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Distributors and Sales Channels

It is easier to purchase, import or produce a product than to find the right sales channel for it.

A sales channel is a store, a wholesaler or a web shop that has contact with customers. It is a way to distribute your goods or service to customers. .

The most valuable asset a company can have is direct contact with customers. Without customers no business even if you have the best product.

An example

In Brazil they produce many interesting things, such as quality footwear made of soft plastic. You have found a great pair of ballerina shoes and a pair of high-heeled shoes in bright colors that you want to import into your country.

Which sales channel can you use to sell your ballerina and high-heeled shoes? For example:

• You can make a web shop – but who dares to buy unknown plastic shoo from a shop. It requires a great branding work before web sales is credible
  
  
• Open a store in your town – you have to sell many shoes just to pay the rent of the shop.
  
  
• Sell the shoes to a shoe chains – bigger shoe chains will probably not give you 10% for each pair of shoes sold. They are big enough to buy direct from the manufacturer in Brazil.
  
  
• Drive around to small independent shops- there are many, but they only buy few pair of shoes at a time. It is expensive and time consuming to sell to small shop owners.
  
  
• A stand at a market - it is relatively inexpensive, but expect a relatively small sale.

Build a sales channel

If you long to build a brand for Brazilian shoes, you need to develop your own sales channel. It takes time, but you will get to own something valuable.

What is your sales channel

Before you purchase or produce a container full of a really exciting product, ask should ask yourself:

•  "In what ways can I sold my products?"

Distribution model

Here is a distribution model to consider. The closer you are to the customer the better:

1. Manufacturer >> Wholesale >> Wholesale >> Shop >> Customer
2. Manufacturer >> Wholesale >> Shop >> Customer
3. Manufacturer >> Shop >> Customer
4. Manufacturer >> Customer
   

Help from distributors

Many entrepreneurs want to sell their product or service directly to their customers. In doing so, you score the full profit yourself without having to split it between one or more intermediaries.

There is a tendency towards direct sales to consumers, but to a newly established company a hook-up with one or more distributors could be a wise decision.

A distributor/liaison can take some costly tasks off your shoulders.

An example

• Instant acces to customers
• Collecting market data
• Marketing
• Negotiation
• Order book
• Financing
• Transfer of risk
• Warehousing
• Payments
• Carriage to customers

Which channels will you use to sell your product?
- asked by a clever consultant