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Is Two-Tier Distribution Right For Your Channel?

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By Brian Anderson, Associate Editor

One of the main goals for any vendor or manufacturer is to ensure products are available in an area where target customers are able to buy them. This is where distributors become helpful in extending the brand — and products — to both current and prospective customers. 

However, many manufacturers still are not sure whether selling through distributors will be profitable for them in the long term, or even if they can afford it. PartnerPath has released a new white paper that aims to shed light on the options available to manufacturers, such as: the types of distributors available, whether distributors are beneficial to specific businesses, and the best tactics to establish a successful partnership.

Knowing The Facts

Stephanie Sissler, an IT channel strategy professional and author of the white paper, titled: An Introduction to Two-Tier Distribution, splits the topic into several sections that highlight many of the common questions manufacturers have when it comes to beginning a partnership with a two-tier distributor. Primarily, the asset covers how two-tier distribution can benefit, limit and also throw obstacles at an organization. Additionally, the white paper discusses what a distributor expects from a vendor/manufacturer in these forms of channel relationships.

“Distributors all provide the same basic offerings,” Sissler explained. “However, each one has a slightly different focus and value proposition to consider and it is important to understand those differences.”

Questions To Ask Before Partnering Up

Sissler compiled a list of questions that a manufacturer should ask before signing on the dotted line and starting a partnership that could potentially hinder a company’s ability to reach the target customers.

Some of the key questions include:

  1. Do target resellers procure the majority of their products through distributors?
  2. Is your volume sufficient enough to keep a distributor happy?
  3. Can you afford the up-front costs associated with building a partnership with a distributor?

In the end, two-tier distribution is not the logical choice for every vendor or manufacturer. As long as organizations double-check their ability to deliver everything a distributor needs to operate, as well as determine there is ample funds available, they can avoid a possibly unrewarding partnership.

To ensure profitable partnerships, vendors/manufacturers also must identify the type of distributor they need in order to reach company goals. Being selective and following established best practices will help businesses in the long term, ensuring that new relationships will continue to grow.

 

 

To download the white paper, click here.

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