Become a Distributor or Manufacturer's Representative
How to Become a Distributor
By Sarah Labiche
If you're interested in earning money by working from home, consider becoming a distributor. You can set up your own online business in a few steps and can begin making money almost immediately. If you become one of the top distributors, you'll definitely end up securing a significant stream of income that will provide you and your family with security.
A distributor has a partnership with a supplier or manufacturer who provides the products, usually at wholesale prices. Your job is to sell those products. Of course, you'll sell them at a higher price so you can earn a profit. In fact, the most challenging part of the process will be determining a good pricing point so you cover all of your expenses while earning a profit and staying affordable for your customers.
Before you get to that point and begin working from home in this capacity, you'll have to find a supplier or manufacturer who needs a distributor. Thanks to the Internet you can find a wide range of potential partners. Just be careful and evaluate any potential companies to ensure they are not a scam. You'll find many reputable companies who have been in this business for a long time and those are the ones with which you'll be most likely to have success.
Generally, you won't have to do much to become a distributor but different companies will have their own requirements. At a minimum, you' ll need to complete an application or provide basic information about yourself. Some partners may require that you purchase products upfront to sell; others may engage in drop shipping.
Drop shipping is a good option if you want to become one of the top distributors while working from home. With this method, you don't keep any stock of your own (except perhaps a few samples). Instead, you send your orders to the supplier who handles all of the shipping for you. Of course, this also means you need to have a good relationship with your supplier because you must trust them to fulfill the orders for your customers in a timely fashion. If you're planning to sell the products through your own web site or through an auction site, such as eBay.com, drop shipping is a good option. However, it's typically a good idea to order some of the products yourself so you can inspect their quality and so you can familiarize yourself with them. This will make it easier to sell them to customers.
Sarah is a stay at home mother of six children. She is married to Kevin LaBiche and is a christian woman who believes God is and should be the center of her world. Kevin and Sarah have a growing business called "The Profit Center." They work together as a team. Sarah believes in team work that if people work together they can achieve their goals much faster. [http://www.internetprofitingonline.com]
What is a Manufacturer's Sales Representative?
By Sandy Dell
A Manufacturer's Representative, also called manufacturer's agent, manufacturer's rep, sales representative, or sales rep - or more commonly, just "rep" - is a self-employed salesperson who contracts direct selling and marketing services to one or more related, but normally non-competitive, companies in a particular industry.
The job of a rep is basically to "represent" the manufacturer's, distributor's, or importer's line of products to prospective buyers, who could be retailers, wholesalers, distributors, or service businesses, depending upon the industry and/or product line. As part of that service, they call on and present the client's products in a positive light (as a way to solve the buyer's needs), answer questions, offer materials and information, and ask for orders and re-orders in person, or by phone, fax, or email. Increasingly, web sites are a way to service wholesale buyers.
Sales reps sometimes just represent one company, where they might be paid a base plus commission. More often, however, independent reps serve multiple companies who share an interest in marketing to a category of buyers that the rep calls upon regularly. Reps are usually given a specific (and often exclusive) territory, so customers are not confused by multiple competing sales representatives, and to honor the hard work done by a good rep.
In the gift industry, you will find that most rep clients will be manufacturers, but sometimes distributors or importers. Your customers - the businesses you sell to - will be retailers who purchase gift lines for resale to the public. The type of products you sell, and the categories of retailers you sell to, will depend on many factors, and we will discuss those issues as we travel together through this book.
As a gift sales rep, you will spend much time traveling to, and visiting with, prospective buyers and current customers. During those visits, you will show samples and/or catalogs that describe the products, pricing, payment terms, and merchandising suggestions. Often as a sales rep, you have the opportunity to share trade information and help solve specific sales problems for the customers. Sales reps exist that target virtually every size of gift retailer from small mom-and-pop stores to large "big box" retailers, including chains. All these reps want to show and sell the newest, most attractive or innovative products on the market (plus, of course, profitable standbys). As a rep, you save buyers significant time and expense by showing several lines during your visits, and always, they want to know "what is new"! (You WILL hear this question a lot!)
On the other side of the equation, sales reps probably qualify as the lowest cost option for manufacturers interesting in expanding sales regionally or nationally. Independent reps operate as a contract sales person, or in the case of rep "groups", as a contract sales force, working on a strictly commission basis, minimizing overhead for a producer. Whereas an in-house sales force could cost a potential manufacturer $75,000 to $100,000 per person, with travel expenses - regardless of sales volume - an independent rep only gets a check when they produce sales for the manufacturer. Since reps can be found in virtually every geographic area in the US, opportunities for a low cost national roll-out are endless, for those manufacturers who choose to grow in this fashion.
