Distributor Search, Due Diligence, and Selection
Distributor Search, Due Diligence, and Selection
We will help you search, conduct due diligence, and select the best distribution partner for you in Colombia. The U.S. Commercial Service recommends that U.S. companies to thoroughly vet the prospective partner by conducting a background check.
Overview
Successful commercialization of your product in a particular market depends a lot on the type of product distributor you choose as a partner. Once you have determined which market best match your business development goals and registered your product according to national regulatory requirements, selecting a distributor that best complements your sales and marketing strategy is crucial.
Foreign manufacturers need to conduct thorough due diligence before entering into business with a Colombian distribution partner and should be conservative in extending credit and alert to payment delays. As one element in a prudent due diligence process, we can conduct background checks on potential Colombian distributors.
“U.S. companies should take care in selecting their Colombian partners…and to thoroughly vet the prospective partner by conducting a background check…To secure an agent, representative, or distributor the foreign company must execute a contract that meets the provisions of the Colombian Commercial Code. This contract must be registered with the chamber of commerce where the agent/representative is located.”
We can assist with the research and assessment of local distributors in Colombia based on your specific requirements. We will review your selection criteria and business development goals. Then, we will research local distributors available in Colombia; leveraging on our extensive local network. We will develop a clear plan of action to present to potential distributors on first approach. We will identify their strengths and weaknesses, we will develop distributors' profiles, we will compile evidence of their track record with products and companies similar to yours, and we will assess pre-selected distributors, and will select your final distributor.
Finding the best distribution partners is in many ways just as important as obtaining regulatory registration for your product. In order to find and screen potential distribution partners for your chosen markets, you should first have a clear idea of your business development strategy.
Once this strategy has been defined and provided to us, the following key considerations will be utilized:
Who the manufacturer's current competitors in the chosen product markets are;
Where the manufacturer’s competitors are concentrated;
How the manufacturer’s product compares to those of its competitors in terms of quality and cost;
Reimbursement as a possible issue in chosen markets;
How well-served the chosen markets already is by products similar to the manufacturer's; and
What the future growth trajectories for the manufacturer’s chosen markets are.
This offering includes,
One-hour session with you to review your sales goals and strategy in Colombia.
Review of your market readiness (i.e., distributor partner program, distributor contract, website, marketing material) and recommendations to successfully enter the market.
Searching, conducting due diligence, and selecting a distributor for your product.
Searching and selecting a third-party logistics operator as your importer of record (when applicable).
Assessing product distributors
When evaluating potential distribution partners we will be addressing the following areas for the manufacturer’s product and market:
Characteristics of the product
How many regions/cities the manufacturer would like to target
Type of product; if it’s either a new and unique product or a high-volume, low-margin product, among other considerations
Evaluating and qualifying potential distributors
We will help you create a distributor profile in order to evaluate and qualify potential distribution partners in Colombia. This profile should incorporate details of the manufacturer’s product as well as the manufacturer’s overall business requirements. We will, subsequently, match those requirements to distributors best suited to assist the client in its sales efforts.
The distributor profile should include information about its product such as how simple or complex it is, whether the product uses novel or advanced technology, among others. The distributor profile should also contain the manufacturer's business goals as well as identify the markets in which the manufacturer plans to sell its product.
We will then create a prescreened list of potential distribution partners. This list may vary from three to 40 distributors depending on the regional or national scope of the manufacturer’s business development strategy. Once the manufacturer evaluates the list of potential distributors that we produced we will then go through the process of qualifying the listed distributors to identify the best potential partners for the manufacturer’s business.
Our qualifying process entails contacting each distributor on the list and providing them with the manufacturers' product’s technical and pricing information as well as product samples if necessary. In addition, we will interview interested distributors on behalf of the manufacturer for details on how they would launch the product in their markets.
We will provide the pre-screened database to the manufacturer for its evaluation and pre-selection of candidates from the list.
Selecting a distributor
Once we receive the manufacturer's feedback we will proceed to coordinate more in-depth conversations with manufacturer’s initial chosen distributors.
We will now, analyze additional factors about the pre selected distributors, such as:
Personal rapport
Confidence of the distributor about the manufacturer’s company, product, and chances for success
Financially stability
Recognized associations the distributors are linked to
The number of employees the distributors has (in particular sales staff)
Inquire with retailers, customers and other exporters about the reputation of distributors
Ensure distributors are not representing other product lines too similar to yours – avoiding conflicts of interest and competing products
Ensure the distributors have an understanding of competitive products
and pricesNetwork of representatives and/or contacts
How many years’ experience the distributor has in the market sector
Knowledge of the local market
Willingness to give you the benefit of its local market knowledge
Distribution terms, pricing, payments preferences, etc.
Information on the company
Year established
Relative size
Number of employees
General reputation
Territory covered
Language capabilities
Product lines handled
Principal owners
Financial references
Trade references
Defining working details with selected distributor
Following our qualification process, the list of potential distribution partners will be considerably smaller—only those firms best matching the requirements set forth in the manufacturer’s distributor profile will remain. At this point, we can facilitate conference calls or face-to-face interviews with the manufacturer and these distributors in order for the manufacturer to make a final determination.
Once we select a local distributor, the next step is drawing up workable terms to be included on the legal agreement with your new partner. Some of the issues that we will consider include: exclusivity, sales regions to be served, cancellation terms, among others.
Contact execution with selected distributor
To secure an agent, representative, or distributor the foreign company must execute a contract in Spanish that meets the provisions of the Colombian Commercial Code. This contract must be registered with the chamber of commerce where the agent/representative is located.
We will facilitate the contract execution between you and your distributor, and will ensure that your contract is properly registered following Colombian laws.