Running an e-commerce business entails many things. From creating a sellable product to delivering them to your customers, it is a lengthy process with a million little details that cannot be overlooked.
The one thing that can become especially tough to navigate is logistics. For smaller businesses, it can be relatively easy to oversee packing, shipping and delivery. But this can change quickly for any business experiencing rapid success. The outpouring of orders in such a situation makes it difficult to individually pack and ship things.
This is where a distribution partner can step in and take the logistical complications off your plate. Read along as we speak more about the importance of establishing distribution partnerships and things to note when looking for a distribution partner.
What is a distribution partner?
In essence, a distribution partner puts your product out into the market. They are an external party who are handed the reins to market your product, distribute it and even resell it when they see it fit. However, this distribution is different across various channels.
While B2B and retail distribution entails taking products off the hands of the manufacturer and onto store shelves, e-commerce distribution involves packing and shipping products to the end-user.
For companies that aspire to have a multichannel strategy, having a distribution partner becomes crucial to establish a more stable and profitable distribution system. To put it into perspective, Shopify’s partnership ecosystem alone made the platform close to $32 billion dollars in 2021.
When do you need a distribution partner?
Having a distribution partner is the easiest way to deal with the onslaught of orders once your business starts to take off. Distribution partners enable business stakeholders to shift focus from the nitty-gritties of processing, fulfillment and delivery to the things that matter.
In addition to expansion and growth of business, there can be many other reasons why you might need to establish a distribution partnership. We get into the details below:
Reasons a business needs a distribution partnership?
- Venturing into International Shipping
- Handle aspects of import duties and tariffs
- Stay on top of regulatory requirements and restrictions
- Store inventory in international warehouses across
- Wants Improved Supply Chain Logistics
- Reduces minor and major human errors
- Access pre-existing automations, SOPs, and technology
- Save money on expensive technology and management
- For Quicker Delivery Standards
- Offer same-day and two-day delivery
- Avail industry expertise on shipping
- Employ dependable last-mile carriers
Venturing into International Shipping
International shipping is no doubt complicated. But for less experienced small businesses, this becomes even more difficult when they realize that it entails more than just duties and customs. In fact, a report by the ICC stated that of over 1500 MSMEs surveyed, a majority of them wanted to expand operations outside their current network and even internationally.
The many facets of international shipping may include:
- tariffs
- import duties
- restrictions
- regulatory requirements
All of this, in addition to the extensive process of picking, packing, shipping and tracking makes the process taxing. Furthermore, the many rules and regulations vary from country to country.
A distribution partner with their experience in this field, can help you through the complexities of international shipping. In fact, certain 3PLs even advise that businesses store their products in their many fulfillment warehouses around the world. This can help you quickly bypass the complicated international shipping process and leave it to the experts, while saving you money and even offer express shipping internationally.
Wants Improved Supply Chain Logistics
Errors are a natural part of a supply chain. But they can be far more common for small businesses that rely on their own team to perform these activities. This can go from not reaching the post office on time to ship your orders to miscalculating the available stock. In fact, it can get quite taxing when these logistical errors occur on a regular basis – even costing you business in the long run.
Distributors are skilled at fine-tuning a supply chain. They use a combination of pre-existing SOPs, technology, and automation to lessen the amount of glitches that turn into major problems. Handing over these processes to a distribution partner can eliminate the minor error. Moreover, it can help fully optimize your supply chain.
Now that these issues are being handled by professionals, you will have the space and time to scale peacefully. Not only will all your deliveries reach their recipients on time, you will also always remain wary of your inventory.
For Quicker Delivery Standards
In the age when everything is at your fingertips, and your groceries can be delivered to your doorstep in under 20 minutes, customers expect express delivery. In fact, anything more than a 2-day delivery standard puts you at the risk of losing customers.
About 80% of customers in the SEA region today want same-day shipping. But most are willing to wait up to 7 days. Anything more than that and cart abandonment rates rise and businesses risk losing customers.
An effective distribution partner has warehouses all over the world. Moreover, those specializing in logistics, use a variety of techniques to optimize the supply chain, therefore expediting order fulfillment and lowering shipping costs. They also collaborate with dependable last-mile carriers to ensure that the last stage of distribution is carried out quickly and efficiently.
In addition to this, distribution partners have the tools, industry know-how, and best practices to offer small businesses quick, affordable shipping – something they might not be able to afford independently.
What a High-Quality Distributor Provides
We have already established how precious a distributor can be. But they are more than just logistics, trucks, and timely delivery. A well-structured partnership is the key to a good business. Listed below are some of the things that a distribution partnership can offer you.
Your sales and earnings have the ability to shoot through the roof if you can get your hands on a distributor who can place your goods in the right retail establishments. They are aware of which retailers can help your product perform best. Moreover, they know how to guarantee that your clients’ orders are processed correctly and on time.
