Have you decided to be a distributor in Australia? You have made a great decision since the Australian marketplace offers many distribution opportunities. However, it also exposes distributors to certain challenges. Enthusiastic distributors are likely to make certain mistakes. Fortunately, you can fix them by taking the right steps. Are you wondering about the common mistakes new distributors make and how to fix them? Check the list below:
Mistake 1:Underestimating the Distance
A big country is extremely difficult to cover for a new distributor. Even if a distance seems coverable on a map, it comes with cost and logistics challenges. New distributors tend to underestimate the expenses and time invested in delivering items across long distances or even within a specific state.
How to Fix this Mistake
Get quotes for delivery, warehouse, and freight across the target locations before even signing a distribution agreement. Consider the last-mile delivery cost, as it can be exceptionally high in regional areas. Never assume a central warehouse is enough to cover a huge distance.
Implement a multi-node strategy with warehouses in population centres, as it can save transit duration and costs. You can save capital expenses and efforts by associating with reputable 3PLs (Third Party Logistics) having a national network, since they understand the logistics aspects.
Mistake 2: Ignore the Local Market Differences
Any country has noticeable differences in retail scenarios, consumer behaviour, and regional preferences between the big cities and states. The items that sell well in a particular state may not sell well in another region.
How to Fix this Mistake
You should not rely only on the general national statistics. A good distributor for sale knows how to delve into certain demographics, states, and local government areas if their product has an extreme local appeal. Ensure to learn the competition scenario in every target location.
Tailor marketing strategies and messages depending on your target audience since the “one size fits all” approach hardly works these days. You should spend time in different regions of a country to connect with local businesses, industry associations, and target customers to get valuable insights.
Mistake 3: Overlooking Regulatory Compliance
A large country tends to have a strong and complicated regulatory environment. You get a lot of things to navigate, including consumer protection laws, import duties, labelling requirements, and safety standards. New distributors may get trapped by assuming global standards will be applied automatically.
How to Fix this Mistake
You can hire a legal counsellor specialising in the nation’s regulatory compliance and commercial law. Try to learn the ACBPS requirements, prohibited goods, taxes, and duties.
Confirm all your products fulfil relevant national standards. It is vital for ensuring product safety, building customer trust, and saving recall costs.
Mistake 4: Mismanaging Cash Flow
Launching a distribution business requires a significant amount of capital for stock, logistics, marketing, and staff. New distributors tend to underestimate the required time for sales to increase and cash flows to become positive. Retailers’ delayed payments can complicate this issue.
How to Fix this Mistake
Build real financing models, including upfront costs, consistent operational expenses, and conventional sales predictions. Maintain a high working capital to include 6 to 12 months of operations without depending only on quick sales.
Define and follow payment terms with customers. You should offer early discounts on payments and use invoice factoring if cash flow gets tight. Avoid overstocking since extra inventory wastes capital and increases storage costs. So, use high-quality inventory management systems to manage product storage.
Mistake 5: Neglecting Retailer Relationships
Maintaining strong relationships with top retailers is crucial for a distributor. Many new distributors focus a lot on only transferring their products through the door, but not on building long-term relationships with retailers.
How to Fix this Mistake
Hire sales experts who understand the retail sector and can build strong relationships with buyers. You should be proactive, responsive, and trustworthy. Deliver products as per your promises, work on marketing strategies, and offer competitive prices.
Avoid pushing your products and understand the goals and challenges of retail partners. Show how your products can help them to fulfil those goals. You should work with the retailers to increase customer demand via in-store promotions, staff training, and promotional campaigns.
The Bottomline
Being a distributor can never be easy at the start. You should plan carefully and be willing to learn at every step of your journey. Ensure you don’t make the common mistakes discussed above and correct them even if you ever make them. With the right steps, you can build and grow your distribution business consistently.
