Written by Zaid Hanif
Starting with distribution types, once you have figured out which product category you want to work with, evaluate the market before deciding the brand that you want to work with as you need to be aware of the current distribution status of your desired brand (referred to herewith as “Brand X”). There could be one or more of these following types of distributors which can be working for Brand X:
- Nationwide Exclusive Distributor
- Region Specific Distributor
- Product Specific Distributor
- No distributor at all
Nationwide Exclusive Distributor
Nationwide exclusive distribution often results from the prior performance as a product and a history of a good working relationship. Obtaining such a license directly is possible only with very strong goodwill, and market penetration of the distributor company, which puts the distributor in a position where the distributor can demand a nationwide distribution license to start a business with the brand.
For an entrepreneur to seek distribution of a brand that already has a Nationwide Exclusive Distributor would be a task beyond worth the efforts, and time. In this case, apart from establishing the fact that your business is capable enough to operate an international brand, you will also be required to prove your ability to perform better than the current distributor.
Having said that there are examples in Pakistan where new companies have secured brands from established distributors, but it requires a heavy investment that could be in the form of an initial purchase that is equivalent to annual sales of the last distributor and further contract of high annual sales targets. If you wish to opt for a brand that already has a nationwide distributor, you need to have answers of the following questions
Region Specific Distributor
In the case of Pakistan, there are examples of brands that have distributors for specific provinces, and even different distributors for different areas in Pakistan. One pertinent example here is an international Doughnut brand that is operated by two different distribution companies, one for southern, and one for the northern region of Pakistan. As an entrepreneur, seeking a distribution license for a specific region is comparatively a more viable option than asking for nationwide distribution.
Product Specific Distributor
Product-specific distribution is also a common method for brands to license local companies based on their areas of expertise, and resources one or a few of their products from the entire portfolio. There are examples of brands such as a leading medical device company that is directly dealing in Pakistan for a few specific products, and have local distributors for the rest of their product portfolio. Compared with the other distribution licenses, a product-specific license is less complex to attain for entrepreneurs considering the choice of product is based on an entrepreneur’s area of expertise, and experience.
No distributor at all
Last, and the most lucrative choice for entrepreneurs are the brands that have no representation in the desired market (Pakistan). Many lesser-known brands often reach out to established distributors through LinkedIn or Email and offer business proposals but for the reputed brand, the things are not as simple as one hopes they would be.
If a brand has no representation in the local market, at first it may sound like an easy deal to make but reputed international brands are concerned about their brand image more than the business they might generate from a new untapped market. For such similar reasons reputed brands restrain from licensing distributors which do not resonate with Brand’s core values, and business policies, and practices. Hence the first step is to find if any other distributor already approached the brand, and failed to secure a license, what is the brand seeking which they couldn’t provide will help you to customize your proposal accordingly. One can also research, and find Brand X distributors in neighboring countries, and gain information that you need before reaching out to Brand X.
To summarize the above, becoming a distributor of a brand that is not being distributed currently should be the preference for entrepreneurs, and to further simplify the process region-specific or product-specific licenses should be the preference for entrepreneurs. The choice of product/ region which one can later justify to Brand X based on expertise, experience, and market penetration (read PR). For a new company that lacks sales record revenue history, and experience, as an entrepreneur, you will have to leverage on your, your family’s or your business partner’s experience, expertise, and personal relation within the category you are going to operate in, and even from the family experience of operating business.
Entrepreneurs should build up their profile through multiple small scale start-ups they have initiated, and operated over the period, and have gained experience by those business or by the jobs they have done so far, and leverage on these when they reach out a brand for a distribution license.
Reaching out to Brands
Usually writing an email attached to a company (business) profile is how one reaches an international brand, and if there is some business exhibition or conference where you could meet, and build a reference for your upcoming email/proposal it would be a plus. Brands shortlist distribution proposal for official discussion based on the information provided by the distributor. Since there are not many chances when you are dealing with an established international brand, you must make your first impression count. Prior knowledge about what the brand seeks from its distributor will help prepare a well thought out business profile that provides all the details at the same time leveraging on the finest margin where possible. For an entrepreneur, a smart, and well thought out business profile covering all key areas will strengthen the chances for initial talks
Brands are interested in knowing your current client list, and other brands that you are associated with, and ask for evidence (distributions letters/license) for existing brands that you work with, and In some cases, Brand might ask you to have a questionnaire filled if further information is required, here is a brief view of what such a questionnaire would ask for:
Nationwide exclusive distribution often results from the prior performance as a product and a history of a good working relationship. Obtaining such a license directly is possible only with very strong goodwill, and market penetration of the distributor company, which puts the distributor in a position where the distributor can demand a nationwide distribution license to start a business with the brand.
