Grow Your Business Globally Through Distributors
What is the fastest, most productive way to market your products globally?
Whether you’re running a brick-and-mortar business or an e-commerce store, finding distributors in the countries you’re exporting to is a great way of growing your business globally.
In this article, we will show you the benefits of using distributors when exporting your product globally. We’ll provide tips on finding the right distributor, and lay out the essentials for negotiating contracts.
This article at a glance:
If you want to sell your product in a foreign country, distributors are one of the most effective means of putting it on the shelves of retail stores. Finding a distributor may cost extra in the short-term, but in the long run it pays dividends: distributors can store, market and ship your product to the wide network of retailers they have at their disposal.
Finding a distributor for your business
Distributors are businesses that buy goods from manufacturers and sell them on to retailers—think of them as the connecting thread between you and a vast network of retailers.
Why are distributors important to grow your business?
Exporting globally gives your product wider visibility. As such, your brand name will grow in recognition, helping you earn more profit and expand your business.
There are four ways to sell your products internationally:
- Sell directly to customers offline or online
- List your products on an eCommerce marketplace like Amazon or Shopify
- Sell to retail stores like Walmart or Costco that then sell directly to customers
- Sell to distributors who sell to retail stores
Selling to customers directly and listing on an eCommerce platform are forms of direct selling. This takes time, effort and resources—which, for most SMEs, aren’t in plentiful supply. You will have to approach multiple stores and upload product listings individually. But with no intermediaries between you and the customer, your profit margin will be higher.
Selling through intermediaries gives you a smaller profit margin but more time to do what you do best—doing business.
So, how do you attract distributors to buy your products?
1. Price your product carefully
Price your product so that both you and the distributor can reap a reasonable profit. This is a balancing act—after all, a ridiculously high price tag will drive potential customers away. Keep things affordable. You will also have to factor in manufacturing and inventory costs.
2. Find your target market
As with any business or marketing plan, you will need to identify your target market. As an international merchant, your mission is to expand your business reach and subsequently increase the profit margin of your business. However, this should be done within your natural limits. What do we mean by that?
Kartika has a small business that sells local clothing in Indonesia. She has ten employees including herself, with four of them in charge of production. Kartika wants to sell her products to the EU, but her company can only manufacture a small amount of clothing per month. Even if Kartika is able to find a distributor in the EU, it will probably be very difficult for her to reach the demands of her target market effectively.
The speed with which you can produce your product is clearly an important factor—otherwise, you won’t be able to meet demand. If you can only produce a small number of goods every month, it might prove difficult to sell overseas.
3. Search for reputable distribution firms
Depending on the country you wish to export to, there are different distribution firms you can contact. You will need to identify firms that market the sort of products you sell. You can do this by filtering through industry, regions, cities and reviews. For instance, if you are selling electronics, it would be best to choose a distributor who has experience working with electronics retailers.
Remember, even though a distributor may boast many positive reviews, they may already be in collaboration with your competitors—they may not want to work with you as a result. This shouldn’t be an issue—there are lots of distribution firms to choose from.
4. Secure an agreement or contract with the distributor
Negotiations are common between a manufacturer, distributor and retailer. You’ll need to engage a contract lawyer to draw up a distribution contract, which you and your chosen distributor will have to sign. As with all contracts, be sure to double-check that every clause is clear and understood by all parties before signing—including the length of the contract, the exact start date, agreed fees, compensation upon termination of the contract, and other relevant clauses.
You might want to discuss with your distributor whether to enter into an exclusivity agreement. This could give the distributor exclusive rights to sell your product, and as a result, stop you from partnering with other distributors. An exclusivity agreement might backfire if you expand your business and want to sell your product elsewhere. Normally, exclusivity agreements have negotiable expiration dates—so, you will be able to look for other distributors once the contract has ended.
How do I attract potential distributors?
Choosing a distributor is not as simple as walking into a firm and asking them to sell your product. You will need to have a solid strategy to attract potential distributors. Think of it as a marketing pitch.
Here are some tips on how to better market your product to attract distributors.
1. Shout about your product
Distributors handle a vast pool of clients—in other words, they will want to know if your product can sell with minimal handling and marketing costs. Bring out the big sales numbers from previous years, statistics about your customers' preference for your product, news reports, reviews—anything that puts your product in the spotlight.
2. Find a connection between you and the distributor
If your business is selling products catered to a specific group—like eco-friendly goods or health supplements—it could help your case when pitching to distributors. This also applies to distributors—if they’re passionate about saving the environment, your range of eco-friendly products could be perfect for them.
3. Attend trade associations and trade shows
Most industries conduct local trade associations where you’ll be able to connect with budding manufacturers, retailers and distributors. Every country has trade associations. In the USA, for example, there is the National Association of Wholesalers (NAW).
Attending trade shows gives you a better idea of your options. You will be able to meet other businesses in the same industry and learn more about the types of distributors they use. You may even get a referral.
4. Finding distribution channels
All it takes is a little bit of Googling. A cursory search on Google for “distribution companies in the US” will bring up a whole host of results. For example, we found UpCity—a site that allows you to search for US-based distributors via cities, industries, and costs. If you are looking on a larger scale, check out The Manifest’s list of top 100 distribution companies.
Social media platforms and online forums are great places to look for distributors. Be discerning about who you contact on social media. Your best bet will be to contact well-established pages that have a reasonable following and positive reviews.
Besides choosing the right distributor, using the right payment method can help you keep on top of your expenses and payments.
At Silverbird, we offer you a smart alternative to traditional banking. Hold, transfer and exchange foreign currencies online simply by using a single account. In order to avoid facing low forex rates when transferring your funds, we offer multi-currency accounts catered to international merchants like you, so that you can convert over 30 currencies within a single account.
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