The concept of distribution came to us from the English language and has become familiar to our ears for a long time. In the most general sense, distribution is a type of activity in which a business entity purchases goods from a direct manufacturer and undertakes an obligation to retail or wholesale these products. However, this activity also includes other areas of work related to the development and implementation of logistics processes, the organization of commodity distribution networks and the distribution of goods.

There are two main views on this small business:

• On the part of the manufacturer of products, distribution is the organization of channels for the sale of goods and the effective management of their movement from the manufacturer to the end consumer.
• From the side of the distributor himself, this activity is considered as a process starting from the placement of goods in his territory and up to bringing the products to the consumer.

Thus, both directions complement each other, and, in accordance with which of them is accepted as dominant, one can distinguish different types of distribution. Legally, even an individual entrepreneur can act as a distributor. But, as practice shows, the most effective way to conduct this activity is through the creation of a distribution company.

General principles of activity

As noted above, in distribution, the interests of the manufacturer and the supplier in the end practically coincide. Therefore, a distributor can act both on his own behalf and on behalf of the manufacturer, indicating himself only as a supplier. As a rule, these approaches are combined.

Between the two main business entities - the manufacturer of the goods and its seller - an appropriate agreement is concluded, in which the principles and conditions of cooperation are clearly distributed and prescribed. They can also be considered as step-by-step instruction when creating a company from scratch. This is:

• Product cost.
• The amount of markups applied for goods sold.
• Conditions for conducting wholesale trade.
• Policy of discounts and preferences.
• General description of the market and its regional distribution.
• Target audience of consumers.
• Procedure and conditions for carrying out settlements.
• Terms of sale of marketable products transferred by the manufacturer to the supplier.

The amount of the distributor's income depends mainly on how competently he calculates the profitability of the business, what equipment he will use to run it, whether it is profitable to select premises, transport, and staff for him. Most often, the income of an entrepreneur-distributor has a variable value, because it is determined by seasonal factors of consumption, the volume of supplies of goods from the manufacturer, the time of settlement with buyers on specific terms for each sale.

Legal regulation

It may seem strange, but Russian law does not regulate the distribution agreement in any way. There are no normative provisions about it either in the Civil Code or in other laws and regulations. However, since paragraph 2 of Art. 1 and paragraph 1 of Art. 421 of the Civil Code of the Russian Federation determine that legal entities and individual entrepreneurs are free to choose the terms of the contract (except when these contracts contradict existing legislation), then they are lawful legal act having no restrictions on the territory of our country.

Some features of the legal registration of a distribution company are available when it is engaged in the sale of goods from foreign manufacturers. However, even here the terms of the contract and other documents require additional study only in connection with the nature of the products being sold.

Pitfalls of distribution

As practice shows, this business idea has its pros and cons. According to experts, the main problems that you need to know about even before the creation of a company and its entry into the markets are:

• Where to start looking for an intermediary market, and how to organize access to it.
• How to hedge the risks associated with distribution activities.
• How to independently assess the prospects of the supplied technologies and goods.

Opening a company in Russia should be accompanied by an understanding that the domestic distribution market is well developed. This is also evidenced by the fact that many product niches have already been distributed and occupied, and stable and long-term ties have developed between manufacturers and suppliers. However, in the system of these relations there is often enough low level professionalism.

The main problem for both start-up entrepreneurs who are just thinking about opening a distribution company, and for existing entities, is the price of the goods. This factor brings to life objective obstacles when working with quality products.

To overcome them, many distributors open parallel training centers, where, at their own expense, they help buyers understand the merits of the product offered. Needless to say, this entails additional costs, and therefore requires the novice entrepreneur to be very prudent when choosing a brand that he intends to promote in the retail or wholesale markets.

Another common mistake when starting a business is misjudging the size of these markets. Among the new challenges for distributors is the high level of competition for certain groups of goods and lack of freedom in their promotion. Only a high reputation can solve this problem - that intangible part of the business that is formed during a very long process, but begins from the very beginning of the company's operation.

Eventually

Before you open a distribution company from scratch, you should understand that our country is a huge market for this activity. Therefore, on initial stage it is necessary to direct all efforts to the development of your data portfolio for effective cooperation and the development of competent tactics of interaction with both manufacturers and end users.

Text by Daria Sharkova

Photo by Elena Ryazanova

For the first time in the "Success Stories" section, we will talk about an alternative form of creating your own business - through distribution. Elena Lapko first became a distributor in Krasnodar, and then the official representative throughout Russia of the well-known Dutch accessories brand NOOSA-Amsterdam. Our heroine created her own network of regional distributors from scratch, overcame three financial crises in the Russian economy and learned to predict what jewelry buyers in our country would like.

