How to Sell Through Intermediaries
As a product manufacturer you have two choices when selling your merchandise -- sell directly to the consumer or through an intermediary. The intermediary charges a fee -- usually a commission based on the dollar amount of the order. The advantage of selling through intermediaries is you tap into their already established network of customers.
To sell to a distributor, you offer a quality product that fits in with the distributor's other product lines but is not a direct competitor of any of the distributor's current line, a substantial discount so the distributor makes money on the transaction and prompt delivery -- either to the distributor when his inventory of your product is low or to the customer. A distributor represents and actively markets your product to its network and delivers it to its customer when an order is placed. The customer pays the distributor. The distributor retains its portion of the sale -- its commission -- and sends you the remainder. Other distributors that don't take possession of your products require you to deliver the product, but they receive the payment from their customer, deduct their commission and send the rest to you.
Working with a sales representative requires that you pay a reasonable commission, and provide marketing materials and samples to the salesperson. Sales representatives sell the product on a commission basis. If the sales representative is exclusive, it means he or his company is the only sales representative for your products. Even if you make a sale yourself, the sales rep still gets paid. Non-exclusive sales representatives get paid only for the sales they directly make. The sales rep makes the sale, then sends you the purchase order. You fill the order and pay the sales rep his commission. The customer pays you directly. The sales rep does not take physical possession of the products.
To make sales through an affiliate, you'll need a website, tracking software, a payment method and an attractive commission rate. Affiliate sales take place online even if the product is physical. The affiliate is paid a commission for each sale. The affiliate sends her contact to your website with her affiliate code embedded in a cookie on her visitor's browser. When the visitor pays for your product, you pay the affiliate. You are responsible for shipping the product and collecting payment from the customer.
You might not think of sites such as Amazon, Etsy and Clickbank as sales intermediaries, but they are. Amazon and Clickbank act as wholesalers. When a customer buys your product, the sites collect the money. You don't get paid until a sale is made, even if you have your products in their warehouse. You may have to complete an online application and pay a fee to get started as well as a commission when a sale is made. Online auction sites act more like a sales representative. The sites get a fee when the sale is made, but the transaction is between you and the buyer.