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10 Questions to Ask When Vetting a Global Distribution Partner

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A global distribution partner can become part of your long-term business success. Selection—and the vetting process—is critical. The benefits are both in establishing and incentivizing the growth of your international business while minimizing risk.
ATC Distribution & Services offers a 10-step overview to help you begin the process.

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10 Questions to Ask When Vetting a Global Distribution Partner

  1. 1. International Business 10 Questions to Ask When Vetting a Global Distribution Partner
  2. 2. 2 Vetting a Global Distribution Partner Moving into international markets entails risk. But you can mitigate that risk through careful selection of your global distribution partner. Your partner can lay the pathway for your success, so your choice is important. We have outlined the 10 key questions that can help in your selection process
  3. 3. 3 BEFORE YOU BEGIN The selection of the right distribution partner is your first, most critical step.  Think Long-Term An international distributor is your trusted business partner— your best option is to leverage their expertise for lasting results. A strong vendor relationship is structured for the long-term.
  4. 4. 4 BEFORE YOU BEGIN The selection of the right distribution partner is your first, most critical step.  Be Prepared to Invest in Success Consider establishing incentives for attaining your business goals. For example:  Offer national exclusivity.  Establish goals such as customer acquisition or new product sales.
  5. 5. 5 BEFORE YOU BEGIN The selection of the right distribution partner is your first, most critical step.  Keep 3 Criteria Top-of-Mind 1. Integrity 2. Credibility 3. Expertise
  6. 6. 10 Questions to Ask When Vetting Your Distribution Partner 6
  7. 7. 7 Why?  Documents play a major role in international trade, and standard payment procedures rely on them.  Letter of credit will continue to play a vital role, increasingly as a form of payment security.  What your company can do is governed by what is legal in the U.S. and the host country’s laws treaties and acts.  They must add value and help you grow, while maintaining full compliance with international laws and regulations, in an ethical manner. What You Should Learn:  What is their familiarity and experience with the local region (everything from currency to customs)?  Can they demonstrate their understanding of legal compliance?  Are there any red flags you need to know about from their past or present business relationships?  Can they supply examples of document from actual customers? What is your experience in managing shipping, trade, and banking export documentation specific to my business and industry? 1
  8. 8. 8 Why?  They must understand how to bid for government or even private customer tenders in the country you are doing business.  Your global distributor MUST win tenders in target markets and present new opportunities prior to a tender being published. What You Should Learn:  Can they explain their methodologies and approach in detail?  Can they demonstrate their understanding of what differentiates your service offering from your competitors?  Can they provide examples of how they met with the key requirements of the tender in the past? Do you understand our new market’s local tender processes?2
  9. 9. 9 Why?  Mitigate the risk of working in foreign exchanges.  Fluctuating currencies cannot be managed on a spreadsheet.  Accounting standards are still evolving, and there are now clear differences between countries.  Many customers do not wish to go through the hassles of dealing in foreign exchange. What You Should Learn:  What methods do they use to eliminate or manage foreign exchange (FX) risk? Have you worked specifically in our new market’s local currency?3
  10. 10. 10 Why?  Developing strong relationships in local markets has enumerable advantages. What You Should Learn:  How do they plan to target your specific customers?  What training do they provide and/or require for their salespeople?  Can they provide detailed data on the local current market and financial performance? Do you have the necessary connections to establish a local salesforce?4
  11. 11. 11 Why?  Minimize your legal risk.  Build your corporate reputation.  Compliance is never optional, regardless of a particular country’s poor reputation for doing business. What You Should Learn:  In relation to the law, can they provide examples of how they tackle bribery issues? Can you demonstrate compliance with the U.S. Foreign Corrupt Practices Act?5
  12. 12. 12 Why?  You need the right amount of inventory, in just the right places, to meet customer service and revenue goals. What You Should Learn:  Do they use and provide real-time web- based inventory reports?  Can they provide real-life examples?  What is their on-time delivery record?  How does their real-time order tracking system work? Can you effectively manage and optimize inventory stock specific to our industry?6
  13. 13. 13 Why?  Strategic marketing is a joint venture.  Who you select is critical when introducing a new product or reaching out to new market segments.  Your success in a new market requires timely responses to local market feedback.  Adjustments will need to be made as you grow and move beyond your core customer base.  Different markets favor different sales and marketing approaches. What You Should Learn:  In what way are they incentivized to market your business?  Do they conduct detailed local market research, and can they provide examples? Can you demonstrate your awareness of emerging trends in local markets?7 In countries that value personal relationships such as Japan, selling products and services through local partners achieves faster success than direct sales models. Also, the biggest challenge companies face with incorporating local insight tends to be communication.
  14. 14. 14 Why?  To provide the kind of service to your customers that builds business and closes orders. What You Should Learn:  Can they provide examples of how they’ve managed local sourcing with other clients?  Can they provide examples of how they’ve managed critical services with other clients? How do you manage local sourcing and critical services?8
  15. 15. 15 Why?  The use of technology, and industry specific KPIs should lead to better analysis, conclusions and future performance. What You Should Learn:  Request and review their automation tools for collecting and monitoring performance.  Can their tools provide reporting specific to your KPIs and expectations?  How do they objectively measure the success of your business and marketing strategy? Have you embraced technology and metrics in your reporting?9
  16. 16. 16 Why?  Selecting the right partner to represent your company in a foreign market is vital to your success. It’s difficult to change partners and distribution structures once established. What You Should Learn:  Get it right from the start. This one you’ll want to ask yourself: Corporate ethos is a bottom line, am I confident in their reputation? 10
  17. 17. Provided by ATC Distribution & Services 17 This overview is based on our experience in providing best-in-class customer service and product life-cycle management support. Contact us for a comprehensive solution, including industrial products, custom engineered packages, and turnkey repairs and services. Connect with ATC Distribution & Services

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