Manufacturers do not sell directly to consumers – they need distribution channels to reach markets. Wider the reach of distribution – larger is the customer base and resultant sales. No wonder, distribution is considered backbone of any market.
However, building distribution network in India has remained an uphill task for small businesses for far too long. Hassles of inter-state trade, compliance with multiple taxation – VAT, CST, state-specific entry taxes, Octroi, road permit etc has hobbled Indian SMEs for long. As a result – only large companies like HUL, Colgate Palmolive, Maruti etc could afford to build pan-India distribution channels so far. However, introduction of GST has opened new opportunities as hassles of inter-state trade is now mostly gone – creating a level playing field for SMEs. India is now truly a Pan-India market.
To leverage the opportunity, SMEs need to have a plan of action to locate and appoint dynamic and resourceful distribution partners across India. Let’s explore various ways of locating distribution partners and corresponding cost-benefit analysis.
There are broadly 3 options for locating distribution partners – newspaper advertisement, hiring consultant or search online. Apart from that, a company may decide to hire Area Sales Managers (ASM) at target markets. However, we are not considering hiring employee option because of its capital intensive nature. Here’s a comparison of relative merits and demerits of various options:
|Reach||Limited Geographic Reach – usually a city (or particular edition of a newspaper)||Even more limited, confined to contacts available with the consultant – may well have used these for others||Pan-India Reach, fresh leads added everyday|
|Targeting||Poor Targeting (Large but diffused audience – from students to housewives)||Well Targeted depending upon depth of consultant’s own database||Precise Targeting – pan-India, state, district level, by role such as distributor, c&f agent, superstockist|
|Response||No Guarantee Whatsoever||Localized Response From Consultant’s Area of Operation||Pan India Response with 100% Money Back Guarantee|
|Speed of Execution||Slow – Reactive Process. Not much to do other than waiting for response||Proactive, Faster than Advertisement. However, speed may cost more||Fastest – Proactive + Reactive, Immediate start with database search|
|Interactivity||Direct but Limited – for a day or two||Indirect – Through Consultant||Open direct communication through email, phone, whatsapp chat etc.|
|Discovery Process||Transparent||No transparency||Transparent|
|Validity||1 Day (nobody reads Yesterday’s newspaper)||Specific period – may prove very costly for longer periods||3 – 6 months|
|Cost||Rs. 15,000 – 60,000 or more per advertisement||Much more than newspaper advertisement depending on period of consultancy||Fixed, One Time Cost. No hidden, recurring expense. Starts as low as Rs. 10,000/-|
How Reliable Is The Data
- The feedback that we receive from companies advertising in newspapers is mixed. 25-50% responses are irrelevant or of no use (e.g. no experience of distribution, lacks financial muscle etc.). Consultants usually have well researched data from local market. Vanik receives large number of distribution related inquiries everyday, but only those inquiries are accepted where its research team has verified the lead by calling concerned person and collecting useful information like background, experience, kind of sales team, infrastructure available etc.
- Vanik.com – is India’s largest portal on agency / distribution / dealership opportunities. Thousands of agents/ dealers/ distributors visit Vanik.com everyday, searching for suitable products to represent. Since 2004, it has helped thousands of manufacturers/ importers to build agent/distributor network across India.
- Try Vanik At No Cost – Get FREE Trial Membership Join Vanik as manufacturer (its free, takes less than couple of minutes) and request Free Trial for 15 days. Get help from customer service team on how to make best use of Trial Membership. Online chat line remains open from 10 am to 6 pm. Try this free trial option before investing money on any other avenue. Compare various options for best ROI and chose the one that matches your requirement best.