B2B Questions Resellers Are Both

B2B Questions Resellers are both competitors and customers for B2B firms. Why do so many companies use resellers which add another layer to their distribution channel? There are many factors that lead companies to pursue an indirect distribution channel, which requires partnering with resellers. The most prevalent factor is the need for establishing a distribution channel in the first place. It is far easier to create a new distribution channel through partnerships with resellers, as risk is spread evenly throughout the selling relationships.

Resellers constantly look for new product and service opportunities to expand sales to existing customers, and for many companies, resellers are the quickest path to creating their initial sales channels. In conjunction with the speed at which a company can create a distribution channel, any given resellers' greatest asset is their customer relationships. Resellers cultivate and often keep confidential the most valuable information regarding their customers, as this is a major competitive advantage both against other resellers and companies who may want to sell to their customers direct.

The depth of knowledge in and trust generated from relationships with customers is a critical part of the resellers' value in an indirect distribution channel. These are attributes that cannot be earned overnight; it takes years of consistent performance from a reseller to a major customer to earn trust. That's why many companies pursue resellers as distribution channel partners; they want to be recommended for sale to key customers of the reseller without having to go through lengthy sales cycles.

Many companies will sign as many resellers as they can manage, in the hopes this will multiply their sales productivity. Called "increasing the feet on the street" by old line sales managers, resellers, if managed and motivated correctly, can be a very productive strategy to creating an entirely new distribution channel while minimizing its risk. In summary, companies rely on resellers to create entirely new distribution channels quickly and with minimal risks, agreeing to share the proceeds of sales to customers the reseller often already has.

Further, resellers are first loyal to their customers and specialize in being experts on their needs, and in exchange for part of the commission of a sale, endorse and meet their customers' needs with company's products. Ultimately resellers shorten sales cycles by having a much more attuned and accurate sense of the customers' needs that would take a company selling on its own months or years to understand and eventually earn trust from prospects.

Why is direct selling more common in certain industries? There are many reasons why direct selling is more pervasive in some industries vs. others. An example of this is the self-service of a grocery store vs. The highly personalized selling of a car dealership. While grocery store attendants do not stop you within minutes of being in the store and ask how they can help you find what you need, anyone walking into a car lot will surely be approached within the first five minutes of arriving.

The major difference is the gross margins and profits for each of these products. In the case of the grocery store, margins and profits per item are quite small and there is a very short sales cycle for them. Picking up a roll of paper towels for example is a sales cycle of just three minutes or less, and as a result there is no need to provide service from the grocers' perspective.

Conversely the sales cycle of a car can be days or even months, and there is a significant amount of gross margin and profit involved in the product itself. For the salesman, there is a commission involved, or cash in their pocket, if they can convince you to buy the cars they are selling. For the auto sale there are also many other factors that contribute to the complexity of the decision itself.

Colors, use of the vehicle, style, reliability and maintenance record, and many other factors all go into the decision. All of these considerations lead to a longer sales cycle. As a result there is the need for a direct sales person to assist with the purchasing decision making. What emerges from this comparison of grocery vs. car shopping is the fundamental reason why direct selling is more prevalent in.