How to Start a Distribution Business

Distribution business is simply about you supplying goods to other people who will sell them to end customers. Distributors normally act as intermediaries between manufacturers/wholesalers and retailers.

Distribution is a very profitable business if you can develop a good retailer and business network. Nowadays distributors are even creating network directly with end customers.

If you want to start a successful distribution business you should first consider a few things to make your business work. Here, I list down the steps to follow to start a successful distribution business.

Steps to Start a Distribution Business Successfully

1. Choose Product

Firstly, choose products which you are going to sell. You must carefully choose the products to sell. You need to find out the products which most people use in your locality. You need to invest some time in researching the demand of the consumers within your locality.

Talk to retailers, dealers and if possible to end customers. You can take help market research experts to find out the demand if you can afford.

2. Contact Suppliers

After you finalize the products, it is now time to find right manufacturer, wholesaler or established big distributors who can supply the products.

If you are new to this business it is recommended that you should first find dealers nearby. The margins might be less, but you save a lot of money in shipping charges and also good for testing the market demand.

3. Set up Work Place

You need to set up your office. Make sure you have a place to stock the inventory. If you have less money to invest, set up your office in home initially. You will save a lot of money in doing this.

4. Name your Business

Create a name for your distribution business. Register your business as a business entity. Find which licenses and permits are required to run the business.

5. Find Franchisor

If you don’t want to start from scratch, you can opt for buying a franchise of reputed brands. You will find a lot of options on the internet to find one including this website.

6. Set Credit Policy

Develop a credit policy for your business. You should establish a competitive credit policy. Some of your dealers or retailers may not be able to buy products from you in bulk for money constraints. Check their market goodwill and create a credit policy to attract them.

7. Build Network

Network, network, and network. The key to running a successful distribution lies in developing an effective network of dealers and distributors. Try to reach as many as resellers you can. Create a catalog and product kit and talk to the people concerned. Meet them with order forms so that you can take orders if you choose to work with him/her.

8. Promote your Distribution Business

Collect retail or wholesale trade publications if any in your community. Place a classified ad in several trade publications. Include your website address, if you have in the classified ad.

9. Purchase Policy

It is always profitable to buy products in large quantities. This will allow you to repack them in smaller packages. Your resellers will find easier to sell your products.

10. Monitor your Business

Always, try to keep a personal touch with your dealers and retailers as much as possible. This helps immensely in retention.  Remember everyone loves to talk to the boss. Whenever you find the time, visit your resellers directly at their office. Talk to them about their business and what else you can do to increase their business volume.

Also, Read  Top 40+ Profitable Small Scale Business Ideas

Finally, distribution business is one the most profitable venture. But to be successful, one needs to do hard work and dedication.