Although selling is your first and main responsibility as a sales rep, associated tasks include processing and tracking orders, keeping running records of your income and expenses (for the IRS, and for your own protection from unscrupulous clients), scheduling travel, and making appointments. Sales reps often attend trade shows on behalf of clients, to showcase new products and open new accounts. Often you will find yourself as a consultant, making new product recommendations, or product revisions, based on customer feedback. Unfortunately, not every manufacturer uses good business practices. Since you will work with many companies, you often will see what works... and what does not. You will learn tactful ways to suggest companies change procedures or policies that are costing them business.
Sales reps differ from wholesalers or distributors who purchase and take actual possession of products at below wholesale costs, and in larger volume. Reps actually are a representative of the manufacturer or other producer, so are not as clearly a separate "middleman". We do not pay for product and then resell the product at a higher price. We work purely on a commission on the wholesale invoice value billed to the customer.
As a sales rep, your purpose is to introduce, educate and take orders for product lines and receive a commission as compensation, rather than making your money on the price differential between buying and selling prices.
Sometimes you will also hear the term "inside" versus "outside" sales rep. This merely means that the rep works for wages (which might be base plus commission) for the producer company ONLY, or they are "outside" reps, working outside the payroll of the company, but still representing the company as an independent. Sometimes the terms are also used to differentiate between reps that answer the phone for "inbound" customer sales calls, and reps that travel on the road to make sales calls on site. In the latter case, both the inside and outside salespeople, would be employees of the company, exclusively selling that one line.
(For more information on opportunities and information on this industry, visit the Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2006-07 Edition, "Sales Representatives, Wholesale and Manufacturing", on the Internet at http://www.bls.gov/oco/ocos119.htm)
Sandy Dell is an experienced independent sales representative for the gift industry. Having operated her own business for over eight years, she has gain valuable knowledge in working with gifts store buyers and producers. She is also co-owner of Gourmet Innovations which makes gourmet foods and gifts.
For more tips and articles on sales reps, subscribe to her blog at http://GiftRepSandy.com
Manufacturer Reps and Independent Sales Reps - How to Use Them to Increase Your Sales
By Jeffrey A. Simon
INCREASE YOUR SALES BY USING INDEPENDENT SALES REPRESENTATIVES (ISR) MANUFACTURER'S REPS (MR)
Why would I be interested in using Independent Sales Representatives? Simply put, to achieve more sales, faster, and at lower cost than other methods.
While Independent Sales Representatives or Manufacturer's Reps are not right for all circumstances, their outstanding advantages could be right for you. Especially, if you need to take your company into new markets or grow existing markets with a lower up-front cost.
What is an Independent Sales Representative?
An Independent Sales Rep, also known as a Manufacturer's Rep, is an independent business composed of sales, marketing and customer service professionals, representing at least two related but non-competing products in a well-defined territory, and primarily compensated through commissions. The Principal can be a manufacturer, distributor, importer, or service provider.
An Independent Sales Representative or Manufacturer's Rep is not the same as "inside" sales, showroom sales, or telephone sales. An Independent Sales Rep may use showrooms, trade shows or the telephone to interact with customers. But their primary focus is to work face-to-face with customers, often traveling to meet with them to show products and services, close sales, provide training and solve issues. Commonly, ISRs carry complementary product lines and cover a territory suited to effective coverage of the account base.
What is a Sales Agency?
A Sales Agency, also known as a Rep Agency, offers a management structure and a team of two or more ISRs. Sales Agencies generally operate regionally. Just as in the case of an ISRs acting in a solo fashion, sales agencies sell multiple product lines that do not compete with each other. Sales Agencies sometime have a provide showroom space as part of their services.
What is a National Sales Force?
A National Sales Force is the combination of any inside sales capability plus outside Sales Agencies plus ISRs, along with administrative and support personnel who jointly cover a country. It is common to build up to a National Sales Force incrementally, with only one or more regions in the beginning. Expanding coverage to more regions, and eventually to a full National Sales Force depends upon success in the regional markets.
To what extent do manufacturers use Independent Sales Representatives or Manufacturer's Reps?