For an entrepreneur to seek distribution of a brand that already has a Nationwide Exclusive Distributor would be a task beyond worth the efforts, and time. In this case, apart from establishing the fact that your business is capable enough to operate an international brand, you will also be required to prove your ability to perform better than the current distributor.
Having said that there are examples in Pakistan where new companies have secured brands from established distributors, but it requires a heavy investment that could be in the form of an initial purchase that is equivalent to annual sales of the last distributor and further contract of high annual sales targets. If you wish to opt for a brand that already has a nationwide distributor, you need to have answers of the following questions
- How well is the current distributor performing?
- How well has the current distributor marketed Brand X?
- What is the estimate of their annual sales against annual targets?
- Is the brand happy with its current distributor?
- Can you offer a better solution that the brand is seeking?
- Most importantly, can you significantly top the sales that are being generated by the current distributor?
Region Specific Distributor
In the case of Pakistan, there are examples of brands that have distributors for specific provinces, and even different distributors for different areas in Pakistan. One pertinent example here is an international Doughnut brand that is operated by two different distribution companies, one for southern, and one for the northern region of Pakistan. As an entrepreneur, seeking a distribution license for a specific region is comparatively a more viable option than asking for nationwide distribution.
Product Specific Distributor
Product-specific distribution is also a common method for brands to license local companies based on their areas of expertise, and resources one or a few of their products from the entire portfolio. There are examples of brands such as a leading medical device company that is directly dealing in Pakistan for a few specific products, and have local distributors for the rest of their product portfolio. Compared with the other distribution licenses, a product-specific license is less complex to attain for entrepreneurs considering the choice of product is based on an entrepreneur’s area of expertise, and experience.
No distributor at all
Last, and the most lucrative choice for entrepreneurs are the brands that have no representation in the desired market (Pakistan). Many lesser-known brands often reach out to established distributors through LinkedIn or Email and offer business proposals but for the reputed brand, the things are not as simple as one hopes they would be.
If a brand has no representation in the local market, at first it may sound like an easy deal to make but reputed international brands are concerned about their brand image more than the business they might generate from a new untapped market. For such similar reasons reputed brands restrain from licensing distributors which do not resonate with Brand’s core values, and business policies, and practices. Hence the first step is to find if any other distributor already approached the brand, and failed to secure a license, what is the brand seeking which they couldn’t provide will help you to customize your proposal accordingly. One can also research, and find Brand X distributors in neighboring countries, and gain information that you need before reaching out to Brand X.
To summarize the above, becoming a distributor of a brand that is not being distributed currently should be the preference for entrepreneurs, and to further simplify the process region-specific or product-specific licenses should be the preference for entrepreneurs. The choice of product/ region which one can later justify to Brand X based on expertise, experience, and market penetration (read PR). For a new company that lacks sales record revenue history, and experience, as an entrepreneur, you will have to leverage on your, your family’s or your business partner’s experience, expertise, and personal relation within the category you are going to operate in, and even from the family experience of operating business.
Entrepreneurs should build up their profile through multiple small scale start-ups they have initiated, and operated over the period, and have gained experience by those business or by the jobs they have done so far, and leverage on these when they reach out a brand for a distribution license.
Reaching out to Brands
Usually writing an email attached to a company (business) profile is how one reaches an international brand, and if there is some business exhibition or conference where you could meet, and build a reference for your upcoming email/proposal it would be a plus. Brands shortlist distribution proposal for official discussion based on the information provided by the distributor. Since there are not many chances when you are dealing with an established international brand, you must make your first impression count. Prior knowledge about what the brand seeks from its distributor will help prepare a well thought out business profile that provides all the details at the same time leveraging on the finest margin where possible. For an entrepreneur, a smart, and well thought out business profile covering all key areas will strengthen the chances for initial talks
Brands are interested in knowing your current client list, and other brands that you are associated with, and ask for evidence (distributions letters/license) for existing brands that you work with, and In some cases, Brand might ask you to have a questionnaire filled if further information is required, here is a brief view of what such a questionnaire would ask for:
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The number of tech. support staff |
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Number of sales staff |
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Total Capital |
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Info on competitors - manufacturer |
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Competitor-Manufacturer |
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Remark |
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