3 types of company that your distribution business may deal with

Today, I would like to share my thoughts on 3 types of companies that your distribution business may deal with. The article reflects my personal reflection on the types of actors that make the business ecosystem.?

You may use the framework below to analyse any sector that you work for. These company types are quite universal so you can apply the framework to other countries as well.?

Without further ado, let's get started.?

1. Manufacturer?

Manufacturer is the starting point of the business ecosystem that moves products from source to consumers. They make the products that businesses move and people consume.?

They have an expertise to produce their goods with their production facilities in large quantities to meet your needs. It is important for these companies to follow the industry standards to ensure that their products are high-quality ones.?

These companies also have their own research and development facilities to innovate their products to the next level. These facilities would apply new technologies to their products to make them better.?

Innovation and production will be key activities that these businesses would focus on. They may or may not have their sales expertise to push their products into the market.?

If a manufacturer doesn't have its sales expertise, it is the point where you as a distributor can help the manufacturer to sell their products. Of course, these products should be high-quality so that they can compete with others in the market.?

2. Distributors?

Even though you may be a distributor, it is possible to work with other distributors to push your products in your market. If you want to enter into other foreign markets, you can also work with the local distributors there.

You can consider your distribution partners as your sub-distributors, as only you will distribute the products to them. You would be the main point that receives the goods from the supplier and distributes them to your sub-distributors.

Your sub-distributors would use their business connections in their respective markets for sales. They won't establish direct connection to your manufacturer to receive the goods.?

You would be in charge of all communications with the manufacturer and dominate the flow of information from your supplier. If there are changes in products, you have to communicate to your sub-distributors to ensure that their sales won't suffer.?

If you are working as a hub-distributor, you would also need to check the compliance of the supplier's products in your market. You also need to adjust the contents of their marketing materials to make them fit for your audience.?

3. Service providers?

Service providers are not part of the supply chain that moves the goods from suppliers to consumers. These companies don't move the goods from one point to another to get margins.?

Instead, these companies would provide something intangible to the companies who are part of the supply chain. They would provide their services like legal consulting, market research, or marketing promotions.?

If you are a hub distributor working with a supplier, you may need to consider working with service providers. Such an option is good to ensure that the supplier's products fit with the legal standards of your market so that you won't have any trouble later.?

Often, you would need to do a product test through test service providers like SGS or Tüv that issues certificates. These certificates would show that your product meets certain standards in your market so that they are safe.?

You may also need to work with agents who provide service to make connections between you and your target customer. They would work on behalf of you to conclude the sales contract and get your commission for their service.?

So, you would work with service providers who provide their intellectual expertise to make your business better. Though they may charge you a considerable amount of fees, it would be worth it to get their service if you aim for a long-term business.?

4. Wrap-up?

Now, I hope you have a framework to use when you analyse the supply chain of your products. All three types of companies exist in any supply chain, so it would be useful when you figure out whom you should partner with.?

The current framework came from my experience of working with physical products. I don't know how it is in the sector of digital products, but I suspect the ecosystem might be similar.

If you have an idea of how the ecosystem of digital products looks like, please let me know. I would like to learn to expand my horizons, and it will be great.?

I thank you for your time to read, and I will see you in my next article.