate a one or two tier distribution strategy for the UK? Do the existing retailers buy from existing UK distis or direct from the manufacturer? Are you looking to become another retailer, another distributor, or maybe the manufacturer is looking to move from one-tier to two-tier and so you want to become the first UK disti?

Sorry to answer your question with a question but I need to have this clarified if I am to have any chance of offering any pertinent comments.

One other thing. I imagine you might not want to say exactly what the product or company is but could you at least answer the following:

- What is the typical sales price for a single unit and what is a typical order value?
- What sort of size is the manufacturer (turnover, number of units sold per year or number of employees)?
- Is it a B2B or B2C sale?

- Julian

 

[Tommy_G]

its a in car technology product range.
cheapest product retails for £150 going up to £1000 for the range topping model.
there is already a number of uk retailers buying from a single UK distributor.
i have been informed the manufaturer is not happy with the current distributor and is looking for a new company to distribute in the UK.

so it would be busines to business.
so chain would be from manufaturer > to me as disti > retail shops > customers

i have no interest in b2c retailing direct, it would only be as stated above.

think that covers it all. :|

 

[colin104]

As a distributor you will have to be very careful what your commitments will be. In most cases you will have to commit to a certain minimum sales volume that you will have to maintain. Make a detailed calculation of your expenses, then try to negotiate how the vendor will support you. Also, ask for exclusivity for at least a year. Otherwise you might end up developing a market for somebody else.

 

[Tej]

Main question:
Why would a manufacturer want to give distributorship to a company not yet formed?

How would he know you can perform?
What about the capital outlay?.. These are relative high value items.

Its a big jump from being a manager of a small t=shirt printing company

 

[Julian]

OK. I know nothing about the automotive market but, for what it's worth, here are my observations as coloured by my knowledge of the IT market.

I would expect the manufacturer to want you to look after in-country sales and marketing but, depending on how sophisticated/big the manufacturer is, they might have support programs to help such as being willing to co-fund specific activities (e.g. sales performance incentives such as a prize for the reseller that makes the highest sales of a new product in the 3 months after launch). They should also have basic collateral items (brochures, point of sale stuff, advertising copy); in the IT industry this stuff is often available for free but I've no idea if that is the case everywhere.

A sales and marketing plan would be pretty essential when approaching the manufacturer and as far as business plan goes then they'll want to see some idea of the top line (sales) projections but the full P&L is your own business really although they might well ask about what level of resource (including people) you would commit.

I would think that they'll be particularly interested in any dynamic new retailers that you could introduce them to that would broaden the overall coverage and how you would support the existing ones. It might be worth trying to get some inside knowledge by talking to some of the current retailers and finding out what they like and, most importantly, what they dislike about the current distributor. If you know the stuff that isn't working then you can play up to the manufacturer how you would do those things well (without letting on that you know that they're currently being done badly) and those could be some good hot buttons to press with the manufacturer.

As for costs and stuff I can't volunteer anything useful there because I'm sure your market bears no relation to the one I'm familiar with and I would have no idea of typical channel markups, stock levels, etc.

- Julian

 

[Tej]

Now, thats what I call a free indepth analysis!

 

[LBtrading]

First of all alot of people seem to think of companies as being very scary to contact and you need to have the perfect pitch. I would say just fire a quick friendly email to the company stating that you are interested in becoming a distributor of there products and ask them for some more information.

short and sweet they will reply with what you need to know. Then you can go from there,

also you stated there is already a distributr for them so you need to find out whether they have exclusive distribution rights and if so how long for etc. again the company would tell you this in reply from your email above.

also when its b2b note they dont care about you or your company they are only interested in what you can do for them, so think of as many things as you can they want/need ie for a brand will be how you can increase their sales and how you can increase brand awareness.

and then think of any concerns they may have ie brand portection and the come up with the answers to both of these and you will have a greater chance of success.

but the best advice I can give is no matter how big a company is just a quick short email really does work, I mean how are you expected to know how the distribution system works unless you ask.

every company wants to grow so see it from their point of view, if someone enquires about becoming a distributor they will send them the necesarry info and then when you get back to them they will qualify you to see if you are right for their company.

dont get me wrong im not saying you dont need a great business and marketing plan that is without question but you need more info from them before you can produce this.