Q & A Table of Contents
My Distributors Don't Play By The Rules
From: Vishal, India
Question: How can I convince my distributors not to supply to wholesalers and to deal directly with retailers? The wholesalers have been creating a lot of problems as far as the prices are concerned. This is also harming my other distributors.
Response: If you have the capacity to choose distributors, it could make excellent sense to find out whether there are other distributors in the markets currently served by your troublesome distributors. If your current distributors will not play by the rules, it is important to know whether you have alternatives or whether you must stick with them.
Is the distribution process covered by written contracts? Are the distributors complying with the contracts? If there are no contracts, can you have a 'master' contract written, then offer it to each of your distributors -- with the rules governing trading with wholesalers spelled out in detail?
What proportion of your distributors are dealing with wholesalers? Are those distributors located within a single geographic area or does the problem arise in a variety of places?
You might gain the most by meeting individually with both 'good' and 'troublesome' distributors. Ask them how well they feel the business practices they use work -- and whether there are ways to improve their profits and other gains. Listen to what they say and try to have your response demonstrate that you have listened carefully and respectfully. Ask them what they would do in your situation. Don't tell them they're 'bad' and then ask them how to solve it. Simply present a realistic description of the business situation and ask their advice. If they have to view things from your angle, it may help them understand things better.
Ask the distributors who 'play by the rules' what they would suggest as solutions. They may have better ideas than you do. Perhaps the 'good' distributors can be rewarded with a higher percentage of the gross revenues as an incentive. This may not be permanent, but often incentives are far more effective than punishment.
I wish you good luck with this situation. Let me know what happens.
Steve
| 
