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Wholesale Distributors

Wholesale distributors are a popular way for many businesses to market and sell their products.  Getting your product out into the marketplace can be a daunting task. There are so many moving parts; transport, storage, sales, service, billing and collections, to name a few. It could take years to build up the necessary infrastructure in order to get your product in retail stores throughout the country. This would be true, even if your marketing goals were more modest such as a particular state or particular region of the country. One possible solution is to out-source these tasks to a wholesaler. In most cases a wholesaler buys product from you and then sells to their business customers, adding a margin or setting their own price. A good example of this is Medical supply companies. These companies offer a huge variety of medical supplies made by numerous different manufacturers. It’s true that distributors will add to the cost of your products. However, because of their large scale of business they can achieve these tasks more efficiently and provide them for a much smaller cost.

Retailers today want “just in time shipping”. This requires a well coordinated transport system built around a highly organized and strategically located system of warehouses. Good wholesale distributors have got these systems down to an art. Because of this, many retailers have a strong preference to primarily do their business with wholesalers. As a result, small manufacturers will often have a very difficult time getting access to the person in charge of purchasing for many retail operations. 

Another important service that wholesale distributors provide manufacturers is their network of sales agents. Most of these have extensive business contacts and have been marketing products such as yours to retailers for many years. Taking advantage of this well established sales force can make the difference from being virtually unknown or having a product that is a highly respected brand in your industry. Wholesalers also help market your product by displaying it in their catalogs and on their web sites. In addition, they will display and demonstrate your product at industry trade shows. 

Customer service is essential for gaining customer satisfaction and repeat sales. Most wholesale distributors have agents that will demonstrate your product, provide training and technical assistance. They will also provide customers with replacement parts and related accessories. Some distributors also have staff to provide product installation and repair. 

Wholesalers also simplify your life by taking care of all the ordering, invoicing and collection of payments. Most of them also provide customer financing. This can prove invaluable in that it saves you from chasing after slow-paying or deadbeat customers. 

Once you’ve determined that using one or more wholesale distributors to market your product would be your best marketing option, it is important to find the right one. A poor choice can be costly in terms of time, money and dissatisfied customers. 

So how do you go about finding the right wholesaler that will most effectively reach your customers and provide the best service? One proven method is to find a product distributor your competitors or other successful businesses are using. You can also find out what distributors that your end users prefer to buy from. For example, if your product was a medical device used in hospitals, you might want to inquire what distributor they use to buy their medical equipment. 

Another source you can investigate are directories compiled by distributor associations. Often times you can check out distributors at trade shows that are related to your industry.
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NewBusinessMarket.com is another excellent way to find a wholesale distributor. You can search by industry category, and the regions you wish to focus your marketing in. After compiling your potential list of candidates, you can then narrow your search by choosing the services you desire. 

Keep in mind that it is not guaranteed that the wholesale distributor on your wish list will handle your product. In order to get them on board you will need to effectively pitch your product. Somehow you have to demonstrate that it is truly unique and that there will be a huge demand for it. Most importantly you need to show that their participation will highly profitable for them. 

You can use NewBusinessMarket.com to do a preliminary pitch to potential wholesale distributors. In this listing site you can use pictures, videos and narratives to pitch your product. 

After getting a wholesale distributor interested in your product your next task will be to negotiate the distribution contract. Most distributors have standard terms and conditions in their contract. Expect them to add at least twenty five percent to the wholesale price for their services. Their expectations regarding their share of the gross margin, which is the difference between the cost to manufacture your product and the retail price, is determined by the tasks that they’re expected to perform. 

Your ultimate goal should be to negotiate a win-win distribution contract that will generate a satisfactory level of profit for your company, motivate your wholesaler to pitch and service your product and lastly and most importantly result in satisfied customers.  Always keep in mind that distributors will tend to concentrate on products that are the easiest to sell and on products with the highest margins. Therefore, it is important that you give a sufficient share of the gross margin to the distributor. If you leave the distributor with an unsatisfactory margin, the level of marketing and service to your customers will suffer. 

Lastly, it is important to monitor your customer satisfaction with your distributor. Remember that your distributor is representing your product. Is their level of service encouraging long-term loyalty and repeat business? If not, you may have to find another distributor. 

Please keep in mind that using wholesale distributors is just one way to market your product. I urge you to check out NewBusinessMarket.com to explore your other options. This website will provide you with a wealth of information and tools.

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