When looking for international distributors, there are many questions you should ask to ensure a successful partnership. The questions can be divided into five main categories: background, experience, process, logistics, and values.

You need to adjust a bit for your individual business but these are the main points you need to get clarity on. It’s a bit like a job interview as both parties are trying to establish if they are a good fit for one another. As with interviewing to fill a job vacancy within your company, the ideal answers from a candidate will vary according to your company’s needs.

eg. If you are a first time exporter, then you probably need a more experienced distributor to help you gain faster traction in the market. They shouldn’t be so huge though, that your brand or product doesn’t get the focus you need to grow.

These questions don’t all have to be saved up for a face to face meeting. In fact chances are that you’ll want to divide up your qualifying process so that certain questions have to be answered before you invest time and resources in travel. You then know that the company is qualified on paper & can spend your first meeting going into perhaps more sensitive details around their views on pricing, margins, dealing with customer service issues etc. Better to talk about values around a table but things like what year was the company founded can be sent as a profile.

Tell me about your company… Selecting international distributors is a bit like job interviews

Looking for international distributors who are truly a great fit for your company is a critical building block of most SME export success. As I’ve mentioned in blog posts before, the partner who is perfect for you right now might not be so ideal 5 years down the road as the only constant in business is change, however you need to do the best job you can of selecting international distributors.

Some of these questions are going to seem pretty obvious, but I’ve seen companies forget to ask them when the sales manager was perhaps nervous or jet lagged (or hung over…) so it always helps to have a checklist to keep you on track.

You want to get an idea about the mission and how the company is run.

  • when was your company founded?
  • what is the legal structure of the company & who are the owners? eg you might prefer to work with a family run company (or not!)
  • how many staff do you have and how are they structured?
  • what is the average length of time that staff stay with your company? (This gives you an indication of what they are like to work for, although you need to remember that this is also a cultural question – Germans for example change jobs usually less often than Brits or Americans).
  • What is your geographic coverage? Can the prospective partner cover the whole country or just certain regions?
  • Which kinds of clients do you focus on (more traditional distribution partners might still place little emphasis on online sales, so you need to ensure that your distribution needs are met).
  • do you have a company mission statement?
  • are you prepared to give appropriate information to Dun & Bradstreet (example credit agency) so that they (Dun & Bradstreet) can prepare a credit report?(Don’t be shy to ask questions to find out about the financial situation of the company you are talking to. You want to be sure your new partner is solvent).
  • Can you give us the contact details of other suppliers who would be prepared to give you a reference?

If you’re looking for international distributors how much experience do they need?

That is one of those “how long is a piece of string” questions as it really depends on your own experience too…Working with an international distributor should make your life easier (if they have the right relationships and experience in the market) so invest some energy to find the company who really match your needs.

  • how much experience do you have in this industry?
  • What is your experience with the product registration of [your category of products]?
  • which are the other companies that you’re working with? (If your main competitor is in the list, you might want to pass and move onto the next candidate to avoid any conflict of interest)
  • What is your existing customer base in this market?
  • How is your distribution network structured and how many customers do you currently serve? Remember that any resellers in this network will also be representing your brand so you want to ensure they are suitable.
  • How many sales representatives do you have and what is their territory coverage?
  • What is your track record in meeting sales targets and growing market share for your partners?
  • How do you currently market and promote the products you distribute?
  • Which payment terms are you typically working with for both suppliers and clients? (I’m always a bit wary of the answers about suppliers as nobody is going to tell you they have to pay everyone up front because they are so unreliable, but it’s worth asking to see what the answer is and whether it aligns with the country usual practice. (Your national commercial office can tell you what the usual terms should be)

Working with an International Distributor involves aligning your Processes and Sales Targets

It can seem like a lot of work to discuss all of these topics before you’ve even sold anything, but it’s better to invest some time up front if you want to work with this company in the long term.

  • How do you plan to market our products?
  • What are your sales projections for our product?
  • Based on your sales projections, what % of your turnover do you expect our brand to have in your portfolio after 1, 3 and 5 years? (This is important to ensure the question of focus – if you have no prospect of reaching around 10% in share of turnover for your prospective partner, you probably won’t be a major supplier to them & that has an impact on negotiations)
  • What are your distribution costs and fees?
  • What pricing strategy would you recommend for our products to ensure that they are competitive?
  • What are the local regulations and laws that we should be aware of?
  • What are your marketing channels?
  • What marketing support will you expect from us?
  • How will you measure the results of your marketing activities?
  • What is your process for evaluating new products to add to your portfolio?
  • What is your experience with online sales and e-commerce?
  • Would you have a dedicated team for managing our account? (That question of bandwidth and focus is REALLY important)
  • How many clients does each sales person typically have responsibility for? (Make sure you get an understanding of the route to market and the sales process before you go ahead with any distribution company)
  • Which CRM system are you using? (If they say “CRM?” & look blank then it’s a definite red flag, although in developing markets it might not be a typical piece of software to be using)

You’re trying to get a full picture of the capabilities of the company you’re talking to, so you need to know how they would sell and market your products, as well as getting a feel for their limitations. Working with an international distributor is often the best solution for smaller exporters but it’s also a relatively expensive one, so you want to be sure you’re getting value for your money (the margin you are allowing them).

