What is a Distributor?

Distributors are essential to the logistics and supply chain processes. They assist producers in expanding their market by distributing their goods to numerous retail locations or clients. It is often simpler for producers to get their items into customers’ hands because distributors already have established networks and connections with retailers. A distributor simply buys the products from the source and resells them to end-user clients. The distributor is given legal ownership of the products in question. Furthermore, the distributor is obligated to any customers under any contracts.

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Exploring the Distributor Business Model

A distributor is a company or person that serves as a middleman between producers, wholesalers, and retailers. A distributor’s main responsibility is to buy goods from producers or wholesalers and then resell them to merchants or other companies. Due to the complexity of distributing, a lot of producers and merchants may work with a third-party distributor to distribute goods rather than setting up their own system.

The distributor’s business strategy is to purchase goods at a discount from the producer and then resell them to retailers or end users for a higher price. Eventually, the distributor must enter into supply agreements that give low purchasing prices for a high markup while concentrating on operational efficiencies to keep costs low in order to maximize profit.

Hiring a Distributor in Latin America for Enhanced Business Functions

Distributors can work in a variety of sectors, such as consumer products, electronics, the automotive industry, or the pharmaceutical industry. They play a key part in the effective distribution of goods by acting as a link in the supply chain. As an effect, they bridging the gap between producers and final consumers.

Here are some of the main duties and tasks of a distributor:

Unlocking Potential in Latin America through Hiring a Distributor

Latin America is a complex region with unique cultural nuances, consumer preferences, and economic norms. By employing a distributor in Latin America, businesses can gain comprehensive experience and incisive understanding of local markets. As a result, this tactic enables businesses to expand their market share and sales in Latin America. Here are some persuasive arguments in favor of hiring a distributor:

  1. Local Market Expertise: Distributors have a thorough understanding of the Latin American market, including consumer preferences, cultural quirks, and legal needs. This knowledge can assist a growing business in effectively navigating the challenges of breaking into a new market.
  2. Established Network: In Latin America, distributors have built up networks of retailers, wholesalers, and other business associates. Utilizing their current connections helps expand distribution and increase market penetration. As a result, introducing a new brand to the market is simpler for a distributor with a solid reputation and a network of contacts.
  3. Logistics and Infrastructure: What is more, the logistics and distribution infrastructure of distributors is highly developed and includes supply chain management systems, transportation networks, and warehouses. As a result, this can greatly simplify the process of successfully bringing products to market. Furthermore, the distributor is often in charge of the shipment of the goods, as well as the associated paperwork and formalities for customs.
  4. Market Access: Employing a distributor gives expanding companies access to existing retail networks and distribution channels in Latin America. By doing this, the growing business can quickly access a larger consumer base. Eventually, companies benefit from the distributor’s already-existing customer ties. Companies can access global markets through distributors while avoiding logistical problems and several trade-related concerns.
  5. Marketing and Sales: They typically invest on marketing to promote their sales effort. Correspondingly, distributors frequently employ specialized sales and marketing teams with knowledge of how to market and sell products. To optimize product awareness, create demand, and boost sales, they can create efficient marketing plans and carry out market research. Finally, they put those tactics into practice.

Risks When Hiring a Distributor in Latin America

Although there are many benefits, there are also risks that businesses need to be aware of. Before choosing to hire a distributor in another country, it is important to measure the following drawbacks against the potential advantages:

  1. Loss of Control: A business has less direct control over factors like pricing, branding, and client relations when working with a distributor. In addition, the distributor serves as an intermediary. Since it has the authority to make choices, it is possible that these may go against corporate policy.
  2. Margin Reduction: Distributors commonly employ a wholesale business model, purchasing goods at a discount and reselling them with a markup. When compared to selling to end users directly, this can lower the profit margin for the growing business.
  3. Dependence on a Third Party: Relying on a distributor means giving another company control over a large chunk of the expansion strategy. Consequently, the distributor’s financial stability, performance, and alignment with the company’s aims and values are threats that could result from this.
  4. Limited Brand Exposure: Last but not least, hiring a distributor may restrict direct customer involvement and brand visibility. As a result, the growing business might have less influence.

Read the Forbes’ article about
“The Interconnected Distributor: Creating Customer Experiences That Last”
Discover why it is a smart strategic move to consider hiring a professional specialist recruiting you the perfect distributors in Latin America. 

Sales Agent vs. Distributor: Key Characteristics

There are several critical roles in the supply chain that are responsible for bringing products to consumers, including sales agents and distributors. Discover the main characteristics of sales agents and distributors.

In summary, a sales agent acts as an intermediary between a company and its customers, focusing on sales and lead generation, while a distributor purchases products from a manufacturer, takes ownership, and handles broader distribution responsibilities, including inventory management and logistics. The choice between a sales agent and a distributor depends on factors such as market strategy, desired level of control, geographic reach, and the specific needs and goals of the company.

Read also our articel about “Hiring External Sales Agents”

Selecting the Perfect Partner: Hiring Distributors

A smooth expansion process and the avoidance of complications depend on the understanding of the market. Therefore, businesses should ensure to engage with partners in Latin America.

Hire top distributors in Latin America by engaging Ongresso. Ongresso has developed a proven multi-step Partner Selection Process to find the best local partner for your business in Latin America.

By partnering with us, businesses can lower risks and ensure a successful soft landing. Ongresso is your reliable partner in Latin America. With our expertise and resources we enable your company to enhance efficiency and attain sustained growth.

Conclusion: Hiring a Distributor in Latin America

In conclusion, selecting the right distribution channel requires careful consideration of factors such as cost, target audience, and brand alignment. Assessing the cost-effectiveness, market reach, and compatibility with the target audience’s shopping preferences is crucial. Additionally, ensuring that the chosen distribution channel aligns with the brand’s image and values is vital to maintain consistency and enhance consumer perception. By evaluating these considerations, companies can make informed decisions that optimize their distribution strategy and support overall business goals.

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