This article will show you how to start a distribution business from home, the prospect, challenges and some important factors you should consider.
If you are thinking of a viable business to start, consider becoming a player in product distribution. This is one area of economic activity which has a multiplier effect across board.
So, we welcome you to read on as we answer the “how” of starting a distribution business.
We are sure that you’d find information necessary for kick starting your business.
The Basic Idea of Product Distribution
The central idea behind this concept is the act of moving manufactured or finished goods from manufacturers to the market.
Thus completing the chain of supply and demand. But this requires a lot of logistics. Which is why we’ve included all you need.
To better appreciate its impact, the global manufacturing industry relies heavily on distribution. Hence, for maximum impact, you only need to read and implement the contents of this article.
Can it be Run as a Part Time Business?
Absolutely! You can start a distribution business while maintaining your day job. The same applies for persons interested in a full time business opportunity. However, one thing is common to both cases. And this has to do with putting in the required effort.
Nevertheless, putting in the right effort depends on an understanding of what to do. So, without further ado, let’s begin right away.
Starting a Distribution Business Right From Home
The following are ways to you can start your business. These steps aren’t complex, but are well presented in a way to encourage easy implementation.
Identifying a Need and a Product
As human needs and wants are numerous, so do products abound. These are manufactured or produced to meet such needs. But you cannot distribute every product. That is practically impossible. Hence the need to identify a need as well as a corresponding product. But such requires careful analysis. In other words, you’d need to identify trends and demands.
These enable you make the right decision on what products to sell. Knowing the customer and your market counts. There’s also the need for sound negotiation skills. Such skills are invaluable when striking a deal with manufacturers.
You’d want all negotiations or deals to benefit you as well giving something in return.
In finding the right product, several questions will need to be raised. These will also require satisfactory answers. These include the credibility of your manufacturer or supplier. You must know that credibility is everything in business. So, how credible your sources are will determine how successful you become.
How marketable are the products? Where can such products be sourced? These and more will enable you clarify your choice for the most marketable products.
Here are some lucrative niches:
- Pharmaceutical distribution
- Distribution of food and beverage
- FMCG distributorship
- Milk distribution outlets
- Diesel distribution
- Distributorship of livestock feeds
- Poultry egg distribution and wholesale supply
Some Due Diligence is Necessary
It isn’t enough to jump into a distribution business agreement with a manufacturer. You’d need to first perform some background check or due diligence. You don’t want a situation where there’s a break in supply or similar disappointments. This can harm your reputation as a distributor.
Therefore, the need apprise your supplier becomes necessary. Of course this needs to be done before any form of marketing commences.
Negotiate Agreeable Payment Terms
This is as vital as water is to fish! Starting a distribution business will suck without an agreeable payment term.
Therefore, you need to have it at the back of your mind to be as professional as possible. Having good negotiation skills is a goldmine you can exploit to your favor. The payment methods should be flexible enough to allow for easy transaction.
Choosing How to Manage Inventory
There are two major options to choose from when it comes to managing your inventory. These include traditional warehousing or choosing the drop shipping option. The oldest of these methods is traditional warehousing. This has been used by distribution businesses for ages. It works by keeping stock of goods or inventory.
For this option, you’d need to get a sizable warehouse. There’s also the need for additional equipment such as trucks, forklifts, and specialized storage equipment in some cases. These come at a cost and is the most expensive among the two. There is also office equipment to be purchased for easy record keeping and tracking of transactions.
Drop shipping is yet another option. This has been fueled by an explosion of internet services across the world. With drop shipping, you don’t need to keep physical stock of goods. Your distribution business is completely online.
As a result, you only need to arrange a sale. The manufacturer or supplier gets notified about a purchase and ships the products while you get paid a commission.
Compared to warehousing, your expenses will be much reduced. You also get to leverage on such opportunity to expand your product lineup.
One of the most important steps for starting a distribution business is marketing. Your business hardly grows without it.
At best, you get a mediocre performance. Sales is crucial to distribution. Therefore, you’d need to have an understanding of the market. Understanding as used here refers to knowing the products with the most demand.
This is followed by strategizing on how to sell. In order to achieve attain traction, certain questions will need to be answered such as; the sort of marketing such product require, how much your budget is, identifying your competition and developing strategies for effective competitiveness.
These and more give you the much needed clarity for sound marketing. It allows you direct your efforts towards achieving significant growth.
What Marketing Channels to Use
With marketing comes a need for effective utilization of marketing channels. But these channels must first be identified. Thankfully, there are many of such to choose from.
A few include guerrilla marketing, the good-old word of mouth marketing, SEO marketing, paid marketing and social media marketing among others. These are strategic avenues to spread word about your distribution business.
Distribution business opportunities can be fun when done right. However, a great deal of work needs to be put in. This may sound like work for some people, but can be really exciting when you’re passionate about the business.