Courting Distributors: How to get your products to market
Retailers and distributors are hard to court, especially for entrepreneurs looking to bring a new product or service to market on a budget.
But they’re the gatekeepers that can make your offering available to the masses. Even in the the age of direct selling over the Internet, distributors remain as important as ever.
“Retail distribution is putting your product in peoples’ natural traffic pattern,” says Tim Silk, an assistant professor of marketing at Sauder School of Business at University of British Columbia. ”People are already going to these stores and shopping and searching, and distributors are putting you in the search pattern. When you do direct sales and online, who knows who’s out there?”
To this end, good distribution partners have plenty of reach.
“They’re a conduit to buyers,” says Silk. “It’s about how many people they can give you access to. It’s also about the extent to which they’re going to make you a priority in the whole scheme of all the products and services they offer.”
To woo distributors, newcomers need to effectively demonstrate how their product fills a void, or what advantages it has over established players.
“You want to make it in their best interest to push your product,” says Silk.
This is no easy feat, so Star Business Club turned to the experts for tips to get your company the connections it needs to reach the marketplace.
Tell your story
Before you approach a distributor, craft a compelling brand story that underscores the benefits of your product.
The web offers a cost-effective channel through which cash-strapped startups can tell that story. It should personalize your company, focus on the values you represent, and demonstrate the quality of your product and what sets it apart for consumers.
“It’s important to have a web presence that’s engaging and effective,” says Raymond Pirouz, a marketing professor at the Ivey School of Business at University of Western Ontario. “You need to demonstrate how the customer experience is going to be improved by what you’re promoting.”
Feedback from prospective customers can lend credibility to an unknown product, so share information with consumers, allow them to try your offering, and get their thoughts. Social media provides an opportunity to connect, and focus groups can give a sense of the potential demand.
Pirouz suggests taping responses and creating a video sales case.
“You have documentation of what a prospective customer thinks about your product, you can use this to inspire a middleman to see your vision,” he says. “Real people’s voices make a huge difference in helping you tell your story.”
Engage an agent
If breaking through proves to be an intractable challenge, outside firms can do the legwork for you.
“They’re called seller’s agents or distribution agents,” says Silk. “They are in the business of getting products into the distribution chains because they understand how those guys think. A lot of them used to be buyers themselves.”
Just beware, notes Silk, these agents will take a percentage of each unit sold, usually in addition to a set fee.
Know your competition
The difference between a successful product and a flop often comes down to the advantage it has over competition.
“You need to understand what you’re giving people that’s over and above the status quo,” says Silk.
Do a competitive analysis and observe consumer behaviour to figure out what similar products already exist. Then analyse this competition: what is it’s value proposition? How is it positioned? And how does your offering compare?
Unfortunately, many companies focus only on direct competitors, and fail to notice there are other potential substitutes for their products out there.
“When the Leafs suck, someone could go see a Marlies game, or maybe they just want to be entertained, so they’ll go to a movie,” Silk says. “The Leafs might not consider Cineplex a direct competitor, but it’s a substitute in terms of entertainment dollar on a game night.”
Embrace entrepreneurial advantages
Being a new player isn’t always a bad thing.
“There are advantages to youth, innovation and creativity,” says Benson Honig, a professor at DeGroote School of Business at McMaster University.
But it all depends on the product.
“People are less likely to buy a new phone from an unheard of company than a new toothbrush.”
Silk notes the marketing phenomenon known as “first mover advantage,” where a new product serves an unmet need and can’t be copied easily.
“If you can move into the market and grab a foothold, and it takes a long time for the competition to set up,” he says, “there’s an opportunity to maintain the first mover advantage.”
Maintaining that advantage comes down to keeping on top of preference changes, keeping market research up to date, and comparing your market share with competitors to see what offering customers prefer.
If you manage to get buy-in from distributors, ensure you can deliver on promises.
“Given that you’re emerging, people are going to be wondering if they should give this new company or product a chance,” says Honig. “You can’t exaggerate; you’ve got to be accurate about what you’re offering.”
The last thing a middleman wants is problems. Honig says distributors will always want to know that their partners can meet price, quality and supply commitments.
“Be up clear and specific about the process and the quality of the product and delivery dates,” says Honig. “But also be open about your possible shortcomings and constraints. If you try and sweep them under the rug it will come back to bite you.”
Courting distributors is like dating, he adds.
“You’re looking for some kind of marriage, and if you fail in your commitments, you’ve got a divorce before you’ve even settled the deal.”