Elena Lapko

NOOSA-Amsterdam: the essence of business

I am the official representative of the Dutch accessory brand NOOSA-Amsterdam in Russia. Moreover, she started as a distributor in her native Krasnodar, where she sold their products. And then she became the main partner and created her own network of regional distributors. Now I have a full-fledged business: my own team, my own channels for attracting customers and promotion, my own turnover and revenue.

My business is based on the distribution of accessories: I buy collections from the NOOSA-Amsterdam head office in Holland and then sell them in two ways - through distributors or in stores.

About the brand

NOOSA-Amsterdam - accessories handmade: bracelets, bags, belts, wallets made of leather. Replaceable buttons for them are made from natural materials: shellfish shells, wood, bone, resin and lava, as well as natural minerals. These things are created by craftsmen in Nepal, Indonesia and Peru by hand by order of the company. We also have a Relics jewelry line, which includes earrings, rings, bracelets, chains and pendants made of silver.

All leather accessories are decorated with removable buttons - each one reflects the culture of one of the peoples of the planet, carries a sacred meaning. By choosing symbol buttons, our customers, for example, make wishes or protect themselves from what they want to avoid. The buttons are easy to attach and just as easy to remove. That is, buyers create the design of their jewelry themselves and can change its appearance at least every day.

For me, working with NOOSA-Amsterdam has always been not just a business, but a great love. If the brand's accessories had not met on my life path I probably wouldn't have gone into another business.

Introduction to NOOSA-Amsterdam

I am one of those people who never thought about the possibility of starting their own business in childhood and adolescence. When I was in high school, I realized that I wanted to interact more with people, so I entered the Faculty of Psychology. After university she worked in various companies in Krasnodar. Among the positions - both an office manager and a personnel manager in a large western company. At that time, as I wanted, I was in very close contact with different people. Perhaps, it was thanks to the experience of an HR manager that I began to realize how to find an approach to everyone, understand needs, be able to listen and hear.

I met NOOSA-Amsterdam by accident. In 2012 I went to Amsterdam, met in a cafe with my Dutch girlfriend. We talked and drank coffee. I noticed on her arm a bracelet decorated with unusual buttons. The accessory captured my attention, and I realized that I just needed to purchase the same one.

A friend took me to the store. It was a typical European multi-brand boutique, where trendy clothes could be complemented with various accessories. Treasured bracelets lay in a window near the cash register. When I asked an employee to show me the buttons, there were three large boxes in front of me - over a hundred characters in total. It was a real delight! Then I still did not understand what all these signs meant, and I chose the replacement elements intuitively. The happiness of owning the very first bracelet cannot be compared with anything! I carried this emotion in my heart through all the years of working with the brand.

Many people who purchase NOOSA-Amsterdam products for the first time have very similar feelings to mine. I don’t want to take off the bracelet, without it there is a feeling that I left the house naked. Accessory becomes part of you! And so I returned to Krasnodar from that trip to Amsterdam with NOOSA jewelry on my arm.

The amount of the first purchase was 150 thousand rubles. Ways and sales channels I could choose myself

»

The idea to become a brand distributor

All friends and acquaintances, when they saw the bracelet on my hand, could not, like me in my time, hide their curiosity and delight. Such is the nature of our jewelry. They started asking me where I got it. It is interesting that in Moscow there was already a Russian representative office of the brand. But at the same time, few people knew about him. And after another question from a friend, the idea suddenly occurred to me that I could become a distributor of this company and tell many people about accessories.

The amount of the first purchase offered by the brand to the distributor was (and still is) 150,000 rubles. Compared to other retail companies, this amount is relatively small; in addition, the distributor constantly has the opportunity to make additional purchases, expanding the range and, accordingly, increasing turnover. That is, I had to buy buttons, bracelets, belts and bags for this amount and boldly start selling them. I could choose the ways and sales channels myself.

At that time, I was not afraid to start a business: the reaction of my Krasnodar acquaintances was eloquent - everyone really liked it. Without giving myself time to doubt, I wrote a letter to the head office of the brand - in the Netherlands. They, in turn, redirected me to a representative office in Moscow. I talked to the management, found out all the conditions for cooperation. They also took a closer look at me, they realized that I was aware of what I needed to do, what kind of product it was and what its target audience was.

I was boundlessly inspired and sure that this is my calling and I will succeed. I made the decision to start my first business with the approval and support of other members of my family. My husband was glad that I could combine business with raising children, broaden my horizons, make new acquaintances and my everyday life will go far beyond housekeeping. I still thank my family for this.

The Moscow representative office received my consent and began to collect the parcel with the first order.

