"For a small company, or a start up, business volumes are not high enough to justify investing in a salesforce – and that's where a good distributor with specialised practical knowledge and knowhow comes in," says Gerrit-Willem Prins, head of Europe sales, at LED Engin.
However, there are risks.
"You won't have control over the resources that the distributor chooses to apply to supporting sales of your product," suggests Prins. "It can change the focus towards other products, or reassign personnel – and both can be detrimental to the manufacturer's business."
So what makes for a good distributor and how do you go about selecting one?
Manufacturers need to be able to understand the distribution market and, in turn, become familiar with channels that are helpful and be able to evaluate and select a suitable distributor with the capabilities needed to address and meet its objectives.
According to Randy Johnson, vp of worldwide sales at N2Power: "It's vital that the distributor has local market knowledge, a good product understanding, as well as strong marketing and sales programs to create opportunities and business. They also need to be able to provide feedback from the market in order to drive product development."
Anglia was appointed the UK and Ireland distributor for Noritake Itron earlier this year, adding the company's SmartTFT module to its range of ARM based embedded boards and PCAP touch panels.
The decision to appoint Anglia was significant, according to Noritake Itron's UK managing director, Andy Stubbings. "While we've had an extensive network of distributors in Europe, it has not been the case in the UK.
"Our decision was driven by the development of our pumaNova System on Module and a desire, on our part, to focus on key strategic customers. We needed to find a distributor in the UK who could do what we'd been doing in Europe – which was to provide FAE support for a broader range of customers all looking at some degree of customisation. It also meant we could then focus on what we do best – designing and manufacturing products."
"We saw great potential in the Noritake pumaNova SOM and PCAP technology, which will allow customers to develop a ruggedized TFT solution for use in public spaces or harsh industrial environments," explains Anglia's technical director, David Pearson. "It's a technology that opens up customers to our broader range of existing products."
Opening up a product portfolio to more customers is crucial for distributors. David Zelkha, Luse Electronics' managing director, points to the distribution agreement he signed with N2Power earlier this year. "While we remain focused on very specific market areas, customer profiles and application types, the more elements of a solution we can offer a customer, the stronger our sales position is.
"Adding N2Power's products to our range has helped us to do this. It has enabled us to achieve greater customer penetration, and has allowed us to develop an even stronger understanding of the customer's business – and that creates a very productive relationship."
"We needed a hybrid distribution model for these new technologies," explains Stubbings.
"The key to finding the 'right' distributor is that company needs to understand your customers," he continues. "Anglia has made a significant commitment to having a physical presence in the market – people on the road, communicating directly with customers. In choosing a distributor, you need to be able to engage with a company that specialises in your type of product and your profile of customer."
For any manufacturer, the relationship with the distributor will be about looking to maximise sales. There will always be distributors who believe their function is just to hold local stock and to wait for orders to come in. According to Noritake Itron and N2Power, both were looking for evidence of strong marketing programmes and a motivated, knowledgeable sales team that would be willing to go out and drive sales proactively.
According to Johnson: "In the case of our relationship with Luso, we had knowledge of the company through previous working relationships. Perhaps the most important criterion for us was finding a distributor with depth, rather than breadth.
"There are broad line distributors out there who are, superficially, an attractive proposition. But you know that your products will get lost among the myriad other products that they've taken on."
From the distributor's perspective, it's also important that new product lines don't overlap with existing product ranges.
"We're always looking to sign complementary lines," explains Pearson. "The appeal of Noritake Itron's technology was that not only was it unique to our product line, but it was also an exciting new technology, meaning it would be what I like to call an 'evangelical sell'. Customers will need help in understanding what they can do with it. Many won't know what questions to ask and will need guidance."
Commenting on its relationship with Luso, Johnson explains that N2Power was looking for a long term distribution agreement.
"That was key for us, as changing distributors can be hugely disruptive to a manufacturer's business and it can also be very unsettling for customers – which can impact sales adversely. As such, we were looking for a company that we felt was financially stable and secure and that wanted to work with us for the long haul.
"Whichever distributor you look to choose, it needs to have a strong marketing and sales capability, allied with an equally strong commitment to customer support and satisfaction.
"The other key element of the relationship – and one that's easily overlooked – is the importance of getting feedback from the market and from customers to drive new product development. That can be easily lost when you're not in direct contact with the market and customers yourselves – so it's vital that the distributor sees that as an integral element of the relationship."
The support of a specialised distributor is a valuable asset to the core sales team, according to Stubbings. "Anglia's offices are just a short drive away, which means that communication is simple and straightforward."
Poor communication is often cited as an issue when using a distributor.
Stubbings adds: "Our team has sat down with engineers from Anglia and has been able to provide a detailed understanding of the product. That means Anglia is well versed in its features and benefits and can talk easily with customers.
"The relationship we have with Anglia has been beneficial to both parties and has developed into a real business partnership based on close collaboration. It has given both of us the opportunity to explore many more market opportunities and to drive the market forward."
