Questions for Distributors to ask Manufacturers
We came up with a list. Trying to be exhaustive here, so please let us know of we missed something.
Some of these questions are a little delicate – but it is better to know the answers before hand, before misconceptions and unwarranted assumptions eventually get everyone’s knickers in a twist, isn’t it?
1. Does the manufacturer (M) sell directly to customers in this country?
2. If so, will they agree to pay the distributor (D) the amount over best export that they sell the products for?
3. How important do they see shows being?
4. How many shows per year do they want to show at ?
5. What type of systems do they want to show [percentages each for statement level systems, midline, and entry level]
6. Who staffs shows? [just the D, or does the M send staff / themselves]
7. Do they expect to sell things at shows?
8. If so, who gets the profits: how are they divided up between the exhibitor, the D, the M, and the local dealer[if any]?
9. Who pays for shows: Shipping? Fees?
10. Does the M plan to advertise: online? print? To what extent / frequency?
11 If so, who pays?
12. Is there a repair center in this country?
13. Who pays for repairs? Warranty? Off-warranty? Shipping? Parts? Labor?
14. How are prices determined? Does the D set them? Are they set by the M? Are they the same world-wide?
15. How was the line previously represented in this country?
a. Did they sell direct at discounts? Did they raise the price more than 10% above the price elsewhere in the world? [i.e. does the dealer population now hate this brand?]
b. Did they setup dealers? How many? What quality?
c. What did the M like about the previous D? Not like? Why did they let them go? How long were they distributor? What quality of distributor are they?
16. Does the M expect the dealer network to be expanded? How important is this? What quality of dealers do they want – does it matter? How many / year?
17. What are the targets for the top line revenue growth? YoY? In 5 years?
18. How long is the lead time for products? entry level? midlevel? statement level?
19. Is there a M rep here in the country we are supposed to work with?
20. Numbers: what were sales like last year? The previous year? Both worldwide and here.
21. What has been the best selling products? What does M want to be the best selling?
22. What kind of marketing has the M been doing? The previous D? Are any changes foreseen?
Suitability of Products
1. Does the general appearance of the products appeal to the typical buyer in this country. If not, will they appeal to any buyers at all in this country?
2. Is the performance competitive at the price?
3. How is the packaging? Will each product sold need to be re-boxed by the distributor to withstand the slings and arrows of our reportedly worse-in-world shippers?
4. How is the reliability?
a. Will each product need to be opened and tested before shipping to customer to prevent an above average rate of DOA sales?
b. Are there spurious failures in the field?
c. Are the products small enough to be shipped when the fail? Or will there have to be on-site repairs?
d. Is there at least one repair center in the country?
e. If so, do the people at the repair center know their stuff? Do they respond in reasonable time? Are they suitable pleasant to customers? Do they keep the product clean – or leave it a filthy mess?
5. How heavy/large are the products? Will they be a pain to warehouse? To send to and setup at shows?
6. Are the products UL / CE inspected?
7. Does the product ‘work well with others’ in actual systems that people may have? If an amp, can it drive real speakers? If a speaker, can it be driven by real amps?
8.
Hmmmm.. not all of these appear to be in the English language, but hopefully you get the gist.
This seems to be quite a thorough listing, but I wanted to comment from the perspective of the potential purchaser. 1) in my mind reliability of a product manufactured outside the US is absolutely key, 2) likewise, the availability of a repair center in the US that is responsive to customer problems (sending the unit back to the country of origin is not really a viable option both from a cost and time perspective), 3) many customers are ultimately hurt badly when distribution changes and a) the former distributor dumps product on the market or b) the product is repriced significantly downward because the former distributor took too high a margin, 4) the availability of upgrades at a reasonable price.
Once a product is mishandled, it often takes years to undo the damage.
A further thought. If I entered into a relationship with a manufacturer, I would want to know that the manufacturer could not terminate the relationship except for a limited number of causes and only after notice and a chance to cure.
Hi Fred,
Wow. Some very good points.
Last point first. I am not sure our industry has the ability to come up with a Termination Clause that makes sense from both distributor and manufacturer point of view. Case in point is that well-known German manufactuer who has a rogue distributor selling at 50% off. They tried to go to court to get rid of him – and couldn’t. Too strong of a contract I think. Don’t think this rogue distributor gets the factory to send much product to him – in less than geologic time anyway – but he sure does throw a wrench into their marketing here.
Still working backwards, I thought I covered point 3) – though somewhat circuitously, I admit. Perhaps there might be some emotions involved here? 🙂
I’ll add 1) under a whole new subsection ‘suitability’ of product for sale and 2) which I just plain overlooked – AN has two really good service centers in the U.S.
Thanks Fred!
-Mike