When expanding your business, finding the right value-added distributor (VAD)) is a crucial step. This partner will not only help you increase sales, but they will also represent your brand, products, or services. With that in mind, ensuring you choose the right partner is vital. Our CEO, Paul McIntosh, recommends looking at five core areas when evaluating potential distributors.
1. Assess the stability and structure of the company
As a rule of thumb, the longer a distributor has been in business, the more they’ve likely weathered different market challenges. Looking at their company background gives you an idea of their longevity and resilience.
You also want to make sure your distributor is financially secure. Assess their financial standing to ensure they won’t face issues that could disrupt your partnership.
Look at the owners of the company, this will also provide insights into their decision-making processes and long-term strategies.
2. Evaluate their experience and network
The distributor’s experience in your specific industry is important. They should be familiar with the market nuances, challenges, and opportunities. Additionally, they should have established relationships with channel partners that enable them to reach your target markets.
If the distributor has multiple locations and sales representatives covering vast areas, it is a good sign. It is not uncommon for distributors to be effective only in certain areas.
Find out whether they offer training and incentives to their sales representatives when it comes to your products or services. Having incentives motivates sales reps to sell your products/services.
3. Understand their processes and methodologies
Check their processes and methodologies. Remember, it’s not just about sales, after-sales support is equally important. Find out how the distributor handles after-sales support in terms of returns and exchanges and repairs. These aspects all impact customer satisfaction. Ensure that they have a solid after-sales support system in place. Monitor any customer feedback to gauge customer satisfaction.
4. Ensure compliance
Make sure distributors are familiar with local laws and customs in order to avoid potential legal and taxation issues. Make sure the distributor has a strong track record of meeting deadlines and delivering quality products. Lastly, ensure that the distributor has appropriate insurance to cover any potential losses.
“I believe that transparency from the very start is key, have an open conversation. This way you are setting clear expectations from the beginning.” recommends Paul.
5. Do your company values align?
When you are aligned, it ultimately leads to a more productive and fruitful partnership. Learn about the distributor’s company values and culture.
For instance, if sustainability is at the top of your agenda, ensure that your distributor shares these values as well. It’s important to make sure that both companies share similar goals. Once you have determined this, you can work together to ensure a successful partnership.
Anything else you should consider
If you’re a first time exporter, then you probably need a more experienced distributor to help you gain faster traction in the market.
Additionally, if you’re a small player, do not pitch to large distributors as your product is unlikely to be a priority for them. Moreover, they will hold the power in your relationship, so you may not receive the best trading terms.
Paul advises: “Ultimately, decide what your goals and objectives are, determine the issues that are important to you, and then choose your distributor accordingly.”
Choosing the right value-added distributor for your business requires thorough vetting and aligning of business goals, processes, and values. We provide fulfilment services to customers of all types and sizes from different countries across a variety of industries. Through our cloud-based management system, we support our customers selling via a range of UK and European retailers, trade partners and online sales channels. If you’re looking for a VAD, let’s start a conversation today.