Interview. Womenbz journalist Daria Sharkova and entrepreneur Elena Lapko

I was given the box and allowed to transfer the money when it was possible

»

Start of cooperation

We agreed with representatives of the brand in Russia to meet at Moscow's Sheremetyevo Airport, where I had a transfer: I was supposed to be given a box with the first purchase. My husband and I wanted to withdraw money from an ATM at the airport, but everything did not go according to plan: the first plane was delayed, we arrived late and did not dare to run to the ATM, so as not to be late for the next flight.

The representative of NOOSA-Amsterdam gave me the box without a hitch saying: "This is not a problem, take it, transfer the money when you have the opportunity." I felt that this is another good sign when starting a business is associated with such total trust.

First sales. Exit to shops

First, my friends began to come for bracelets, then friends of friends. Word of mouth worked well then, because there were always interesting people in my environment who liked unusual things. In a matter of days, the Noosa brand was on everyone's lips and began to be sold "by itself." I had to be constantly in touch to pick up bracelets and buttons every day for those people who aspired to become part of the NOOSA world.

There was a big boom, buyers wanted to buy new items, to have products that I did not have in stock at that time, and the second one immediately followed the first purchase. American marketer John Trout once formulated the law according to which regular expansion of the assortment in a short time will inevitably lead to an increase in sales. It worked in my case too.

I decided not to limit myself to the circle of acquaintances. I wanted more people to know about the brand. The next step was a cooperation agreement with the network of accessories stores CosmoStore, which, by the way, for many years did not work under a commission agreement with third-party suppliers. But for me they made an exception, because as experienced buyers realized: unique products will attract a large number of new customers. At first, I placed accessories on the terms of sale, that is, I received money after the sale. Then, when the owners of the company saw commercial success brands, the network began to make purchases of collections. Today, like almost six years ago, NOOSA-Amsterdam collections are widely represented in the flagship store CosmoStore in Krasnodar.

Events developed really quickly, and I asked the Moscow office for permission to expand the geography of sales. I began to conclude contracts with shops in Novorossiysk, Gelendzhik, Vladikavkaz, Rostov-on-Don. I found outlets through the Internet and on the recommendations of mutual friends. During that period, about a year and a half, she worked without assistants.

I personally visited official representatives in different cities of the Southern Federal District, made presentations for sellers, showed photo and video materials, shared inspiring stories and told how to work with customers correctly, offering store visitors not only a high-quality and beautiful accessory, but also a unique amulet, and a good gift for the closest people.

It is difficult for the Dutch to understand that in Russian cities located at a distance of 300 kilometers from each other, people have different mentalities, lifestyles, wealth, priorities, interests

»

My favorite business was about to disappear, and, of course, I simply could not come to terms with this. I exhaled, made up my mind and wrote a letter to the head office in the Netherlands. She introduced herself, told about herself, about her successes and asked to make an appointment. A couple of months later I flew to Amsterdam.

I prepared a business plan to convince them not only with my emotions, but also with the commercial component. She talked about what has already been implemented and what is planned. She focused on the mentality of different regions - something that they cannot know in Holland. It is difficult for them to understand that in Russian cities located at a distance of 300 kilometers from each other, people have different mentalities, lifestyles, wealth, priorities, interests. The founders of the brand were convinced not only by the performance of my business plan, but also by the fact that I want to introduce people to good taste and knowledge of the symbols of world cultures.

They then asked me one question: “What is the difference between you and our former partners, a company from Moscow? Without thinking, I said, "They liked it and I love it." Literally: "They liked it, and I love it." And it was absolutely true. I have always treated the project primarily as a hobby, and not as a business. Until now, all this for me is on the same level of love.

The result of our meeting with the Dutch was the signing of a contract for a year. We "looked at" each other, I made regular orders for collections according to the purchase budget, while simultaneously developing a network of distributors in Russia. A year later, I confirmed the status of the exclusive representative of NOOSA-Amsterdam in the country and still keep it.

I continue to please them with numbers: for example, in 2017 our turnover increased by another 20% compared to 2016.

How to become a distributor - brand partner in Russia

Today I am building a network across the country. I work with distributors in different regions. Those who want to cooperate with us, to be a representative of NOOSA, choose which way of implementation and development is closer to them. There are two such options.

1. Shop or showroom. In this case, you need a platform where the entire range of brand products will be presented. Partners buy collections and sell at home. The retail price of products is the same in all regions of the country, while the brand is high-margin. In this format, we cooperate with boutique owners in Volgograd, Kaliningrad, Kirov and Simferopol.
2. Regional representation. That is, to work in the same way as I started: to make regular purchases of each new collection. Today, when a potential distributor comes to us who is in love with our jewelry and wants to make money with NOOSA, we tell you what promotion mechanisms can be used, share secrets, and help. In this case, accessories are sold, as in the first option, at a retail price recommended by the head office in Krasnodar. Official representatives work in 18 cities and regions of the country, as well as in Ukraine and Kazakhstan.

