How to Become a Vendor

by Owen E. Richason IV; Updated September 26, 2017
To become a vendor, you must be approved by the manufacturer.

A vendor is a person or company that distributes goods or services manufactured or supplied by a service provider. For instance, a manufacturer of peripheral devices for computers will hire a vendor to sell keyboards and speakers to electronics stores—who will then sell it to the end user. A service provider might offer janitorial services but need a vendor to sell their service to restaurants, retailers, and professional offices.

To become a vendor, decide which products you wish to distribute, contact the manufacturers to work out the terms of the agreements, and finally, sell the products to retailers at a wholesale price.

Step 1

Choose the goods or services you will distribute. Goods or services should be easy to sell and in constant demand. Products like DVD players and musical instruments are popular and have consistently high sales. Look for products that are not overly saturated in your chosen region. Conduct some Internet research to see which manufacturers have the most market share, i.e., they sell more of their products in a given area than their competitors.

Step 2

Determine the distribution area. Your distribution area will be limited by your resources. If you have a large sales team and the ability to assign large territories, the larger your distribution area will be. If you are selling niche market items (art, luxury watches, et cetera) it would be best to target specific areas.

Step 3

Get approval from the manufacturers or service providers in the form of a written right to sell agreement. If you are the only vendor for the chosen products, the manufacturers should provide you with an exclusivity agreement; if there are other vendors, the manufacturers will most likely provide you with a sales territory or region and have each vendor sign a non-compete agreement.

Step 4

Establish your distribution network—which is the delivery method you decide to use to move your products to your retailers. If the products are small, you may elect to ship them in packages, while larger products may require delivery trucks.

Step 5

Set your wholesale price, which is your selling price to retailers. Manufacturers commonly offer guidelines, but you may have to calculate manufacturing and distribution costs on your own to come up with your price.

About the Author

Owen Richason grew up working in his family's small contracting business. He later became an outplacement consultant, then a retail business consultant. Richason is a former personal finance and business writer for "Tampa Bay Business and Financier." He now writes for various publications, websites and blogs.

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