Beginning your own wholesale distributor program can be a little scary at first, but well worth the opportunity of increased sales. Regardless of whether you are trying to jump start your business, extend your client list, or just want to start selling at home parties; hiring wholesale distributors is one very smart move to start bringing in additional sales.
What is a Wholesale Distributor?
Wholesale Distributors are essentially the same thing as Sales Representatives. However, wholesale distributors do not directly work for your company. Instead, they are independent contractors. As independent contractors, it is their responsibility to attain sales through various means. Many wholesale distributors receive these sales by selling at home parties, craft bazaars, direct sales, etc.
Now, because your wholesale distributor is independently contracted, they are literally in charge of themselves. This means they work their own schedules, find their own leads, close all of their sales, and file their own taxes accordingly.
How to Start a Wholesale Distributor Program
The first thing you need to establish before hiring any wholesale distributors is a starter kit. A starter kit is an all encompassing kit that the wholesale distributors take with them to encourage sales everywhere they go. These starter kits should contain samples of your best sellers, notable products, product lists, bags, business cards, etc. These starter kits are offered at an affordable set price for the wholesale distributors to purchase.
Generally speaking, most companies offer three different sized starter kits: large, medium, and small. Nine times out of ten, the majority of people will purchase the medium kit. You will want to ensure that your medium starter kit contains all of the key products you want your wholesale distributor to highlight during their sales.
Regardless, all starter kits should include at least the following: samples, receipt books, catalogs, post cards, and a carrying case.
What Does a Wholesale Distributor Need to Know
It is the responsibility of any new wholesale distributor to read and know your company’s policies and rules. For example, if you are in the candle industry, you would especially want them to know why your candles are superior over the competition. They would also need to know things like the wax you use, burn times, and even fragrance strength of the candles. These are all great selling points for them to mention during their sales pitch.
Something to establish with your wholesale distributor is their earnings scale. This scale should be a win-win for both parties involved. The more sales they are able to bring to you, the higher their earnings will be. For example, when the wholesale distributor starts, they earn 25% of the total net sales before taxes. But, a way that you can sweeten their deal is to give them a goal. An example of this would be: when a wholesale distributor has acquired $5000 in sales of products, they are then able to earn 30% of the sales (instead of the 25%). Having various goals established for your wholesale distributors will constantly give them new heights to strive for, therefore also an increase in sales for you as well as possible repeat customers.
How the Wholesale Distributor is Paid
For this example, we are going to use a home party. Regardless of the form in which the sale was made, here is the breakdown of how the wholesale distributor is paid.
When the wholesale distributor books a home party, attends, and makes the sales, he/she adds together the total amount of sales from the party. Next, the wholesale distributor would then subtract their earnings (the 25%). The total of what is left is what is due to the company for the products sold.
Ideally, no tax is collected on the products that are sold to the wholesale distributor because they have a tax exemption certificate. Remember once again, it is the responsibility of the sales rep to pay the sales tax since they are independently contracted.