It is convenient for our partners in stores and regions: the entire range is available for order at any time, since our main warehouse in Krasnodar has all items, including items from the regular collection, as well as new items from limited collections.

Often, distributors are people who are already familiar with our product. It is important for us to cooperate with those who appreciate each customer and know that coincidences are not accidental. You should have intuition, believe in buttons and share positive emotions with others. The action of symbols is not magic. This is the power of a person's faith in himself.

We do not charge distributors for future collections. We take these risks

»

Purchase of collections

I get acquainted with new collections 9 months before the start of retail sales. After the presentation of new products in Amsterdam, I pre-order accessories for several months in advance and make an advance payment. For example, orders for products for August and November of this year have already been placed.

My task is to predict how many bracelets, buttons, bags of one kind or another we will be able to sell in Russia, which design options our buyer will like. At the very beginning of the work, the forecast was more based on intuition, and it was also important to listen to personal taste, present the widest possible range of products and also give the opportunity to purchase accessories from the classic collection, which is now always available to each representative. Now, when ordering, the preferences of buyers from different regions are taken into account.

Interestingly, in Krasnodar, the audience, which traditionally prefers bright colors in clothes, chooses more conceptual bracelets, bags and wallets of our brand and builds a look around them. The image is based on black, gray and blue products. And, say, creations of ocher and wine color are sold better in Siberia than in the south. Petersburgers, on the contrary, often wear colored bracelets and buttons, additionally creating a joyful mood. "Nusamans" in Ukraine, Crimea and Kazakhstan are at the initial stage of acquaintance with the brand, therefore they prefer universal accessories that will suit both casual and evening wear.

While accessories make their way from Amsterdam to us, Russian distributors receive a new order form and make a purchase. After the appearance of the next limited collection in our warehouse in Krasnodar, we immediately send products to representatives in the regions.

We make life easier for our distributors: we do not take an advance payment for future collections. Thus, partners do not "freeze" 30-50% of the order value for several months - our company takes these risks.

The advantage of the brand's products is NOOSA-Amsterdam accessories out of season and time. In other words, all products are popular throughout the year and do not go out of fashion.

Specifics of purchases in euro

In our country it is difficult to plan a strategy for several years ahead. Especially when the business is directly dependent on the euro, like mine. Our company has successfully survived three financial crises in the Russian economy. When the ruble weakened against the European currency, I did not make drastic decisions: for example, to stop the business, immediately raise prices and thereby scare off buyers and distributors. Therefore, I kept prices at the same level for a long time. Then the increase was from 5 to 12% for various categories of goods. However, as soon as the situation in the economy stabilized, the ruble "crepe" and the sudden jumps in the exchange rate stopped, we again reduced prices.

Interview. Womenbz journalist Daria Sharkova and entrepreneur Elena Lapko

Preparation of new collections for sale in Russia

New limited collections appear 4 times a year. Each of them produces an average of two dozen new products. We independently prepare detailed descriptions of the buttons, plunging into the culture, myths and beliefs of those countries and peoples where the signs depicted on the buttons originated. Information about all the buttons-symbols released by the brand throughout history can be found on the official website. Also, our company releases its own booklet, in which lookbook is adjacent to interesting information about the philosophy of NOOSA-Amsterdam.

Retail sales and promotion

We continue to work with retail buyers. They can purchase jewelry in our online store. This is a partnership project connected to our central warehouse in Krasnodar and online prices are the same as retail prices throughout Russia. Now we are finalizing it to create a single platform for retail sales for distributors in different regions. It is important for us to launch a portal that has a unified visual style, a system of customer relations and accounting for products in stock.

We pay great attention social networks. In 2015, I created a full-fledged Instagram profile. Today it is a working mechanism to increase brand awareness and retail sales. Each regional representative also has its own Instagram account, in which our partner publishes both author's photos and image photos provided by us. In addition to materials received from the Dutch, we ourselves constantly initiate professional photo shoots that convey the beauty of accessories and the philosophy of the brand.

Participation in specialized exhibitions is also important. We are convinced that such events help to make the brand more recognizable. Participated in Collection Premiere Moscow (CPM), opened a corner within Moscow Fashion Week with the support of Mercedes-Benz. Official representatives of NOOSA-Amsterdam can be found at major regional and Moscow exhibitions, fashion markets and among partners of social events.

