Getting the right partner to distribute your products or services is vital if you are to succeed internationally. Appointing the first company that promises you the earth in great sales can often end up in disappointment and so it is really important that you carry out an intensive due-diligence process.
This will provide you with many insights into the business, from how it is perceived in the market place to knowing its internal capabilities to sell and support your products.
Remember, when you visit a distributor it will want you to see through its ‘window’ on the market and how it does business. Therefore a thorough due-diligence process will help you immensely get the right picture.
You will have sent a general questionnaire and if the company has a website you will have gathered some information from that on various aspects of its operations.
Here are some general hints and tips to consider when you’re selecting and profiling the best partner for your business.
1. Embark on a COUNTRY VISIT
Although there is a cost element to making a visit to a far flung country but it is an investment that will provide you with so much valuable information. Remember, even a visit needs planning to ensure you are effective in your objectives.
Visit the British Embassy or Consulate
The relevant commercial officer would give me information and provide another perspective on the market with possibly a view on the companies that you intended to visit. As with every human being you will get some officers that are very good and others not so good but generally I found this very useful.
Try and time a visit with a relevant exhibition in your business sector
This cannot always be done but it would give you additional external information such as who are the active competitors, customer demographics and the level of interest in your type of product or technology.
Arrange your company visit well in advance
Taking the different cultures into consideration it’s important to make sure that you plan a meeting well in advance and that you meet the right personnel. Make sure that they confirm back the meeting details to you so that you can proceed with your arrangements
2. Get a ’3rd’ eye view
I’ve mentioned the Embassy as one possible external reference but contact Principals that are represented by your prospective partner.
Contact at least three Principals and not necessarily ones suggested by the distributor. You can usually find details on the principals from the distributor website and then from the website of the Principal.
Ask them how long the distributor/agent has been representing them.
Have they grown their business consistently over a period of time?(say over the last three years)
How about their receivables history, do they keep to your terms?
Do they invest in holding stock?
Have they had any major issue(s) with this particular
If possible try and talk to actual end users as well but can it can be a bit of a challenge, especially when taking into account a different culture, mentality and a different language of course.
3. CARRY OUT AN INTERNAL COMPANY ASSESSMENT – DUE DILIGENCE
This is vitally important to get a view on the company motivation and capabilities to distribute and support your products. These are just some aspects of the due- diligence that should be considered.
Is it an established company with a good reputation in the market?
What’s their vision and strategy?
Ask for their last three years sales growth.
Do they have a high turnover of staff?
Visit the warehousing facilities as well as principal offices
Do they meet any special storage needs e.g. refrigeration?
Are they well located close to logistic infrastructure?
Can you see any competitive products stored on the shelves?
Check their sales and marketing departments
Do they invest in employee training and how often?
Do they hold inventory?
Do they provide regular forecasts?
Do they provide suitable and adequate MARCOM?
How do they cover the territory?
Post sales support capability (if required)
Do they hold suitable support inventory (Inst, parts and tools)?
Do they outsource their service support?
Do they hold regular training?
Are they able finance sales?
Are they able to maintain inventory?
Credit history (external checks preferable)
The above are just some of the questions one should consider in evaluating a company’s competency to distribute your product. If you need further information and guidance on selecting and profiling the right partner, please contact us at firstname.lastname@example.org or visit our website at http://www.lm2ex.com which has an interactive assessment tool to help you.