hello, this is my first time on this forum. I would like to ask some questions regarding distribution.
let's say i want to start a distribution business in my country (USA). i would like to distribute products from this japanese company to retail stores located in USA, but there is already a distributor doing this at the moment and they are well established. is it possible for me to ask this japanese company if i can distribute their products? or does that other distributor have special and sole rights to distribute in the USA?
this also leads up to my next question. if i wanted to start an online retail store, do i have to get my products from that well established distributor (mentioned above)? or can i obtain the products from the japanese manufacture/distributor (or is this illegal?)? i kind of want to skip the middle man.
going from manufacture -> distributor -> retail causes the product to have a 200-300% markup in price. in japan, the product sells for 60 US dollars in retail stores so those retail stores probably bought those products for 20-30 US dollars from japanese distributors/manufactures. in USA however, the same product sells for 120-150 US dollars (unknown on how much the USA distributors sell to retailers for). i do understand that there is cost of shipping and customs fee and etc etc, but it just seems ugly to have such a high markup.
just contemplating the idea of starting a business. thank you in advance. haha i guess i should've majored in business instead of human bio.
creativemediaweb | Window Shopper |
7/10/2012 - 2:34 am
I would recommend trying to obtain a Japanese manufacturer if you are able.
Often though it is difficult to find one who will work with a small business
since they do have a minimum purchase amount on orders. I have also tried to
deal directly with China for manufacturing several products I need however, I
was unsuccessful in obtaining a "dealer". They have brokers who will be the
intermediary for the business and the manufacturing plant which helps with
interpretation with the language barrier.
This will also add some cost since they do charge a fee. Personally, trying
to find a manufacturer in another country is like trying to find a needle in
a haystack. But if I knew how its done, I would not hesitate for a minute to
do so. Because your cost is much lower than getting a U.S. manufacturer, your
profit margin will be higher.
Jeff Jackson | Window Shopper |
6/18/2012 - 12:22 pm
Yes, you should definitely try to skip the middle man if at all possible. It
is my experience that unless its a very large US distributor then the foreign
company (in Japan in this case) does not give sole distribution rights. You
should simply just ask the Japanese company if they will sell to you, thats
as simple as that.
Firstly you need to find out if anyone currently has sole distribution rights for this product in the US? If they do then unfortunately you will have to go to the US distributer which I can tell is not your plan. If they haven't given any sole distribution rights, you may find them to be quite receptive to the idea. They will likely put you on a 3 month trial whereby you will have to reach a certain target in order to extend the distribution lease. Also, they may want to know of any proven success that you have with other businesses before they will grant sole distribution. I have found that people are very keen to give sole distribution rights for a probationary period and any promise to enter the US market is very attractive to a manufacturer.
Sometimes, a company may have a special agreement with a chinese manufacturer
but in most cases they do not. I advise that you see which foreign company is
best to go with and see what it will take for you to become one of those
special companies with the foreign company that you are looking to do
business with. Hope this helps!
Going to the manufacturer directly is not illegal, you can do that. But
generally, the manufacturer will not deal with you directly unless you buy in
big bulk. Generally they only deal with a handful of wholesalers who buy in
bulk and store products, which is another big cost.
If you can afford the capital to buy in bulk and the storage cost, then it
might be worth going direct.
The other complication is dealing with import regulations/laws,
transportation from abroad, insurance required to deal with international
partners / shipping, knowing about differences in legislation, etc.
ifindwholesalers.com | Window Shopper |
5/10/2012 - 6:55 am
Since you are not sure what types of agreements are set in place with the
current manufacturer and the distributor it would probably best to
communicate what your plans are with the manufacturer.
Sometimes companies have a no competition agreement with their distributors,
which the manufacturer supplies the distributor whom has sole rights to the
distribution.
creativemediaweb | Window Shopper | 7/10/2012 - 2:34 am
Often though it is difficult to find one who will work with a small business
since they do have a minimum purchase amount on orders. I have also tried to
deal directly with China for manufacturing several products I need however, I
was unsuccessful in obtaining a "dealer". They have brokers who will be the
intermediary for the business and the manufacturing plant which helps with
interpretation with the language barrier.
This will also add some cost since they do charge a fee. Personally, trying
to find a manufacturer in another country is like trying to find a needle in
a haystack. But if I knew how its done, I would not hesitate for a minute to
do so. Because your cost is much lower than getting a U.S. manufacturer, your
profit margin will be higher.
Jeff Jackson | Window Shopper | 6/18/2012 - 12:22 pm
is my experience that unless its a very large US distributor then the foreign
company (in Japan in this case) does not give sole distribution rights. You
should simply just ask the Japanese company if they will sell to you, thats
as simple as that.
yousellquick | Window Shopper | 6/17/2012 - 2:08 pm
Adarien | Window Shopper | 5/23/2012 - 10:29 am
but in most cases they do not. I advise that you see which foreign company is
best to go with and see what it will take for you to become one of those
special companies with the foreign company that you are looking to do
business with. Hope this helps!
clevertim | Window Shopper | 5/15/2012 - 8:53 am
generally, the manufacturer will not deal with you directly unless you buy in
big bulk. Generally they only deal with a handful of wholesalers who buy in
bulk and store products, which is another big cost.
If you can afford the capital to buy in bulk and the storage cost, then it
might be worth going direct.
The other complication is dealing with import regulations/laws,
transportation from abroad, insurance required to deal with international
partners / shipping, knowing about differences in legislation, etc.
ifindwholesalers.com | Window Shopper | 5/10/2012 - 6:55 am
current manufacturer and the distributor it would probably best to
communicate what your plans are with the manufacturer.
Sometimes companies have a no competition agreement with their distributors,
which the manufacturer supplies the distributor whom has sole rights to the
distribution.
Maybe that is the case, maybe it isn't.
Communication is key :)
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