About buyers

Our customers are strong, special personalities. There was an opinion that the majority of "nusamans" or, as we also call them, noosapeople, are representatives of creative professions. But our accessories are also bought with pleasure by young mothers, doctors, employees of financial organizations - in fact, everything is deeper and more diverse.

In other words, the main thing for a person is to find a reflection of his inner world in our unusual products and pick up signs close to the heart. Our man appreciates things with strong energy, created with soul and from natural materials, is aware of his individual style. Buying a bracelet once, the buyer after a while seeks to become the owner of a wallet and a bag, and after fixing a set of buttons on the accessory, he returns for new symbols.

Employees

On the this moment In addition to me, our team includes a PR and Marketing Director, a Development Director, and a Client Relations Manager. An accountant and an IT specialist are outsourced.

I try to motivate and encourage my colleagues. For example, for the performance of the last two years, two employees were awarded a trip to Amsterdam. In general, I was lucky: we have harmony and mutual understanding in our team. This is logical, because we are united by love for such beauty.

In business, as in driving a car, the rules are the same for everyone: for both men and women

»

Competition

In fact, all modular accessories can be competitors to us. But still, our customers do not like things presented in the mass market. In addition, nusamans will never buy a Chinese fake Noosa bracelet made of leatherette and with a plastic button.

We occupy a "niche of unusualness". We are often compared to other stacked bracelets, such as charms, but we are very different, even in appearance. This is a completely different style and, in my opinion, a different philosophy and meaning. If you buy a charm when you want to remember something, then by choosing a button, you "write" your future.

I take pleasure in the fact that the product that we offer people brings them joy. Increasingly, bracelets are being purchased as an amulet or a universal gift that carries a positive message, and to a lesser extent - as a mere fashion item.

About women in business

I believe that in business, as in, say, driving a car, the rules are the same for everyone, for both men and women. The gender of a successful businessman does not matter. In my opinion, it is wrong to believe that if you are a woman, then you will be given a head start.

Own business helped to develop my business qualities, negotiating skills. It is important for a businessman to have a balance between the energies of Yin and Yang, because if the balance is broken, then the head of the company will not be able to equally use both analytical thinking and intuition. Also, success largely depends on personal charisma.

1. Find a balance between work and family life, give enough time and attention to those you love. Do happy people around you to get that warmth back.

2. As for the risk, it is always justified! There is no business that does not have certain difficulties. My business, as I said, depends on the euro exchange rate, and I take on all the temporary difficulties caused by the growth of the exchange rate. There is no smooth and sweet business. If you are not ready to take risks, your own business is not for you.

3. It is very important to have a safety cushion in the form of a reserve of financial resources and the support of loved ones, to be ready and fearless to stay afloat, no matter how stormy around you.

There will always be a buyer for a good product, but what if the buyer is domestic, and the product can only be bought from a foreign manufacturer? Not every potential consumer is ready to go to another country for a product they like, so you can start making money on this desire in Russia. But before you become a distributor of a foreign company in Russia in 2019, you need to make sure that there is a steady demand.

Distributor or Dealer – work in the chain

Having established contacts with a foreign manufacturer, an enterprising person will need to decide in what capacity he will be ready to work with him. There are two options: dealer and distributor. The words, unusual for the Russian-speaking ear, in translation mean: merchant and distributor. Despite some similarity of concepts, there are differences between them that determine their functional difference.

Difference in definitions

Even a superficial knowledge of English will allow you to find a translation of foreign concepts that have quickly taken root in our vocabulary since the 90s. And if in the era of the “wild” market no one delved into the details, now the chosen status also determines a set of rights and obligations.

So, a distributor (general or exclusive) is first of all obliged to organize the distribution of a product or service. This means that a domestic company or individual entrepreneur will be busy forming a network of wholesalers or small-scale wholesalers, as well as launching an intensive advertising campaign for greater brand awareness.

Contacts with small retail outlets and end users are carried out mainly by dealers. It is their responsibilities that include direct direct sales of goods and services.

Difference in rights

If we imagine trade relations as a hierarchical chain, we get a simple sequence: a foreign manufacturer - a distributor - a dealer. Based on the manufacturer's sales policy, there can be either one or several distributors in the country. The number of dealers depends on the intensity of the distributor's work. It is clear that the commercial success of work in Russia implies the most developed network of those who work directly with the buyer.

A foreigner can quickly and without hassle open an IP online through the proven My Business service. It is enough to register, enter the necessary data, and the system will give you ready-made documents that you only have to print and submit to the tax office.

Become a Supplier: The Distributor Journey

Having chosen a foreign manufacturer, whose goods, in the opinion of the future distributor, will be of interest to the Russian buyer, the main thing is to properly conduct presentation work and negotiations. A well-written business plan and forecast data on purchases and sales will help to successfully present your company to foreigners.

