Find out how to use a distributor to increase your sales
A distributor will directly buy produce from your company and then take on the duty of distributing it in the home or overseas market.
Need to know
Finding and building a good working relationship with a distributor can be challenging. It is vital that your distributor is someone you trust as they will be tasked with not only selling your products, but also your company’s image.
The distributor’s duties generally include:
• The shipment of goods
• Dealing with customs formalities
• Completing necessary paperwork
• Taking on liability for goods
• Selling of goods
Pros and cons
The real advantage of using a distributor is simplicity. The distributor will help you gain access into international markets without having to handle the trade logistics and customs issues. The distributor should also have extensive knowledge of the marketplace leaving you free to concentrate on your core business. This is particularly important if you plan to export to multiple markets or markets with cultural and language differences; your distributor is likely to have the local knowledge and expertise you need.
On the downside, using a distributor may mean that you lose control over how your products are priced and sold as the distributor will take charge of the sale of goods. In addition, your distributor may expect bulk order discounts and even demand a level of exclusivity.
Before signing a distribution agreement it is important that you take legal advice. This can either be from a legal advisor such as a lawyer with experience of trade matters, or someone from the UK Trade & Investment team.
Making a contract
Any contract that you make with a distribution agent must be clear, concise and accurate. After both parties have signed the agreement it becomes legally binding.
Avoiding mistakes at this stage will reduce the chances of any disputes or problems later on, so both parties should agree on the terms before signing, which should include:
• Duration of contract
• Payment – how will this be calculated
• Type of appointment – is it exclusive to the distributor?
• Agreed obligations
• Trading terms
• Fixed targets
Finding a distributor
The following websites offer useful guidance on finding and choosing a distributor:
• UK Trade and Investment: www.ukti.gov.uk
• Foreign and Commonwealth Office: www.fco.gov.uk
• Trade Association Forum: www.taforum.org
It is beneficial to use a distributor that is well-established in the markets you are looking to sell in. It is also worth reviewing their sales success rate and checking what their future plans are for the market – do they fit with your expectations and long-term goals?