- Diversified Reach
It’s challenging to reach all markets on your own, especially as a small business. This is an issue because perhaps a different part of the country, where you do not operate, is a better fit for your business. With the help of a reputable, well-connected distributor, you stand to display your goods to markets you haven’t been able to access in the past.
- Infrastructural Support
Often, the logistics of distribution could prove to be so demanding that they obstruct and exhaust other business processes. With the help of a good distributor that recognizes your infrastructural requirements, logistical processes become extremely smooth. With the streamlining of this process, businesses can start focusing their energy towards the things that truly matter – development, scaling, and marketing.
What to Look For in a Distribution Partner
When looking at potential distribution partners, it can be quite difficult to narrow down on the best one for your business. Here are some things you should definitely consider looking at distribution partnerships.
- Infrastructure
An efficient distribution partner will already have a system in place for fulfillment and distribution. And the best ones will also have additional infrastructure such as tools, technology and a workforce to help optimize the supply chain. This may include adequate space across multiple locations, a warehouse management system and adequate warehousing equipment like forklifts and pellets.
- Dependability
Always choose a distribution partner with a solid track record of on-time deliveries, quick order fulfillment, and high order accuracy rates. Additionally, make sure they employ modern technologies to aid in preventing supply chain disruptions.
Moreover, in case any problems occur, the distribution partner should remain accessible. They should also show a commitment to resolving concerns rather than escalating them further along the supply chain.
- Scalability
Although it may seem like the right thing to do, it is often better to forego the biggest distributor around and instead look for a distribution partner whose business size is closer to yours. For example, if you have a smaller, hyperlocal business, you might want to consider linking with a smaller distribution partner. While it is wiser to collaborate with a bigger distribution partner if your operations are more spread out.
The Challenges of Distribution
Distribution is a challenge and one of the biggest contributors to draining out your cash reserve. Moreover, middle men are constantly vying to get themselves into the system some way or the other – especially in industries requiring bigger networks.
Furthermore, given that it is a logistics process, there are a whole host of challenges associated with inventory management – both inflow and outflow so that there is enough to be distributed while ensuring no surplus.
In addition to this, small businesses with lesser knowledge of inventory management and product placement often seek out distributors to break into a market. Finding an efficient distribution partner can solve every single one of these problems and even offer you the opportunity to develop new products and scale them for profits.
Top tips on how to find a distribution partner
There are plenty of distribution partners out in the world. But which one would serve your purpose? To identify what qualifies certain distribution partners, follow the tips mentioned below.
Tips to find a distribution partner
- Identify if your business is big enough to require a distribution partner
- Conduct research on the competition and use the information to locate suitable partners for distribution
- Use available trade resources and join associations to find the right partner for your business
Identify your needs
The first step to finding the right partner is to see if your business needs one yet. Sometimes, for smaller businesses that are only starting out, it may be far more profitable to keep things small. For example, if your product is largely online based – it may not be too smart to look for a distribution partner as a small business. However, it may be the correct step to seek out one if you also wish to establish a retail presence.
Assess the competition
A little research on what distributors are doing great work in your industry can go a long way. You can then use this information to seek out a distribution partnership best suited to your firm.
Use trade resources and join associations
Finding any form of collaboration, including a distribution partner, can become far easier by reaching out to trade organizations that support the industry you work in. Moreover, subscribing to trade publications and visiting trade shows are great ways to learn about a variety of distributors in your sector.
In Summary
To reiterate everything, a well-fitted distribution partnership can be the fuel that takes your business to the next level. It can help with disbursing your products to the right customer demographic, and help you logistically. Moreover, a fitting collaboration can also help you offload many logistical operations you may not have the equipment for.
A distribution partnership can allow you to fully focus on business aspects that can aid in scalability and growth such as product development and marketing. The access to sophisticated technology will also keep you abreast of inventory levels and optimize production.
So, what are you waiting for? Get in touch with a distribution partner today and start looking towards growth.
FAQs
What is the difference between a channel partner and a distribution partner?
A channel partner is a party that generally partners with a separate organization to sell or market your product. On the other hand, a distribution partner purchases the product from you and takes it to market for distribution.
What makes a good distribution partner?
A good distribution partner is reliable, and has the right infrastructure to meet a business’s needs. Most importantly, the key to a good distribution partner is their ability to match your aspirations for scaling and offer you the right tools for growth.
What does a distribution partner do?
A distribution partner is responsible for bringing your product to market for the correct demographic and for undertaking other logistical processes such as warehousing, picking, packing and shipping it using the correct last mile delivery methods.
What are the benefits of distribution partnerships?
A distribution partnership is a crucial stepping stone to growth, as it allows certain companies to hand over any logistical operation to professionals. It also allows brands to keep their inventories in check and manage their manufacturing efforts efficiently.
What are the different types of distribution channels?
The most popularly used distribution channels are wholesalers, retailers, distributors and the internet for e-commerce businesses.