Many foreign brands have their own set of requirements for potential partners. They can cover not only financial indicators about the minimum sales volumes.

Among the requirements for a future distributor, there may be wishes for the location, the availability of warehouses and industrial premises, equipment, personnel and retail space. The demographic and economic indicators of the region can also play an important role.

In addition, before becoming a dealer of a foreign company in Russia, it will be necessary to prove to the manufacturer that the company is able to establish and further develop a partner network.

Options for work schemes

The form of cooperation between the manufacturer and the official distributor may have several options. A foreign company may elect a Russian distributor as the only one entitled to import their goods and sell them on the territory of the Russian Federation. The broadest and sometimes exclusive rights for the development and expansion of the sales network can be transferred to him. There is a scheme in which a distributor is selected for different groups of goods. Regional division is also possible.

Under an agreement with foreign businessmen, a distributor may be obliged to independently organize a network of representative offices and service centers and establish work on direct sales.

However, most often there are contracts under which the distributor can delegate the authority to work with clients to smaller dealers, while he himself will be engaged in promoting products and expanding the partner network. With such a scheme of work, the distributor will need not only an intensive search for new sales markets, but also information support for dealers, organization of seminars and representative events.

Documentation of cooperation

After conducting preliminary negotiations and receiving positive reviews of the proposal for cooperation, it is time to discuss the draft agreement. According to established practice, a contract with a foreign company stipulates in detail many even small details. Most often it is compiled in two languages ​​(Russian and English).

The main pitfall of such agreements can be considered that in any disputes, the text in a foreign language will be taken as the basis. On top of that, often lawyers add a clause on foreign jurisdiction of cases under this document.

A positive aspect of such rigor can be considered detailed description all procedures and requirements, listing data on information support and an appendix to the contract list of responsible contact persons.

Work on the basis of a dealer agreement

In addition to obtaining the status of a distributor, a domestic entrepreneur can try to conclude an agreement with a foreign legal entity to work as a dealer. Such cooperation is suitable for those who are ready to work independently in the field of direct sales of imported products, without advertising support and service departments.

This is acceptable in cases where the manufacturer itself already has its own branch in the territory of the Russian Federation and is interested in developing a partner network. Most often, the dealer agreement implies work on an advance payment. If a we are talking about the possibility of paying for the goods after their sale and allows you to return illiquid assets, the manufacturer in most cases reserves the right to set maximum prices and return periods.

For an optimal approach to making an informed decision on the form of cooperation, it would be useful to familiarize yourself with information about.

How much working capital will such a business require

The answer to the question about the costs of product promotion, the purchase of several starter and presentation batches of goods, the development of a distribution network should be announced at the stage of presenting a business plan and conducting negotiations. A scrupulous approach to the preliminary calculation of financial investments is not only useful for ensuring a positive response from a foreign partner, but also expedient for the potential distributor himself.

The amount of capital investment largely depends on the product being sold, and on the expected territory of distribution and the branching of the dealer network. It is clear that high-tech gadgets or unique highly specialized equipment cannot be cheap, but the segment of a non-premium clothing brand will be more affordable in terms of material costs and capital turnover rate.

Ways to do business with foreigners without investments

If the preliminary calculation of capital investments before becoming a representative of a foreign company does not correspond to the available savings, draft contracts can be proposed with the distribution of the financial burden between the parties.

To reduce the size of the initial investment, you can try to negotiate a free delivery of at least a trial batch of products. Despite the riskiness of such a transaction, the contract can provide for some kind of insurance (for example, bank financial guarantees or insurance). In addition, this option may be the only opportunity for foreigners to penetrate new markets.

Another way to promote a product without purchasing it is an agency agreement. At the same time, the ownership of the goods does not pass to the distributor, he will receive only the commission specified in the contract.

Usually the agent's profit is less, but given the lack of working capital, this output seems to be optimal.

Pros and cons of working on behalf of a foreign partner

The indisputable advantage of working on the terms of official representation is that the distributor is guaranteed the support of the manufacturer. In the case of cooperation with a global brand, the establishment of sales is noticeably facilitated.

The disadvantage may be considered stiffness in decision-making. In the vast majority of cases, the manufacturer rather tightly controls the fulfillment of the image requirements of the contract, insists on increasing the minimum sales volumes, sometimes it comes to applying a system of fines or reducing the amount of remuneration based on the results of the verification sent.

