By Nitasha Chawla
One of the easiest and most efficient ways to get your product to the market is through a distributor. Both manufacturers and retailers have a limited reach, and this gap is bridged by the distributors. But one has to choose and train distributors with the utmost care as they can make or break your products. Here are some tips.
Choose distributors based on customer segments
Analyse the different categories or segments that your customers belong to, and then look for distributors based on the needs of each segment. If different levels of service are required by different customer segments, you may need to consider different distribution channels or provide them yourself for each customer segment. Says Shubhra Mohanka, director, Solid Solar, “Since our products cater mainly to rural areas, we make sure that our distributors understand the needs of rural customers and provide end point services to them. In case our distributors cannot execute these services, we provide our customers the required support in terms of technicians, sales people, etc.”
A distributor should be capable of sharing some of your responsibilities and offer you some extra mileage. “Apart from a warehouse and a sales team, a distributor should have a team of trained and qualified technicians to service the products during the warranty period and thereafter. A distributor should invest in the stock and should maintain the minimum order quantity, based on the terms and conditions of the agreement with the manufacturer,” says Biju PC, manager, sales and marketing, Emvee Photovoltaic Power Pvt Ltd.
Identify the distribution tasks
A distributor should perform a variety of tasks, apart from just being responsible for selling goods. Some of these include maintaining a certain inventory level, training salespersons, giving promotional support and providing prompt technical service. Sometimes, it may be necessary to train the distributors specifically for these tasks. Shares Biju PC, “From time to time, distributors and their teams require training and knowledge upgradation on the technology, from the company, to help them understand the customers’ requirements prior to making suggestions about the appropriate systems they ought to purchase.”
Basically, responsibilities should be assigned on the basis of who can do the task more efficiently (and at a lower cost). After proper training and support is given to the distributor, many tasks done by the manufacturer can be shifted to the distributors’ shoulders. Informs Shubhra. “As a manufacturer, we support our distributors by allowing them to stock with us, since not all the distributors can afford to maintain huge stocks.”
Dividing the earnings
The gross margin, the difference between the final price to the customer and the cost of manufacturing is shared between the manufacturer and the distributor. This margin should be distributed based on performance, reimbursement of the costs incurred in performing each task, etc. However, if the manufacturer leaves the distributor with an unsatisfactory margin, the level of service could suffer, which will have a negative impact on customers.
You should expect your distributor to provide a level of service that encourages long term loyalty. With this in view, maintaining a relationship of trust and cooperation with the distributor is very important.
Says Biju P C, “It is very important for a company to have good relations with its distributors and vice versa.”