Building a dealer and distributor network for your product across Bangladesh

Your product sells locally. Now what?

"Our product does well around our own district, but we cannot reach the rest of the country by ourselves." For manufacturers, agro-input makers, food producers and electrical or hardware brands, the usual route is a network of distributors and dealers. Built well, they carry stock, extend your reach and know their local customers. Built badly, you end up with a few dealers who owe you money, undercut each other on price, and push a competitor's product whenever it pays them better.

The difference is mostly in the planning you do before you sign anyone up.

Design the network before recruiting

Decide these on paper first:

1. Structure. Will you sell to distributors who supply retailers, directly to dealers and shops, or a mix? More layers mean wider reach but less control over price and presentation.
2. Territories. Start with a few districts or one division that you can actually visit and supply reliably, rather than announcing a national network. Note the transport routes and how long a delivery really takes.
3. Exclusivity. Will a distributor have an exclusive area? Exclusivity attracts stronger partners but makes you dependent on them. Many businesses grant it only after a trial period with agreed targets.
4. Margins and pricing. Work out the margin each layer needs and check that the final shelf price is still competitive. Set a recommended retail price, and decide what you will do about dealers who cut it.
5. Credit. Settle your policy on advance payment, cash on delivery and credit before the first negotiation, because every dealer will ask. Unchecked credit is one of the most common ways a dealer network loses money.

Finding and choosing the right dealers

Good candidates usually already sell something related to the same customers: a hardware shop for electrical items, an agro-input shop for seeds or feed. Ways to find them:

• Ask your existing retailers and customers where else they buy.
• Visit the market areas in each target town and note who is busy and well organised.
• Ask transport agents and sales reps of non-competing brands who is reliable.
• Meet people in person at trade fairs and through industry associations.

When choosing, look beyond the size of the shop: payment history with other suppliers, storage space, delivery capacity, whether they will actually push your product or just list it, and whether the owner has time for one more brand.

Put the terms in writing

Write a clear dealer agreement covering territory, pricing, credit limits, payment timing, returns and damaged goods, targets, marketing support and how either side can end the relationship. Have a lawyer review it; I will not try to tell you what the law requires. A written agreement also protects the relationship when a family member or a new manager takes over on either side.

Support them, then measure

Dealers sell what they understand and what moves easily. Give them product training, display material, a simple way to place orders, and a named person who answers the phone. Then review each dealer every month: orders, payments, stock on hand and complaints. A dealer who orders once and goes quiet usually needs a visit, not a warning.

Mistakes to avoid: appointing too many dealers in one town, so they fight on price; offering credit just to win a dealer; and expanding territory faster than you can supply it.

Much of this you can do in-house. An outside view helps with network design, margin structure and the recruitment plan, which is part of my business development work.

A first step for this month

Pick one district next to your current market. List every shop there that sells to your kind of customer, visit the five most promising, and ask what they would need in order to stock your product. Their answers will shape your terms better than any template. If you want help planning the network, get in touch.