Foreign counterparty - trust, but verify

The possibility of stumbling upon an unscrupulous partner outside the native country, unfortunately, is not reduced to zero only by the very fact of foreign origin. In order to preserve their own nervous system, a domestic merchant should conduct a check in advance, albeit at the level of universal capabilities:

• Check for a serious site and your own domain name.
• Assess the negotiating approach and the draft treaty.
• Take advantage of the opportunities of the worldwide network and a number of special sites:
  • www.ved.gov.ru - government portal of foreign economic information,
  • creditreform.com is a foreign site that offers services for checking potential partners, has offices in many countries around the world,
  • europages.com.ru - "yellow pages" of European manufacturing and trading companies.

With the development of the Internet and remote ways of transmitting information, it has become easier for a modern businessman to develop his business. Freedom of communication helps entrepreneurs to expand the list of suppliers, and not only brings the consumer closer to global brands, but also gives them the opportunity to try lesser known brands.

How a foreign company can open a representative office or create a branch in Russia: Video

The key to success for any company is the distribution business, which allows you to effectively promote the product to the end consumer. Markets that successfully develop distribution are characterized by a hierarchical structure. Companies - distributors can be conditionally divided into three groups.

The first group includes the largest wholesale suppliers, and the second group includes large dealers who purchase products from wholesale suppliers. The third group includes retailers that buy products from the companies of the first two groups, and it is the representatives of the third and second groups who become distributors. How to start a distribution business is the topic of our today's article.

Introductory information or starting from scratch

It should be noted that most distribution areas are not saturated, so entering these areas will not be difficult. On average, the threshold is 700 thousand dollars and rarely exceeds 1.5-2 million dollars. We will consider two options for creating a distribution company - creating from scratch and buying a ready-made distributor. Distribution from scratch.

When creating from scratch, it is very important to carefully develop a business plan for a distribution company. You need to start with a careful selection of the market segment, taking into account your own work experience, the sales structure of product groups, and the position of the manufacturing company in the market. Having chosen potential partners, it is necessary to create the material base of the company.

This will require renting premises, a warehouse, space in a shopping center for organizing a salon-shop, which will cost about 60 thousand dollars.

Question number 2 is the staff, with the number of 20 people, the annual costs for this direction will be about 190 thousand dollars. Taking into account transaction costs, obtaining permits, as well as unforeseen expenses, this stage will cost you about $300,000, and will take at least 2 months. Then you start the actual economic activity and purchase the selected product.

Distribution business costs at this stage are likely to be around $150,000-250,000 per year, although this certainly depends on the specific product. In addition, it is necessary to take into account the cost of advertising and establishing contact with retailers, which can be at least 50-70 thousand dollars a year. You can, of course, try to create your own retail network, but this will require too much money and time.

Having established itself in the market, you can begin to obtain the official status of a distributor, that is, to conclude a distribution agreement with the manufacturer. By becoming an official distributor, you can receive a number of privileges, including exclusive rights to trade and the right to preferential service. However, this will also impose certain obligations on you - for example, to purchase certain volumes of products on a quarterly basis or to maintain a certain price level.

Buying a ready-made distributor

Of course, when buying a ready-made "package", the question of where to start as a distributor will not worry you too much. This option sometimes provides unique opportunities, as several nationwide distributors have recently been put up for sale at once. Of course, this option is also very attractive for large investors, because the presence of liquid commodity balances guarantees the return of most of the invested funds, and the high status of the acquired company contributes to mutually beneficial relations with manufacturers.

It is noteworthy that often the cost of regional distributors exceeds the price of large wholesale companies. The fact is that often large distributors do not have their own real estate and are only cash flows. And when selling, the price of the company is formed from the inventory balances and profits for the last 12-18 months. Therefore, regional dealers are valued at a higher price due to retail space. Those wishing to acquire existing distribution companies need to consider a number of important points.

• Firstly, it is the liquidity of commodity balances , it is desirable that the share of well-selling product groups is at least 60%, and their turnover period is about 2-3 months.
• Secondly, great importance It has number of repeat sales characterizing the mood of the customer base. It should not be lower than 20%, otherwise you will have to carry out activities that can increase customer loyalty.
• It is also important to take into account the presence of competitors and the possibilities of the investor.

Business process structure

The structure of the business may depend on such factors as: the specifics of the goods supplied (term and storage conditions), relations with manufacturers, the specifics of demand, and others. Let's consider the general model of activity of the distributor. First, the goods are purchased, they are delivered to the place and their storage is organized. Distribution channels are involved, which can be either single-level (sales go through the central office), or two-level (deliveries through second-tier dealers) and even multi-level (several dealers and many resellers).

Significant funds are invested in advertising, including participation in exhibitions, advertising in specialized magazines, and in the creation and maintenance of websites. A system of bonuses and discounts is used to attract and retain a customer base. Important points include:

• the process of developing and implementing information systems;
• the issue of personnel and methods of its control and stimulation;
• after-sales service for companies involved in the sale of equipment.

