With this, joining the distribution field can be a highly fulfilling and lucrative career path, especially for those involved in specialized product markets. If you're considering becoming a distributor or starting your own enterprise, there are a few essential steps you can take to start your journey.
In this article, we outline what a distributor is, how you can become one, what skills you should develop and the average salary and job outlook for distributors. Distributors are typically independent business owners who transport products from manufacturers to market environments. They are an important part of the chain of supply and demand. Distributors often buy products, store them and sell them through different processes, depending on their specific purpose.
They may serve as retail distributors who sell such products to consumers directly, or as wholesale distributors who purchase goods from manufacturers and sell the products to other organizations, like retailers, merchants, contractors and institutions, for resale or use. Similar to retail sales, the primary goal behind distribution is to buy goods and sell them at a profit. Comparatively, though, most distribution is exclusively handled in the business-to-business sector, rather than business-to-consumer.
Most essentially, distributors serve as the linking force between the manufacturers of a product and the end consumers. This can be a highly lucrative undertaking, especially in niche markets where distributors may grant exclusive rights to distributors to sell certain products in particular regions. Distributors usually purchase products from manufacturers and sell them to buyers like retailers for commercial resale or use.
They can choose to sell any product—from food items to automobiles, distributors may choose the industry in which they operate. From here, distributors form business agreements with manufacturers that dictate the terms of their relationship. Manufacturers may specify contract pricing for bulk sale item purchases made by distributors. In most cases, though, distributors take primary responsibility for the operations necessary to sell products, while manufacturers focus solely on the creation of said products.
Distributors typically form business partnerships with a network of retail outlets or buyers that they can sell products to. These buyers purchase products from distributors, often at wholesale pricing levels, and resell them to end consumers. Many distributors handle the transportation logistics, like shipping, behind these sales, which is a significant benefit for manufacturers and retailers alike.
Distributors may ship products domestically or internationally, depending on their specific industry. In addition, customer service is a large part of the distribution business—as sales professionals, distributors must build the infrastructure to provide customer support to retailers through their organization. While many conceptualize customer service as the responsibility of manufacturers who build products, that's not typically the case. Distributors may take care of accounting issues, shipping errors, product shortages, defects and other customer-related concerns.
It is often the distributor's responsibility to replace products with active warranties or those damaged in shipping processes. Becoming a distributor can be a highly rewarding venture full of profitable opportunities. The exact path you should take to become a distributor will depend on what industry you're interested in, where you live and how much funding you have to invest in starting a business. With this, though, there are few essential steps you can follow to establish the basis for your distribution career.
Here are six steps you can take toward becoming a distributor:. The first step to becoming a distributor is identifying the industry you'd like to serve. Prior to establishing your business, you'll need to decide what you'll sell and who your customers will be, as distributors typically specialize in a particular industry or sell products to specific consumer bases.
You should try to decide what product market you're interested in—you can choose any industry, from technological products to restaurant wholesale. In order to make your decision easier, research different industries and the products sold within them. This research can help you find information about openings for distributors, potential profit margins and projected industry growth. Such information can be vital in making an informed decision and building a business prepared for growth.
To operate as a distributor, you will need to register your business legally. You may need to acquire licensing or other registration depending on the state your business is located in. In order to ensure you're in compliance with local business regulations, contact your local government center for business licensing and ask for information about the procedures for registering as a new distribution business. They will provide you with all the necessary applications and components for registering your company legally.
This is an important step as maintaining legal compliance with local regulations can help you avoid discrepancies in the future. In addition, some of the manufacturers and buyers you'll interact with as a distributor will require you to provide documentation of your business license, resale tax certificate or other federal identification items prior to working with you. Once you've established your distribution business as a legal entity, you should begin researching potential suppliers and manufacturers that handle the products you're interested in distributing.
By: HowStuffWorks. The United States Industry and Trade Outlook published in conjunction with the United States Department of Commerce defines a wholesaler as an establishment that sells products to retailers, merchants, contractors and to institutional and commercial users [source: NTIS]. Wholesalers can sell any product, including food , electronics and furniture. As a wholesale distributor, you will be running an independently owned and operated business that buys product and sells products for which you have taken ownership.
Usually, such a business operates out of a warehouse where the goods are received and later shipped to customers for a profit [source: Fein]. Let's take a detailed look at how to become a wholesale distributor. Sign up for our Newsletter! Mobile Newsletter banner close. Mobile Newsletter chat close. Mobile Newsletter chat dots. Mobile Newsletter chat avatar. Mobile Newsletter chat subscribe.
Starting a Business. How to Be a Wholesale Distributor. It always follows a chain, as its name implies: the manufacturer produces the finished products. The distributors supply these finished products to the retailers. The retailer, in turn, gets the products to the end-users. It also involves supplying raw materials from suppliers to product manufacturers to make the finished products.
The supply chain has a sector known as the distribution channel. A distribution channel has to do with the product manufacturer, wholesale distributor, retailers, and end-users. Thus, you need to know how to prevent these supply chain disruptions. Success in the wholesale distribution business requires you to take certain steps as a seller. However, these steps depend on your location, financing level, and your chosen industry and niche. The first step in becoming a distributor is deciding what part of the distribution channel you want to be a part of.
Wholesale distributors can sell any products; this is why it can be tricky deciding what to sell. One of the best ways to decide what products to sell is researching products in high demand.
Also, you must pay attention to recent trends. Moreover, you can choose any channel, ranging from accessories, beverages, tech gadgets, clothing, amongst others. A smart idea is to invest in high-demand products by small-sized retailers and supply them to retail stores. Another method is to supply small businesses, like brick-and-mortar grocery stores. However, you need to decide if you want to be a retail distributor who sells directly to the consumers end-users or a wholesaler distributor merchant ; that sells in bulk to retailers.
Next, find a good location for your business. Running a wholesale business requires a storage space. The storage space could be your basement, garage, or ideally, a warehouse, where you can store inventories. When looking for warehouse space, you need to consider the size of inventories that you will stock in the warehouse, your garage, or wherever you decide. You also have to choose the method of delivery best suitable for your distributing business. It is essential to consider rent and the geographical location of the storage space.
Networking is the basis of the distribution industry. Attend conferences, participate in webinars. It is vital to study your target market to formulate an understanding and improve your relationship with them. Your target market is the manufacturers, retailers, and end-users; this is your customer base. That way, you would get the industry news and updates. Additionally, look out for ads on Magazines and blogs; these ads can lead you to retailers and manufacturers looking for your services.
You can also use ads to promote your business to reach a bigger customer base. You need to know the basic business rules and have the basic skills to succeed in the wholesale business. The skills that concern the wholesaling market are: supply management, team development skills, negotiation skills, marketing skills, experience in finance and accounting.
Team development and negotiation skills should be at the tip of your finger as a wholesale distributor. These are the skills you would exercise in your daily business activities and putting a team together.
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