According to the Research Institute of America, from 50 to 80 percent of U.S. manufacturers use Independent Sales Representatives, depending upon the industry.
How do I know if there are Independent Sales Reps or Manufacturer's Reps in my industry?
Virtually every industry has ISRs. For example: Agriculture, Mining, Utilities, Construction, Manufacturing, OEM, Wholesale, Distributors, Retail, Transportation, Information, Finance, Insurance, Real Estate, Rental, Professional Management, Administrative & Support, Waste Management, Educational, Health Care & Hospitals, Medical, Pharmaceuticals, Entertainment, Recreation, Hotel & Motel, Food & Restaurant, and Public Administration.
How does using Independent Sales Reps or Manufacturer's Reps increase sales?
The major reason that ISRs can increase sales is because they carry multiple lines. When more than one line is brought to the customer, sales can be made more effectively and at lower cost. The sale of one product can "trigger" sales of other products. With multiple lines, reps see more customers in their territory than inside salespeople. Thus a broader, better-defined customer base is created. The result is more sales and better market penetration.
What are the other advantages of using Independent Sales Reps or Manufacturer's Reps?
- Principals can enter a new market quickly and cost-effectively. The Rep brings his existing customer base. The Rep knows his territory and has his own established network of both buyers and other Reps. For new companies who are still seeking to create their place in the market this feature is vital.
- One product sale can "trigger" other product sales.
- Reps are paid for results, leading to a highly motivated sales force.
- Sales costs are known.
- Provide better focus in their territory due to familiarity with local preferences. Reps quickly identify new product opportunities, whereas an inside sales force may take months or longer to make that identification.
- Reps have local acceptance. They are familiar to their customers and trusted by them. They often live in their community. So they have a vested interest in their products and customers, whereas inside salespeople may not.
- Provide more objective ideas for product improvement and more objective customer feedback on new products because they do not work for the Principal. Customers feel confident in sharing information with them about changes and opportunities in the market. Customers who would hesitate to bring valuable input directly to inside sales staff will openly share with Independent Reps, including both suggestions and criticism. This openness further motivates the Rep.
- Provide quick response to customer issues because of close physical proximity. Customers may also feel that it is easier reach the local Reps.
- Provide consultative selling, customer service, product demonstrations, product and sales training, sales analysis, credit reporting, market research, market development information, product quoting, and current product improvements, new product development, and participation in sales meetings, trade shows and conventions. Some may also offer showroom displays.
- Alert Principals to new developments in their territory that could affect their lines.
How does an Independent Sales Rep get paid?
The Independent Sales Rep typically is credited for all sales in his territory, and is paid the commission stated in a written contractual agreement, sometimes called a "Sales Representation Agreement." Payment is due only after the sale is closed.
The Independent Sales Rep or Manufacturer's Rep operates a independent business, with its own sales and administrative staff. This business is responsible for all related operating expenses, including staff compensation, employee benefits, advertising, auto, insurance, office equipment, taxes, technology, travel, and so forth. These costs must be paid out of the gross commission received by the Rep.
Doesn't the Independent Sales Rep or Manufacturer's Rep add cost?
No. Using Reps can actually save money for the customer. A Principal must have a sales force. Using an Independent Sales Rep is a form of outsourcing the sales function. Just as with the well-known practice by many companies to outsource such functions as manufacturing, information technology, and accounting, using Reps is outsourcing.
To compare the cost of the inside sales force with the outsourced sales force, the overhead "burden" of the inside sales force must be included. For example, what may appear as a yearly cost of $75,000 for a salaried inside Sales Professional has a true cost of 2.0 to 2.5 times that amount, or $150,000 to $188,000 when the overhead "burden" is included. Examples of such costs are administrative support, auto, commission, office space and related costs, employee benefits, holidays, technology, and travel. Another intangible cost that is minimized is the Principal's legal exposure, because Reps handle the cost and liabilities associated with their own employee selection, training, compensation, discipline and termination.
The bottom line is that using Independent Sales Reps reduces fixed costs and spreads those costs over multiple lines. A single sales call for many products saves everyone time. If all Principals had to sell all their products and services via an inside sales force to all territories, the additional cost to the economy would be mind boggling.
Can Independent Sales Reps or Manufacturer's Reps serve as distributors?
Generally the Independent Sales Rep is not a distributor. However in some cases the Principal may require that the Rep takes ownership of the product and resell to the customer. In this case that Rep would be functioning as a Distributor rather than an Independent Sales Rep.
