There's an old adage, which each new crop of entrepreneurs needs to re-learn: Distributors take orders; they don't "sell". "Distributors", in this sense, includes other companies' saleforces that are going to sell your product. What this means is that is, distributors don't/can't pro-actively market and sell anything that end-users don't already know about and want. For a successful distribution relationship, customer demand must already exist or be generated by the maker of the product or provider of the service being distributed.
That's the good news.
The bad news: distributors completely, really, totally, absolutely don't/can't successfully sell/distribute a product (or service, or combination) that is (1) new, so requires educating the end-customer, (2) requires training of the distributor's salesforce to understand, (3) isn't immediately easy to sell.
Entrepreneurs, if any one of the above 3 attributes is true of your situation, you will be disappointed in any distribution relationship you enter. This is always true, notwithstanding the protestations to the contrary by savvy distributors who've heard the old saw and are smart enough to try to pre-emptively deal with the concern.
Especially for startups, with limited sales, marketing and distribution resources, it is very tempting to believe that "this distributor" is different.
It never is. Beware.
This is a great post and very insightful. I was regularly badgered by my investors in various companies I ran and by fellow investors in companies on whose boards I sat to build "distribution channels" . Many saw this as the panacea for hitting agressive and probably unrealistic sales targets. My mantra was simple - if we can't sell our product, why do we think others can?
Posted by: Ken Ross | June 07, 2012 at 10:26 AM
Further good advice above from Ken Ross, a successful serial entrepreneur, who knows whereof he speaks -- from experience.
Posted by: Allen Morgan | June 07, 2012 at 01:00 PM