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) Country visit – this is a must do activity
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.
a) Visit the British Embassy or Consulate
This can provide another perspective on the market with possibly a view on the companies that you intended to visit.
b) Visit a relevant exhibition in your business sector
Cannot always be done but would give additional external information such as who are the active competitors, customer demographics and the level of interest in your type of product or technology.
c) 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) Obtain a ‘3rd eye’ view – external references
Contact at least three Principals and not necessarily ones suggested by the distributor.
Ask them how long the distributor/agent has been representing them.
a) Have they grown their business consistently over a period of time?(say over the last three years)
b) How about their receivables history, do they keep to the agreed terms?
c) Do they invest in holding stock?
d) Have they had any major issue(s) with this particular distributor?
3) An internal company assessment
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.
a) Company history
- 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?
b) Visit the warehousing facilities as well as principle offices.
- Do they meet any special storage needs e.g. refrigeration?
- Are they well located close to a developed logistic infrastructure?
- Can you see any competitive products stored on the shelves?
c) 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?
d) Post Sale 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?
e) Finance dept.
- Are they able to 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 or visit our website which has an interactive selection and profiling tool (I.C.A.T) which will help on how to carry out a thorough due-diligence process.