Profits are made up of sales margins on products distributed, minus costs. The markup ranges from 3 to 60%, which is determined both by the position of the company in the market and by the presence of exclusive rights. In the food industry, distributors with an average annual turnover of $5 million cannot charge a markup above 5%.

But in the field of building materials, a distributor with a turnover of 2-3 million dollars a year can set a mark-up of 30-50%. Thus, distributors return their investments in this area in 12-18 months, with an income of 30-40% per annum.

Increasing profitability

It is necessary to start work on improving efficiency with a thorough study of the market. The most successful strategies today are based on the development of regional and retail distribution networks, as well as the promotion of well-known and popular imported brands. The distribution of several brands gives the greatest effect if there are exclusive rights to the products of one of them. It is very important for a distributor to go through the authorization process, that is, to obtain confirmation of the official status of a trading partner from the manufacturer. You can increase the range of product groups and sell related products.

This will bring an increase in profits, an expansion of the market segment and a strengthening of the customer base. Opening your own salon-shop can be of great benefit even in the absence of a retail network. An important point is the choice of a dealer who could become an effective link with the consumer.

Many people dream of becoming a distributor. This is not surprising, because a person holding such a position usually receives a fairly high salary, works according to a free schedule, travels a lot, does not sit in the office in one place, and even decides for himself how exactly to do his job. As you can see, this profession has many advantages.

There is only one minus, and it lies in the fact that not everyone knows what exactly the job of a distributor is, and most importantly, how to become one.

To begin with, it is worth understanding that a distributor, no matter what company he works for, is building a sales market for this company. Well, becoming a distributor is not difficult.

The following describes what is required for this, and where you can start.

What does it take to become a distributor?

In fact, anyone can become a distributor. All that is needed for this is a desire to work, and at least an approximate understanding of the functioning of the market for goods and services that the company is aimed at. And, of course, it goes without saying that you need to start the path to becoming a distributor with the choice of an organization whose products you want to distribute.

You can choose both direct manufacturers and intermediary companies. For example, you can be a distributor of a specific Lipton tea, or a wholesale tea shop, then you can distribute products from different companies.

In order to choose who to work for, it is simply worth considering what things or services you would be most happy to sell.

Don't know how to become a company distributor? Follow our advice!

When you have chosen a company whose products or services you want to sell, it is worth first of all to find out how things are with distributors in this company.

Sometimes it happens that the company itself hires distributors, and sometimes the recruitment of people for this position is carried out by an intermediary recruiting firm. This information can be found on the Internet, or in extreme cases, you can write a letter directly to the company.

There is usually no limit to the number of distributors, although there are situations where a firm will assign only one wholesale distributor per area.

In any case, it is possible to break into this position, even if there are no open vacancies. To do this, you can write a letter to the company, or call the phone intended for contacts on cooperation. However, it is very important to prepare in order to be competitive. For this you need:

• Familiarize yourself with the assortment of the company;
• To get acquainted with the market and the current situation in the sale of the company's goods;
• Develop several proposals for increasing sales of the products offered by the company.

How to become a distributor of a foreign company

It is very convenient to work as a distributor in a foreign company, because such companies rarely have a good sales market in our country, therefore, there is a large field of activity, and considerable prospects open up.

In order to become a distributor of any foreign company, one should

• choose a company first
• to get acquainted with its assortment,
• learn about the current situation in the sales of the company's products
• be ready to offer your solution to improve sales.

When contacting a foreign company, you should describe why you are the perfect fit to be a distributor abroad, that is, in your area, and exactly how you can help this company expand its market.

Step-by-step instructions on how to become a clothing distributor

If you like clothes, becoming a distributor for the company that makes or sells them is a great solution. You can work on both wholesale and retail sales.

After you select a specific company whose products you want to distribute and get a job as a distributor, having shown your familiarity with the market and competitiveness, you can start working according to the following scheme:

• Assess which category of the population may like the company's clothing;
• Find stores in the city, including online, that are aimed at selling clothes to a category of people who may be interested in the company's products;
• Write down the main advantages of your company's clothing, prepare a catalog of its best products and go shopping with all this, describing how profitable it will be for them to sell the clothes you offer.

Getting a job as a food distributor is the easiest, as there are a lot of food companies, and they constantly need to expand their sales market.

Follow this plan:

• Find a suitable manufacturer or large wholesaler;
• Check out the range;
• Propose your candidacy for the role of a distributor by preparing several interesting ideas relatively more effective product sales;
• Find retailers that don't already have your products and convince them to distribute them;
• Walk through catering establishments, offering to order exactly your grocery products.

Acting as described above, you will become not just a distributor, but a good distributor.