What Is Distribution Selling?

by Stan Mack

When it’s time to sell your products, you have two basic choices. Your business can sell directly to customers, which means you will likely need to hire a sales force. Your other option is to allow another business to act as a middleman, what's called a distributor. Distribution selling involves making a deal to sell your products at a reduced rate to a distributor. In return, the distributor gets to keep the difference between your price and the price its customers pay.


The exact selling methods used by distributors vary by industry. Typically, distributors have sales forces that specialize in selling certain types of products. A distributor that sells foods to gourmet grocery stores, for example, likely has expert sales representatives who have long-standing relationships with buyers in stores in various regions. A computer hardware distributor, on the other hand, might have a tech-savvy sales force that specializes in selling to small businesses and offices.


The major advantage of making a deal with a distributor is you can focus on other business objectives rather than spending time prospecting and closing customer sales. For example, a manufacturer that uses a distributor could focus on creating new and exciting products rather than operating a retail sales outlet. Another potential advantage is that your distributor might have access to geographical regions or retail-store shelves that you don’t. In other words, a distributor might be able to sell your products to customers you can't reach on your own, meaning sales and profits could be much higher with a distributor.


Distribution selling has some disadvantages. First, selling to a distributor means lower profit per item, although overall profits might be higher if the distributor sells more items than you could have alone. Second, allowing a distributor to act as a middleman erects a barrier between your customers and your business. You might not receive important feedback, for example, that would help improve your product. Your customers might not feel like they have a relationship with your business, making brand loyalty harder to develop. And if the distributor treats customers badly, that will reflect poorly on your business, according to the book “The Complete Idiot's Guide to Starting Your Own Business,” by Ed Paulson.


Careful research is vital when you’re looking for a distributor for your products, according to the book “Building Your Business Through Export," by John Westwood. As the supplier, you understand your product better than anyone. Identify your product’s strengths and weaknesses, and ask distributors to explain what complementary strengths they can bring to the table. The distributor you select should have a successful track record in your industry, strategies and methods that match your values as a businessperson and a willingness to cooperate with you to achieve mutual benefits.

About the Author


Photo Credits

  • Ryan McVay/Photodisc/Getty Images
Suggest an Article Correction