The establishment of a distributorship can be profitable. However, the company must deal with a high volume transaction level to be profitable. The Distributorship market has changed the most over the past decade. Many have closed up shop and others have merged. A few new ones have entered the marketplace. The availability of using Distributing Companies for stocking product has become more selective. However this is only part of the story. Many of the Distributors have changed the type of product that they stock. The focus today seems to be on the collectable card and action figure market. Since Distributors need constant product turnover to be profitable, these collectable areas are currently providing the necessary sales that they need. With the wide selection of products on the market, it is impossible for any company to stock a complete range of items.

As an industry the distributorships can be classified into several categories. There are the Importers, the Domestic General Distributor and the Specialty Distributor. The Importers are just that. They import selected products from outside of the USA. Due to the complexity of importing, they often restrict themselves to importing specific companies. The Domestic General Distributor is a large company that offers a wide selection of staple products. The areas will include, rule books, dice, books, various miniatures and collectable cards among other items. Some may be considered imported but many companies deal with the domestic sources or agents for the product if not the manufacturers. A Specialty Distributor is one of the most common in the Historical area. Many companies will specialize in such areas as books, terrain, remote control, model railroads, or certain miniatures. Often these Specialty Distributors will be associated if not part of a manufacturer.

G1. Obtaining the product to wholesale can be difficult.

The owner will have to be able to get the product in a reasonable fashion, at a price that enable them to resale it to stores and develop a retail store base that will ensure a heavy and constant sales volume. With the current market climate it may be difficult to develop a niche product line that will make stores want to buy from your company. Many major manufacturers no longer sell through a distributor, they either go straight to the retail stores or straight to the customer. In order to be able to sell to retail stores, a distributor must be able to obtain the product at a reasonable discount. Often in order to secure the best rates, the company must buy in quantity. Common purchase amounts will be 3’s, 6’s, 12’s or even 100s (if dealing with small items such as dice). Having to buy in quantity can be a two-edged sword. A deep stock is needed to satisfy the needs of your clients but it will also result in some line numbers be regarded as dead stock. Eliminating portions of the dead stock can become a challenge if not handled correctly. But such a process must be part of the Business plan for a Distributing company.

G2 Developing an effective client list will be a challenge as well. All companies must be evaluated upon their ability to pay, need for an appropriate product line and a wide range of products. Incentives such as early payment discounts and reduced or free shipping with large orders should be part of your Sales Plan. It is also good to employ sales representatives who know not only your product line but a variety of topics. It is always frustrating for a store looking for castings wearing a shako or some other historical term and the sales person does not know anything about your subject matter. It will hurt sales if the sales representative cannot talk intelligently about various areas of the hobby. (whether it be Historical, fantasy, remote control, etc)

G3. Another area of consideration is the location of the company. Distributors in most cases are expected to be regional. They must have the ability to get the product to the clients in a timely manner. The overhead of the company is often associated with the location. Great structure locations can be developed with the proper vision. Satisfy the company’s needs and not the owner’s ego.

Do You Really Want to Get Into The Hobby Business?

Introduction
Running a Store
Painting Service
Ebay Store
Game and Figure Design
Running a Hobby-related Webpage
Something I Haven’t Mentioned
Running a Distributorship
Becoming a Producer (Manufacturer)