Distributors are companies that purchase merchandise from the manufacturers for the sole purpose of reselling it to smaller businesses. They buy from many different manufacturers and then consolidate the shipping so that the stores the distributors sell to get only one delivery rather than many deliver- ies from a variety of manufacturers.
In most cases, you won’t pay much more to get merchandise from a distributor than from a manufacturer because distributors are so big that they can work on very favorable terms with the manufacturer — they buy in huge quantities. Doing business with distributors is great because it’s like one-stop shopping. Relationships with distributors are generally consistent and long term.
Often a manufacturer does business with many distributors, and the person who refers you may have a favorite. Ask what other distributors the manu- facturer uses, and talk to as many distributors as possible. Remember that you’re making a long-term commitment so you want to make sure that you’ll be happy with the distributor for the long haul.
The best source for finding distributors is networking with other retailers. Ask them whether they use a distributor, who else they talked to before choosing that distributor, and who they recommend for a business like yours. You may even make a friend.
Finding out about importers
Importers buy and sell foreign-made merchandise. Although they don’t actually produce the merchandise, they function almost the same way a manufacturer does. The rules for buying from importers are the same as buying from manufacturers.
Directories of importers are available, but don’t waste your time. Many of these importers look for businesses that can purchase in large quantities, something that a new business may not be able to do. Instead, look for imported merchandise to buy through normal channels, such as distributors. You can even ask the importer to recommend one.
Participating in buying groups
Buying groups are associations of retailers who have joined together to buy as a unit to get better deals from manufacturers. “United we stand” may be a good battle cry for buying groups because individually they don’t have much clout with the manufacturers, but combined they’re a powerful force. If you have an opportunity to join a buying group, I strongly recommend doing so. You pay dues to belong, but the savings are tremendous. Many groups offer educational seminars, and they exchange advertising ideas as well.
Watch for ads in trade journals for these groups, but the vast majority increase their membership via referrals from other members or manufacturers. These associations are generally located in office settings rather than retail environments.
Understanding Buying Services
These services function in a similar way to buying groups, but they vary in that the buying service is not owned by the members but rather by a com- pany that has to make a profit to survive. You pay a monthly fee to belong to a buying service. In return, it informs you about hot merchandise and industry trends — vital information when you’re new to the business. Buying services can also negotiate additional discounts for their members, and they offer additional credibility in the marketplace.
One word of caution: Many times the manufacturers that buying services recommend are the companies that support the office financially as well. Manufacturers pay the buying office a fee to sell their merchandise to the stores. They also pay the service to feature the manufacturers’ merchandise in circulars or catalogs. These are legitimate charges, but you have to be aware of how buying services make money. Sometimes a buying service won’t recommend a manu- facturer if that manufacturer doesn’t support the service financially, even though the manufacturer may be great.
Having said all that, I still recommend joining a buying service or at least talk- ing to one or two before you rule them out. Their buyers know the market, and the service is a great source of information — who’s making what and for what price, and who can deliver the merchandise on time.
Some buying services may be too big or too small for your needs and will recommend other services. You have to be a good fit. Watch for ads in trade journals for openings of new services. Many times a strong buyer going off on her own is the one opening the service. Such a person needs clients and can offer you great service. She may be new in the buying service business but very experienced as a buyer.
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