Running a business means making several decisions about how you operate and bring different goods and services to clients. When it comes to delivering products, one key question that often comes up is how you want to stream them to the consumers.
There’s the initial option of being a direct seller. The two main paths laid out for start-ups are to either correspond with a distributor or get a reseller. Although they may seem similar, it’s important to distinguish one from the other to understand the terms of who you’re dealing with.
If you want to learn more about your options as a business, contact a business advisor who can provide you with some insight and discuss. Here’s an overview of the possibilities that you face.
Looking into Being a Direct Seller
If you’re already manufacturing products or you have a steady supply chain from another manufacturer, the thought of selling directly may have crossed your mind already. Being a direct seller does have certain benefits, as you would have the most control over reaching your customers. You could stand your own e-commerce business and sell through an online store.
Plus, you’d also have full control over the marketing of your product and what impressions to give your customers, which shapes the brand image of your business. However, this can place limits on how well your business is fairing in the industry. When customer demand and the company start to grow, it can take a toll on you, your schedule, and your energy.
Not only that, but there’s customer support that has to be provided and customer returns that need to be attended to. As it’s incredibly taxing on time and resources, more business owners prefer having distributors and resellers to carry out that work.
Speaking to a Distributor
If you’re getting a distributor, the terms will be relatively simple. Whether you actually created the products or not, you will serve as their supplier. An ideal distributor would already have existing client relationships with retailers. The distributor would then offer whatever product you already have in the stores.
The terms are simple enough, and you wouldn’t even have to trouble yourself over the marketing strategies. Distributors take care of that. Do take note of the level of exclusivity they may require in a contract, though. Some distributors want to be the only one to hold stocks of your products, while others want to have specified jurisdiction over a certain location or region.
Turning to a Reseller
Although the terms of a distributor are straightforward, resellers make theirs even easier to understand. You are also in the same position as a supplier, but you’re treated with fewer obligations. There’s no exclusivity needed, and they just make a cut from whatever sales they make from the products they bought from you.
There are cases wherein a group of resellers are under one distributor, but that can really depend. Dealing with someone who solely resells likely means that they aren’t too big or focused at all on marketing the product. More effort may be needed on that front, but the fees are cheaper with getting resellers when compared to distributors.
Conclusion
There are several pros and cons to being a direct seller, dealing with distributors, and selling through resellers. It’s important to weigh what solution works best for your business to fully flourish and grow.
In need of e-commerce accounting? The ECommerce Accountant has business advisors who are ready to help out online stores and influencers in Australia to grow their company. Contact us today!