Why don't all Principals use Independent Sales Reps or Manufacturer's Reps?
Many Principals who could benefit from using Independent Sales Reps who do not yet sell that way have misconceptions about the method, or about inside sales forces, or both. Another reason could be that they prefer to have complete control over the sales force.
How many lines should an Independent Sales Rep or Manufacturer's Rep carry?
Reps handle as many lines as necessary to present a sufficient portfolio of products and services for their customer base and to provide sufficient profits for themselves. By carrying multiple lines the Principal shares in the costs of a unified sales organization, as described in detail above. When the Rep is selling the line of another Principal, a positive relationship for the lines of all represented Principals is being established.
Will my Rep help build my business -- or just be an order taker?
If sales could be successfully made via promotion and advertising by themselves, neither an inside nor independent sales force would be needed. However, because Reps are only paid by commissions, they cannot depend only on the sales support efforts of the Principals. They have to go beyond the Principal's efforts to develop and implement their own incentive programs which are tailored to their own territories and customer base.
How much commission is the Independent Sales Rep or Manufacturer's Rep customarily paid?
Commission rates vary by industry over a wide range, with the majority between 5 - 20% of gross sales.
How much commission dollar does the Sales Agency actually keep?
The Sales Agency keeps approximately 40% of commissions received. The remaining 60% is paid as compensation.
How Can I Find Independent Sales Reps, Manufacturer's Reps or Sales Agencies?
- There are several online services that provide cost-effective access to Independent Sales Reps.
- Visit regional and national regional trade shows to meet Independent Sales Reps and Sales Agencies.
- Set up a booth at a trade show and post in your booth a "Sales Representatives Wanted" ad.
- Employ or engage a consultant to act as a Sales Manager whose job it is to select, engage and train your National Sales Force.
- Advertise in Craigslist, on-line job boards, and classified sections of newspapers.
While these routes may appear simple and inexpensive, be prepared for their hidden costs and time delays. To use them effectively, you will need an appropriate level of Human Resources staffing to screen a potential deluge of resumes, reduce their number by a factor of as much as a hundred or more, finally leading to phone and possibly in-person interviews. That is, some advance staffing may be necessary, and you will need to budget sufficient time and resources over and above the up-front advertising expense. Plus newspaper advertising can be quite expensive.
GETTING STARTED: Tips for Working With Reps
Placing productive, independent sales reps is a numbers game. Period. This fact cannot be emphasized too much.
Using one of the matching services will improve those numbers. But you will still most likely need to communicate with several reps to place that one that will ultimately be productive.
For example: to have 10 productive reps you may need to place 30. To place 30 reps you may need to have discussions with 100.
Therefore, it is important that you proceed with the proper understanding. Some of the online services provide specific guidance to their members which can prevent months of frustration in getting started with Independent Sales Reps. This guidance includes detailed tips and instructions to cover the following fundamental points.
- The Best Way to Place Reps
- Creating a Professional Impression
- Why Patience and Persistence are Vital
- The Proper Use of a Letter-of-Intent -- including a sample Letter of Intent that members can begin using right away
- How to Set Commission Amounts
- How to Prevent Problems with Samples Provided to Reps
- Proper User of Contracts and Exclusives -- including a Sample Representation Agreement
- How to Overcome and Even Benefit from Situations Where the Rep Truly Is Not a Good Match for Your Business
Contact RepHunter.net at http://www.RepHunter.net for assistance with the topics presented in this article.
RepHunter.net, operated by RepHunter, Inc., is a Minnesota-based company that provides manufacturers with experienced sales representation. We use a unique profiling system to facilitate a TARGETED SEARCH using specific criteria and our growing network of independent manufacturers' representatives.
RepHunter.net is more COST-EFFECTIVE than placing traditional ads and wading through the resume response.
RepHunter.net was established by Matt Tronnier, an experienced sales professional, and Jeffrey Simon, an experienced financial manager and systems developer. Matt was frustrated by his own attempts to search for new opportunities, because resumes just didn't capture the key criteria for finding good partnerships. By creating a profiling form for manufacturers and representatives, RepHunter.net can leverage the technology of databases and the Internet to bring manufacturers the qualified sales representatives they need, without the resume reviewing hassle.
Our clients confirm the quality of our referrals and tell us that the candidates that we place are more productive and able to hit the ground running precisely because of their established customer base.
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