How to Apply for a Product Distributorship

Mufaddal K.

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After finding the right distributorship opportunity on PanXpan, you will need to send an application to the manufacturer for them to approve and hire you.  Applying for a distributorship requires entering a sales and investment forecast which the manufacturer will use to make a decision on your application.  We'll provide an overview of the different parts of the application form below.



Application Overview


The first thing you will need to fill out on the application form is an overview of the reasons why you are interested in this distributorship opportunity.  Try to tell your story and make yourself stand out.  Convince the manufacturer that you would be a great partner to sell the manufacturer's products in your local market.  Talk about your local contacts, experience and knowledge of the market.  Also mention your plan to grow customers in your local market and if you have any questions about the manufacturer's products or things that you would like answered, include those questions here as well.



Some manufacturers may also require you to answer fixed questions as part of the application.  If questions are included in the application, you will need to answer these questions as well.  Use your answers to again sell yourself and tell your story.



Sales Forecast


The next section is the sales forecast section.  In the sales forecast section you will need to select the products that you wish to sell locally from the manufacturer's list of products.  Select a given product and then enter the expected quantity you think you can sell each month.  This is just a forecast so you will not be forced to purchase this quantity.  It will help give the manufacturer an idea of your expected purchase amounts.  You can change the expected quantities after discussing with the manufacturer and you can also change the quantities after the venture has started.  As you learn more about local interest for the products through your sales efforts, you should be updating this forecast as you go.  



If the contract term is for multiple years, you will need to use the Year drop down to enter values for Year 2 or Year 3 as well.  After entering the units you expect to purchase, you can use the "Value" and "Cost per unit" tabs to see how much money the units you entered translates into.  This is also where quantity discounts will come in.  If the product you choose has quantity discounts available, the software will automatically calculate the lower cost per unit as soon as you hit the quota units required in the previous 12 months.  You only need to enter the units you plan to purchase and the software will automatically calculate the value and cost per unit itself.


If the manufacturer is from a different country than you are, the underlying pricing of the products will be based on the manufacturer's currency.   This means that the pricing of the product will vary from month to month based on prevailing currency exchange rates.  In our software, product pricing will be updated on the first of every month based on the latest exchange rates.  So your actual purchase price for each product may vary from month to month due to currency fluctuations. 



Investment Forecast


PanXpan is unique in that we allow local partners to get investment from manufacturers as well.  When applying to sell a manufacturer's products, you can also add an investment forecast.  For each local responsibility (sales, marketing, customer service, etc.) that the manufacturer has assigned the local partner in this distributorship, you can enter roughly how much investment you think this will require.  Investment can include a variety of real expenses such as salaries of local employees, transportation and customs expenses, advertising, free samples that you will need to give out, rent for offices, administration costs, etc.  It is important to show the manufacturer all the investment you will be making to get their products sold locally.



Once you enter a forecast for the expenses required to sell the products locally, you can then choose for the manufacturer to pay a percentage of these expenses each month.  This is what we call the "manufacturer share".  You can for example ask for the manufacturer to pay 50% of all expenses or 10% of all expenses or maybe 0% of all expenses.  If you ask the manufacturer to pay some of the expenses each month, we will require the manufacturer to provide PanXpan with that amount each month before the month starts.  Once the manufacturer provides us with their portion of the investment, we will let you know.  You can then spend the money and then at the end of the month you will be required to add all expenses occurred in the month and upload receipts for each expense.  Once you've added all expenses for the month, we will then release the manufacturer's share of those expenses to you based on your existing forecast.  Any unused amount from the initial month's forecast will be returned to the manufacturer.


You will not need to add your expenses or receipts if you don't want to get reimbursed by the manufacturer or if your manufacturer share is 0%.  Its important to remember that the higher percentage reimbursement you ask from the manufacturer, the more likely it is for the manufacturer to not accept your application.  If you feel like you would like the manufacturer to subsidize a large percentage of your investment, make sure your sales forecast supports this and make sure you explain a detailed plan for this investment in the initial application overview section.


Like with the sales forecast, the investment forecast is only an estimate can be changed as you start discussing with the manufacturer and also even after you start a venture and start realizing that more or less investment is needed.  You should always try to keep the investment forecast as accurate as possible by updating it as your venture progresses.



Headcount Forecast


The headcount forecast section is used to further reinforce your investment forecast.  This is where you should mention how many people will be working on each of the responsibilities that the manufacturer has assigned the local partner in this distributorship (sales, marketing, customer service, etc.).  If you are the only person working on selling this product, you can show how you plan to split up your time.  So for example, for a given month you can say something like 0.5 for sales, 0.25 for marketing and 0.25 for customer service.  If you have multiple people working on the venture, you can estimate overall how many heads you plan to staff for each responsibility.  Do not count the same person twice for different responsibilities.  So the total headcount for each month after adding up different responsibility rows should equal the total headcount you have staffed on this project.



The headcount forecast section along with the investment forecast section will help the manufacturer get an idea of the overall time and effort you plan to put in to help grow sales for the manufacturer's products in your local market.  Like with the sales forecast and investment forecast, this is only a forecast and can be updated after discussing with the manufacturer or even after once a venture has started.  You should try to keep the headcount forecast section as accurate as possible over time.



Shipping Preference


This is where you can select your shipping preference and shipping location.  The manufacturer will use this to understand how they will need to ship you products and also where to ship.  This doesnt have to be your final shipping location and preference but is instead just to give the manufacturer a rough idea.  If your venture is accepted, you will be creating purchase orders for each product request.  You can adjust your shipping mode and location when you submit each purchase request.




What's Next?


Once you fill out and send the application for the distributorship, the manufacturer will then review the application.  They may also ask you some questions about your application.  You can also at that point ask the manufacturer some questions as well.  Based on your discussions you may need to update your sales forecast, investment forecast, headcount forecast or shipping preferences.  This will be easy to do for you via PanXpan.  Once you and the manfuacturer have agreed on a final sales and investment forecast, the manufacturer will send you a formal offer for distributorship via PanXpan.  This formal offer will note the final sales and investment forecast that you have both mutually agreed in your application.  You will then be required to accept the formal offer.  Once you accept, you application will turn into a venture with this manufacturer on PanXpan's online platform.


You are able to see all your applications and ventures easily on PanXpan's online platform.  Once you have a venture with a manufacturer, at that point we will start asking the manufacturer for investment to hold in escrow until you submit receipts and you will be able to start placing product orders from the manufacturer.  You can learn more about managing your ventures on PanXpan's online platform here.


You may not have all of your distributorship applications accepted by different manufacturers so its ideal to make sure you find and apply to multiple distributorship opportunities.  We have some tips here on finding good distributorship opportunities.