How do I Start an Online Distribution Company?

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Distribution companies are able to purchase or obtain rights to market products from the manufacturer and sell them to retailers that use or sell the merchandise. Essentially, a distribution company acts as a liaison between the manufacturer and retailer while making a significant profit. Starting an online distribution business allows a person to offer competitive prices to retailers by keeping minimal overhead for his company.

Instructions

Determine which specialty you would like to sell products in. Distribution companies cater to every type of business from retail clothing and electronics stores to grocery stores and restaurants. An online distribution company can be started in any market. If there is not an area of interest for the business owner, consider tracking market spending trends to find an area where consumers are most likely to buy.

Design a marketing plan that includes a target merchant area and projected sales based on consumer spending trends. Part of the marketing plan should include a general comparison of other distributors' prices versus yours and potential profits for the retailer. The marketing plan will be shown to potential retailers as a way to influence them to choose your distribution company over the competitors'. This tool is also used with manufacturers to show how you will market and distribute their products to ensure success.

Set up wholesale merchant accounts and obtain distribution rights. In order to sell a product for a profit it is necessary to gain rights from the manufacturer by setting up a wholesale merchant account. This can be done by contacting the company's account representative. It will be necessary to have established a business name and tax identification number to assure the manufacturer that your company is an actual business.

Design a database type of website for retailers to purchase products. Databases are a difficult aspect of website building. If you are not well versed in them, it is in your best interest to hire a professional website designer who will then show you how to input products and track inventory. There should be automatic sales reporting to the manufacturer as well as order tracking. Distribution companies that sell non-grocery goods such as electronics, skin care products and clothing are able to have the orders shipped directly from the manufacturer instead of keeping a warehouse of merchandise, which also decreases on operating costs.

Market your business to retailers that fit your industry. Start by contacting retailers to arrange an introductory meeting, giving the potential customer the opportunity to ask questions and discuss the options of switching from his current distribution company.

Tips

  • Using visual aids such as PowerPoint will enhance the marketing plan presentation for your audience.

References

About the Author

Leanne Clute started writing in 2009 with her work published in several magazines, including "All About Golf," "All About Snow," "All About Bikes," "All About Four Wheels" and "All About Outdoors." She holds an Associate of Science in mortuary science through Hudson Valley Community College, where she is also pursuing a Bachelor of Business in business management.

Photo Credits

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