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What To Look For In A Wholesale Distributor

Aug 17, 2007
The wholesaling industry is lucrative, but with a lot of entry barriers. Hence, you can be sure that those who have managed to obtain success, even small-sized businesses, are reliable and trustworthy. Thus, all of them are capable of fulfilling whatever needs you have; only one of them however can be considered the best.

1. Characteristics look for in a distributor

Is it a legitimate business?

Do not succumb to temptation and transact with an illegal distributor, even if he offers very attractive rates. If you feel shy about asking the legitimacy of the wholesale business, you can visit the nearest government office to your home and office, and inquire if the wholesale operator is truly licensed by law to do business.

What are the advantages and competative benefits?

Its better to transact with a distributor performing better than its rivals than one who isnt. You dont necessarily have to transact with the biggest distributor the big companies usually have high volume requirements before they agree to any dealership but at least with a company that has strong sales over the years as proof of its capabilities.

Dealing with an inexperienced wholesale distributor can be disastrous; as someone new to the business, a distributor is more likely to commit faults, act inefficiently, and charge higher fees because of higher operational costs. An experienced distributor, on the other hand, not only has lower operational costs, but also may have tax-exempt status that leads to lower market prices.

2. Evaluate their financial situation

A wholesale distributor thats burdened with debts, unable to collect its accounts receivables, and with low cash assets, is not the ideal type to transact with. Such distributor may be forced to increase its rates to be able to handle its debts and improve its financial situation.

3. What do their warehouses look like? Are they in good condition?

Its important to take a look at the wholesale distributors warehouses', if it has any. If the facilities appear to be neglected or run-down, such conditions indicate that the distributor is not that particular about the quality of the goods it distribute. Obviously, goods of inferior quality are not sellable. If possible, know if it keeps an accurate inventory of its goods as well. If you notice any discrepancies, this simply means that the business is not being run efficiently. Thus, its logical to assume that the distributor may not be an efficient partner to deal with as well.

4. Is there a large network of contacts?

A wholesale distributor will enjoy more sales with a large network of contacts. As a client, you will also benefit from dealing with a distributor with numerous contacts to depend on. More contacts lead to more choices, and eventually, better rates. The distributor will gain access to more manufacturing companies, and therefore be able to provide you with lower prices for the goods youre interested in selling.

The network of a wholesale distributor is not solely made up of manufacturers and retailers alone. A smart distributor is aware that its also important to build strong relationships with the people it indirectly transacts with, like retailers, labor organizations and public officials. If its possible, try observing how the distributor interacts with the aforementioned individuals. Keep in mind that when we say strong relationships, this doesnt mean relationships based on bribery and corruption is acceptable. It is not!

5. What are their product policies?

What happens when delivery of goods are delayed? What happens if the delivered goods have been damaged? Knowing the product policies beforehand will give you an idea if the distributor will act fairly towards you in future dealings. Make sure that any conditions he does specify are included in your contract.
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