What to Consider When Choosing a Distribution Partner
July 19, 2021
If everything comes from somewhere, where do you start?
Finding the right distribution partners is an essential part of building any business. Ask any small business owner — from food and beverage brands to tech startups to D2C retail companies— the means by which you distribute your product can make or break you.
It’s one thing to have created the perfect product; it’s a whole other thing to see that product out in the world and readily available for your consumer. A high-quality distribution network ensures that all the time you spend perfecting your product or service is worthwhile. Reliable distribution partners ensure a business’ products reach their potential market successfully and efficiently.
What exactly is a Distribution Partner?
A distribution partner is any person or party that has been given the rights from an original party to market, distribute, resell, or do whatever they need to provide the original party’s products and services to a wider or more specific market.
TL;DR: They get your stuff out in the world.
In the most basic sense, distribution partners bring your products to the shelves. Imagine you’ve made a matcha drink. You would lean on a distribution partner to help to get your cans into coffee shops. Distribution partners specialize at varying scales, and can be referred to by different names. You may have heard of wholesalers, for example. They tend to be large distributors who supply businesses with inventory to sell. Here are a few other players in the distribution network:
Manufacturers — They buy from other smaller manufacturers or artisans.
Exclusive Distributors — They sell, often in an exclusive capacity, to local wholesalers.
Regional Distributors — They sell large quantities of inventory to other wholesalers.
Jobbers — They make daily, one-off deliveries to local businesses. (Think: The classic milkman).
The Challenges of Distribution
The distribution game can be chaotic and draining on your cash flow. In some industries, distribution requires a massive network in which there always seems to be a new middle man trying to squeeze their way in.
Distribution is primarily a challenge of logistics. All parties involved want to ensure there’s a steady flow of inventory and products so there’s no surplus at the storefront or in the warehouse. For many small businesses, it’s easier to outsource the entire process of distribution to another firm. The consequence, however, is a loss of control — you never quite know how many extra partners are needed to work alongside the one with whom you’re contracted.
Small businesses rely on distributors to make sophisticated decisions about product placement and inventory availability. They often look to distributors for strategic advice on how to break through oversaturated markets. A solid distribution partner can get a brand on the map by finding the right places to sell it.
What a High-Quality Distributor Provides
A high-quality partner is more than just a truck that runs on time. Distribution partners can greatly impact your business in a variety of ways.
Distributors that get your product into the right stores can help to boost your sales and revenue. They know which stores are most effective at selling your product, where to place the product, and how to ensure your customers’ order goes through.
On your own, it’s difficult to reach every market. Perhaps your business is better fit in a different region of the country where you don’t live. A reliable, well-connected distributor can get your product in front of audiences you haven’t been able to reach before.
The logistics behind distribution can be so overwhelming that they cloud and fatigue other operations of a business. A good partner makes it so distribution is a streamlined undercurrent to the rest of your business. You can take your eyes off the ordering schedule and spend more time developing products, marketing efforts, and scaling your business.
What to Look For in a Distribution Partner
There are few different criteria that can help you to know whether a distribution partner is right for you:
It may seem like choosing the biggest distributor in the country is the safest bet, but oftentimes the most successful partnerships run parallel in size. If your business is hyperlocal, you may want to look for a small distributor (jobber) to bring your product to market. If you run a broad, internationally-selling D2C business, however, you may want to look into a much larger distributor.
Distributors charge more for more inventory shipped. In basic terms, try to build within your bounds.
Reliable and Easy to Work With
Your distributor will be someone or a firm with whom you work very closely. Since inventory and ordering can change on a dime, look for a distributor who is amenable to your business needs. This might mean you look for a distributor who always picks up the phone, or it might mean you look for one with reliable technology. Choose a firm you can trust.
Deals in Your Target Market
Distribution partners differentiate themselves by industry for a reason — their expertise can help your product to outshine competitors’ on the shelves. Look for a distribution partner who has a strong track record of building brands within your industry. If they can offer suggestions on how to expand your target market, all the better.
Remember to Pay Your Distributors (Using Settle!)
If you hire a distribution partner, you’ll reap the benefits of off-loaded work and smooth product distribution. The same can be true of your finances when you use Settle’s streamlined payment system.
Settle alleviates the burden of cash flow management for payers and vendors alike, meaning you have more time to focus on scaling your business. Settle covers delayed payments on a payers’ behalf so companies have more time and resources to grow.
As you continue your search for distribution partners, take respite in knowing they’ll be paid on time and with flexibility when you use Settle.