Beacon South West - InsideEnterprise

Somar International Ltd

A definition of distribution

• The most effective way to get as many products to as many clients as possible, through a skilled distribution network, offering as much support as possible
• A network of resellers

Qualities of a good network

• Design and develop good product
• Insulated from long term debt
  
• Use expertise of distributors
• Use distributor as a ‘bank’
• Use distributor as a stockholder
• Use distributor for feedback from market
• Enables you to expand the market quickly and focus on manufacturer strengths
• Has flexibility - Enables you to go direct to market where appropriate
• Is an ideal one stop shop to enable customers to reduce overheads and time wasted in going to multiple suppliers
• If you’re selling a bespoke solution to a problem – you need a value added agent, with skills, a technical background and market/sector knowledge – ideally handpicked or, to avoid this – standardise or simplify your product range
• Always use British statutory law for contracts – but check on the legal definitions of distributor and agent of the country you are working with as it will differ. In some countries; In UK, agents – the contract of purchase is with the manufacturer.  Distributor – the contract of purchase is with the distributor, not you. However, this will vary according to the country
• Agents are good to grow a market from its inception, to get it off the ground. Distributors are preferable for a mature market or a long term approach

Disadvantages

• You lose contact with the end user
• It dilutes your market and sector knowledge
• In West Africa– its best to deal directly with end client (Use DTI for country reports)
• If a distributor doesn’t add value – go direct to client

Questions

• How much can you expand your network if you work with credit?
• Does the distributor add value? Technical / market
• How can the internet be used to change the face of business?

What is involved in training a distributor network?

• Understanding the culture in a market
• Establish who it ‘could’ be
• Poach the best sales people from rival competitors or industry sectors
• Split the market by vertical industry sector and weigh up the key strengths of possible distributors
• Have 1 distributor per country to reduce conflict
• Define what you want – ensure a distributor matches your own company culture profile
• Consider what product is suitable vis-à-vis training/technical needs of end users
• Locate distributors who already have some experience / knowledge in what you are selling
• Use the DTI to define a market
• Use the internet as a place to attract possible distributors
• Gain the commitment of your distributors – this is the most important thing of all

What is involved in Managing a distributor network?

• Targets
• Control(s)
• A daily contact / relationship
• Motivation; praise, criticism, reward
• Sales management
• Phone contact – not just e-mails
• Use e-mail to confirm any important phone conversation though!
• Incentive schemes
• Target driven Contracts – they lose the distributorship if the don’t meet targets
• Get each individual sales person within a distributorship involved somehow with your product
• Set realistic targets
• Build stock profile through relationship building
• But be real about stock levels – don’t force them to overstock (otherwise your stock may end up on E-bay!)
• Get 2 way communication on customer and market feedback – be interested in how your distributor is fairing
• What spin off products and services can you introduce t to them?
• Get new ideas from them