Questions to ask when looking for international distributors
Image by Dean Moriarty from Pixabay

Don’t Skip the Questions around Logistics when Qualifying International Distributors

The nuts and bolts of distribution may seem like a long way from the snazzy production line in your home factory, but you need to have peace of mind that your products will arrive with the end user in the same fantastic condition that they left your doors…

  • How do you handle customs and import/export regulations?
  • What is your policy for managing supply chain risks?
  • Which certifications do you have for your warehouses? eg ISO 9001, organic, food grade, pharmaceutical, kosher…
  • How many regional warehouses do you have?
  • Are these your own or with third party logistics providers?
  • How do you manage inventory and logistics to ensure timely delivery of products?
  • How do you ensure the quality and safety of the products you distribute?
  • How long does it take you to fulfill orders?
  • Can you handle adding labels or creating promotion bundles?
  • What is your policy for handling product returns and customer complaints? Depending on your industry, this might be reframed as “How do you manage product warranties and after-sales service?”
  • How do you deal with expirations or delisted products?
  • How do you manage product liability and insurance coverage? Remember that your liability if you are the producer can’t just be handed off to a distributor.
  • Can you show me around your warehouse? This is a bit like looking around the kitchen in a restaurant and if selecting international distributors it’s something I always want to do!

Values will come up in the discussion around other points too, but discuss sensitive topics in person

When you’re looking for international distributors you don’t want to put your potential new partner off by seemingly implying that they are unethical so it makes sense to discuss more sensitive topics face to face. There might be specific ethical standards within your industry or home country that you need your partners to adhere too in or this could be purely down to your company’s personal preference.

  • How do you ensure that your sales representatives adhere to ethical and legal standards?
  • What is your policy for protecting intellectual property rights?
  • What is your policy for protecting confidential information and trade secrets?
  • How do you measure customer satisfaction and gather feedback? How do you prioritise customer satisfaction in your business operations?
  • How do you stay up to date with changes in regulations and industry standards? What about following trends?
  • What is your approach to training and supporting sales representatives? How about your resellers? (This attitude to training shows whether or not a company is dedicated to really working professionally or just interested in selling at any cost).
  • How do you handle language and cultural barriers when dealing with international suppliers?
  • Do you have a crisis management process in case of natural disasters or media crises?
  • Do you actively support diversity & equality amongst your teams and the companies you work with?
  • Do you have a sustainability policy in place?

When selecting international distributors remember that they will be seen as the local representative of your brand, so your reputation is in their hands. You don’t want to end up working with an international distributor whose working style and values don’t complement your own.

Are you asking the right questions when selecting international distributors? Working with an international distributor is a bit like getting married so you need to take the time in qualifying international distributors

To sum up this Checklist for International Distributors

In terms of background, you should first ask about the distributor’s business structure and size. This includes inquiring about how long they have been in business, their financial background and ownership structure. Selecting international distributors is an important process that has a huge impact on your success in a market and also your reputation so don’t leave things to chance.

Regarding experience, ask the distributor about their expertise in your particular industry. You also need to find out about the distributor’s reseller network and training programs for their sales representatives.

When it comes to process, make sure you ask about the distributor’s after-sales support process for clients who need repairs or support. Take the opportunity at the beginning of your relationship to quiz the distributor on their plans to make the partnership successful as well as their projected sales growth.

In terms of logistics, ask how the distributor ensures compliance with local laws and customs – this is an increasingly critical topic. Talk openly about the associated numbers…

Finally, regarding values, make sure you discuss the distributor’s mission statement and company culture. It is essential to ensure that both companies share similar values to create a successful partnership. You don’t want to discover you have a partner who “speeds up” business by handing out cash in envelopes or who has an appalling record on DEI & sustainability.

Usually, it’s a good idea to make sure that the partner you have chosen isn’t massively larger than you as this will result in a power/experience imbalance that may lead to you being forced into disadvantageous decisions. eg if you are a small player, don’t pitch for the Coca Cola distributor as 1) they won’t focus on your product (unless you have a killer USP) and 2) you can be potentially bullied into giving them unfavourable conditions.

Overall, asking these questions will help you when qualifying international distributors to ensure your new partner aligns with your goals and values. It’s certainly not an exhaustive list of questions, but a good general starting point. Remember that working with an international distributor is a two way process though, so be also prepared for some probing questions from their side too!

Thinking that working with a consultant would accelerate your international expansion?

If you’d like to learn more about working with me for support on your internationalisation projects or personal export knowledge, you can book a 30 minute international clarity call here.

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Kathryn

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