Choosing a Distributor for Your Product

Written February, 2006					File C5-161

Mary Holz-Clause, Co-Director, Ag Marketing Resource Center, Iowa State University, 515-294-0648, mclause@iastate.edu

Below are checklists you can use to help find and evaluate a distributor for your product and a checklist of what to expect from a distributor.

Checklist 1 - Finding a Potential Distributor Partner

Ask the end users of your products what distributors they prefer to buy from.
Ask current distributors if they’re interested in expanding their territories or know of other distributors who might be available.
Find out what distributors your competitors are using.
Identify distributors of allied products.
Consult directories published by distributor associations by doing a Web or library search.
Attend meetings and trade shows sponsored by industry associations.
Place ads in industry trade and association publications.
Post messages to news groups available on the Internet.

Checklist 2 - Evaluating Potential Distributors

Financial stability - credit history, timeliness of payments, etc.
Sales and marketing capabilities - size of outside and inside sales force, ability to generate leads, selling skills, technical competence, etc.
Sales performance - past sales history for same or similar products.
Knowledge of the local market - ability to accurately forecast future sales and identify changes in customer needs and expectations.
Product mix - types of products carried, including competitive, supplementary and complimentary items.
Growth potential - capability of distributor to keep pace with any anticipated growth in the local market.
Inventory handling capabilities - warehouse space, ability to track turnover rates and other important statistics.
Technology capabilities - possession of and familiarity with the technology required to do business together most efficiently.
Management ability - viewpoint of distributor on human resources, planning, training, financial management, communication, etc.
Succession planning - arrangements in place to continue the distributorship in case of retirement or death of distributor principal.
Overall fit - how well your goals, operating philosophies and business practices mesh with those of the distributor.

Checklist 3 - What to Expect from a Distributor

Maintenance of a well-qualified and well-trained sales force that is familiar with the manufacturer’s products and is skilled in demonstrating the advantages of those products to the customer.
Commitment of sufficient resources required for aggressive sales and marketing of the manufacturer’s products.
The best efforts to achieve market share and other sales goals in a specific geographical or other area of responsibility.
A commitment to stock recommended inventories of products based on the needs of the local market.
Prompt payment of all financial obligations.
Prompt communication with the manufacturer regarding changes in the local market and/or distributor’s own business (e.g., changes in management and other personnel, and/or operating policies).
A level of service that encourages long-term loyalty on the part of the customer toward the manufacturer and its products.
Physical facilities and technology necessary to consistently perform the above functions.

Resource - Edward S. Stecki, President, Industrial Performance Group, Inc., Northfield, IL.