Leveraging existing relationships has many advantages, such as quick route to market, generating revenue efficiently and gaining local market feedback, however, this can also be a drawback. Retailer. Other examples of the disadvantages of working with a distributor are: Geographical and operational distance from your target market can result in a number of difficulties, such as; a forfeit of brand control. They are quick Unless you are making luxury products and want to maintain an air of exclusivity, … Once you have established a good relationship with retailers, revenue will grow much faster, and it’ll be more consistent. Pros of Wholesaling: * Ease of scaling – Wholesalers are all about the product and selling a lot of it. The term “wholesale” refers to the link in the supply chain that provides retail... Finding the Right Wholesaler. Effective and motivated distributors can make a huge contribution and impact to the potential success of your international expansion venture. The retailer may be the manufacturer of the product, or may acquire relevant products from a distributor or a wholesaler. 2.Indirect #distributors #partnerships #strategy #expansion, Victor Fortis Partners | About us | Projects | Services | Insights | Contact, Advantages and Disadvantages of Working with a Distributor. Those direct sales represent another possible distribution channel of products. Direct – The consumer buys the product from you online, in a store, at a trade show or by mail order. In addition, brands retain marketing control, meaning tha… Being detached at a local level can result in a number of challenges, such as identifying whether your products are a good fit for the local market, or whether your distributors are selling through the most effective channels. Having said this, there can be are drawbacks and disadvantages to working with distributors in international markets that you should be aware of. The retailer might generate 70% of the farmer’s revenue, being the most crucial component of the supply chain. Morsa Images/Getty Images. The disadvantages. Other areas include the executed channel strategy. Keep in mind that this method of product distribution also has accompanying disadvantages, such as: 1. Some distributors due to their market share, revenue and market dominance, can be quite aggressive with their margins, thus resulting in negative margin impact on your business. Smaller profit margins 2. There are certain activities you can take in order to ensure you reduce risk as much as possible, controlling the controllables, such as thorough due diligence and finding the most suitable, effective partners possible that meet your strategic objectives. through LinkedIn or RocketReach. Leading a group of overseas workers with different cultural nuances and the time demands of such a venture being just two examples of this. As with any strategic decision, international expansion and distributor partnerships require thorough due diligence to ensure investments are made with a deep understanding of all the potential opportunities and threats. With the middleman (the retailer) out of the equation, your brand captures all the profit. And, of course, retailers carry multiple products, including your competitors’ So before you take the plunge, take the time to study both sides of the equation, as well as research the var… This can result in some distributors requiring margins as high as 30%. Distribution channels can be direct or indirect. In a challenging international market, leveraging a distribution model can be highly beneficial, but what should you look out for. They may have a deeper level of investment in the products they make the highest profits on, or focus on product portfolios that do not prioritise the products that you are trying to sell within the market. 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