Strategic Planning

Getting Distribution for Your New Product

Distribution is critical for every startup. It’s all too common for a startup with a great product to fail due to lack of distribution.

If your business model is designed to rely on distribution partners to deliver your product to the market and you don’t have experience building and managing a distribution channel, then take the time to properly prepare for this task; your startup’s success may depend on it.

A common mistake many entrepreneurs make is banking on a specific partner as they create their product. You hear it all the time on ABC’s Shark Tank:

  • “I only need to be on QVC”
  • “We need to get into Walmart”
  • “If we’re in Sephora we’ll hit our numbers”

The reality of startup life is that most things don’t go according to plan. And that means entrepreneurs shouldn’t pin their company’s hopes on a single distribution partner. The smart move is to create a plan to target multiple distribution partners in multiple areas.

Step 1 – Decide on Distribution Types

Most products can be delivered through multiple channel types. Betting on one type of channel is extremely risky. Even if you land a partner, you may not be able to control their performance.

Think about all of your options. Here are some examples:

  • Retailers
  • Wholesaler/distributor
  • VAR (value-added reseller)
  • Consultant
  • Sales agent/ manufacturer’s rep firm
  • Dealer
  • Direct – Internet
  • Direct – catalog
  • Direct – specialized internal sales team

Before you start contacting your target companies, think about the key criteria you’re looking for. For example, if you’re selling software and you’re going to sell to VARs, you will need to find VARs with the kind of expertise and customer base that enables reps to quickly get your product to the end-users who need it.

Step 2 – Profile Your Optimal Distribution Partner

Next, think about your ideal channel partner in each category. Don’t list the brand names just yet. Focus on a general description. This will help you objectively evaluate different options (and potential investors will prefer to hear this over naming a specific brand).

Here are some things to consider:

  • What kind of customers does this company need to have?
  • What kind of skills and experience will the company need to have to sell this product?
  • What kind of geographical territory does the company need to serve?
  • Are there any quantitative criteria such as the size of the company, the number of locations, the number of sales reps, the number of customers they have, or the number of years they’ve been in business?

Step 3 – Create Your Target List for Each Category

Finally, it’s time to begin creating your list. Review each ideal partner description and list all potential companies that fit the criteria by category.

It’s a good idea to have another person assist you to cover all bases. You may be surprised at what you find.

 Step 4 – Practice Your Partner Sales Pitch

If your list is long, treat your distribution partner search like a marketing campaign. Even if it’s short, practice your pitch diligently. You may only get one chance.

As you’re designing your pitch, remember to focus on the needs of the company you’re pitching.

Here are some things to consider:

  • What’s your message to the potential partner? What are the key benefits of working with you?
  • What are the benefits to the partner’s end-customers?
  • What kind of marketing support will you provide?
  • What type of inventory are you able to provide if they’re interested?

Be sure you have a solid presentation prepared, including a product presentation, a slide demo and any relevant facts about your market and your product. You have only one chance to make an impression!

We’ll cover distribution channel management in a future post.



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