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"Product Distributor Business": How to Get Started

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What is the basis of all business? It is to buy something at a certain price and sell it with a profit margin. No matter what your business model is, in the end, you'll come back to that basic principle. If you are tired of searching for that groundbreaking business idea with no avail, why not come back to basic and be a product distributor instead?

The initial challenge you'll have is to find the product itself, and no, not every manufacturer will require buying their product upfront. So, the initial investment can be lower than you expected. Look at local flea market or bazaar; there might be a potential product that can be distributed

After you got your product, you simply need to offer that product to the available channels, and you profit from the successful sales. Sounds easier than it should be? Maybe it is, but finding the potential product itself, as mentioned, can be a very difficult challenge to tackle.

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Interested to be a distributor?
Here are some things to help get you started:

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1. Startup Investment
The initial startup investment will vary depending on your business model and scale of operations. Some wholesale distributors started with $700, and successful, and there are those who started with $1,5 Million Dollars. In general, your essential equipment will only be your computer and internet connection. However, depending on your deal, you might need to lease a warehouse space, and the rent cost can vary depending on your location.

2. The Distributor's Role
Understanding your role will play a pivotal part in the success of your business. As the name of your role suggests, your role will be to distribute. The thing is, many so-called distributors forget that fact, and rather do the things that are actually not their job description.

For example, a package of Doritos is manufactured and packaged by Doritos manufacturer, and then sold in your favorite 7/11. Where's your role as a distributor of Doritos? You are where 7/11 buys their Doritos to. Your job isn't to market Doritos, not to sell to direct customers, but to distribute to retail channels.

3. Negotiating a Deal
Another key to success in this business is how well you negotiate a bargain with the manufacturer, and how well you can manage your term of payments. You can negotiate on a consignment basis, where you only pay the manufacturers when you successfully sell a product, or you can discuss a certain term of payments.

But of course, the general principle applies: You'll get more potential profit by paying cash upfront. However, the risk associated can be hard to manage.

4. Licenses and Permits
Depending on your location, you won't need a special permit to be a distributor. However, there is an exception for certain products, such as liquor or tobacco. Consult your local authority to get a better information regarding required permit and license depending on your product of choice, and location.

Earning Potential

In general, a distributor can have 20% markups of the sold products. Meaning if you can sell a $200,000 worth of products in a year, you will gain $40,000 in annual earning.

Distribution business is a massive business, with the U.S. revenue exceeding $3 trillion each year. The key is to find a good product with a good deal.