Every list of where to look solves a problem nobody has. Finding candidates is easy; what goes wrong is what the search leaves you choosing between.
The best distributor I met in one particular year was also the one who needed us least. At the time I took those for two separate observations about the same company. They were one observation, and it took me a long time to see it.
Every guide to this question answers a different question than the one you have. Search for how to find a distributor for your product and you will get a list of places to look: trade shows, industry directories, chambers of commerce, B2B marketplaces, trade associations, government export agencies, LinkedIn. The lists are accurate. They are also close to useless, because finding candidates is not the part that goes wrong.
Here is what goes wrong instead.
The lists answer "where do I look", and nobody fails at looking
If you have a product that sells at home and you want it sold in another market, you can assemble a list of forty plausible distributors in about two weeks. Trade directories exist. Export promotion bodies will hand you pre-screened lists for free. A category-specific trade fair puts several hundred of them in one hall for three days.
Supply of names is not scarce. I have never once run out of names.
What actually happens is this: you contact forty companies, eleven reply, four take a meeting, two send a proposal, and one of those two is enthusiastic. Then you sign with the enthusiastic one, because by that point you have spent five months and someone at home is asking when the first order lands.
The failure is not in the search. It is in what the search leaves you choosing between, and in the fact that the process rewards speed at exactly the moment it should reward patience.
The candidates who are easiest to sign are, on average, the ones you want least
This is uncomfortable but it is structural, not cynical.
A distributor's scarce resource is not warehouse space or capital. It is the attention of the people who call on retailers. That attention is already allocated. A good distributor in a mature category is running a portfolio that keeps its sales organisation busy, and adding a new brand costs it something real: sales calls diverted, listing slots spent, working capital committed.
So who has spare capacity to take you on quickly?
Three kinds of company, mostly. One that is new and has no lines yet. One whose existing lines are declining and is looking for replacement volume. And one that collects agreements it has no intention of working, either to block a competitor from the market or to hold the territory until someone pays it to let go.
None of these is disqualifying on its own. I have signed a new company and it worked. But notice what the pool looks like: the observable signal — they are available and keen — is correlated with the unobservable quality you actually care about, and correlated in the wrong direction. This is the structure George Akerlof described in 1970 in his paper on used cars, now called adverse selection: when the buyer cannot verify quality before purchase, the sellers who step forward are disproportionately the ones with the least to lose from being chosen. Distribution is not a used-car market, but the selection mechanism rhymes.
The practical consequence is not "avoid keen candidates". It is that enthusiasm carries almost no information, so you cannot let it do any work in your decision. And in most processes I have watched, enthusiasm does nearly all the work, because it is the only signal that arrives early and for free.
You are not buying coverage. You are buying a slice of someone else's attention
The second misframing is subtler and it costs more.
Brands describe what they are buying as market access: shelf space, coverage, a route to retailers. What you are actually buying is a share of the effort of a sales organisation that works for several principals at once — you, and the ten other brands in the portfolio, each of whom also thinks they are buying coverage.
Economists have a name for this arrangement. Bernheim and Whinston called it common agency: one agent, several principals, each offering its own incentive scheme, with effort flowing to whichever principal makes it most rewarding at the margin. Their 1986 result is that the agent's behaviour is determined by the combination of everyone's incentives, not by any one contract in isolation. You cannot read your own agreement and know what you will get. Your agreement is one term in a sum you cannot see.
Once you hold that picture, several things that look like partner problems turn out to be allocation problems:
- The partner who "isn't pushing" may be behaving rationally given what your margin structure pays their salespeople relative to the brand next to you in the bag.
- The partner who over-orders and then goes quiet has bought your exclusivity as insurance, not as an obligation.
- The partner who is excellent for two years and then drifts has usually not deteriorated. Something else in their portfolio got better.
So when you evaluate a candidate, the question is not "are they good". It is "where would we sit in their portfolio, and what would have to be true for us to move up." That question has a checkable answer. "Are they good" does not.
How a candidate reaches you tells you something before anyone speaks
Candidates arrive by three routes, and the route is itself data.
Inbound. They found you — at a fair, through a trade body, through a search. Cheapest to obtain, weakest signal. Inbound tells you they have capacity and interest. It tells you nothing about fit, and as above, capacity is the thing you should be suspicious of.
Referred. A retailer, a logistics provider, a non-competing brand names them. Much stronger, because the referrer has seen them work and has some reputation at stake. The best single question to ask a referrer is not "are they good" but "what do they do badly". A referrer who cannot answer that has not worked with them closely.
Outbound. You identified them from the market, not from a directory — you walked the stores, saw which competing brands were well merchandised and in stock, and traced back who handles them. Most expensive. Highest quality. And it inverts the selection problem above, because you are now approaching companies that were not looking, which is exactly the pool the inbound route filters out.
If your candidate list is entirely inbound, you have not run a selection process. You have run an application process, and you will choose the best applicant rather than the best distributor. Those are different populations.
The cheapest correction I know: before you meet anyone, spend two days in the market's stores without appointments. Photograph shelves. Note which brands in adjacent categories are in stock, priced consistently, and merchandised as intended. You are not shopping for your product. You are shopping for evidence of competent execution, and then finding out who is behind it.
Make them spend something small before you spend something large
You cannot verify a distributor by asking them questions. Everyone answers questions well; answering questions is the part of the job they practise most.
What you can do is design steps that cost a serious candidate a little and cost an unserious one too much, and then watch who completes them. Nothing exotic — these are all things a genuinely interested partner does without complaint:
- A written market plan for your brand specifically, two pages, with a named list of target accounts and the sequence they would approach them in. Generic plans come back in a day. Real ones come back in two weeks and contain arguments you did not think of.
- Names and roles of the people who would carry the line. Not headcount. Names, and what else those people carry today. If nobody can be named, nobody is assigned.
- A meeting at their office, with the sales team, not the owner. You learn more in forty minutes with three salespeople than in a day with a managing director, because the salespeople will tell you what they already have in the bag and where a new brand ranks.
- A first-year forecast with the assumptions written out, not a number. The number is negotiating. The assumptions are the actual information — how many doors, at what rate of sale, with how much of their promotional calendar.
- One reference you chose, not one they offered. Ideally a brand that left them.
The last one is the step people skip, and it is worth more than the other four together. A brand that ended the relationship will tell you, usually within ten minutes, exactly what the failure mode was. Some of those failure modes are the distributor's. Some are the brand's — and if the story you hear is a brand that never supported the line and then blamed the partner, you have just learned something valuable about your own plan.
What happens after this step — checking a shortlisted candidate before you sign — is the subject of How to Evaluate a Distributor Before You Sign.
What to do when the market genuinely has only three candidates
In many categories and many markets, the serious candidate list is not forty. It is three, and two of them already carry a direct competitor.
The advice to "walk away if you don't find the right partner" assumes an abundance that frequently does not exist. When it does not, the choice is not between good and bad partners. It is between a compromised partner now and no presence for two years.
That choice can be made either way and I have made it both ways. What makes it survivable is not the choice itself but what you write down at the time:
- Name the specific compromise. "They carry a competing line in an adjacent tier" is a sentence you can build safeguards around. "They're not ideal but let's try" is not.
- Set the term to the length of the compromise, not to the length of your ambition. If the risk is that you are the second priority, a two-year term with a defined extension test costs you very little and costs a partner who intends to perform nothing at all.
- Agree what you will look at, before you need to look at it. Sell-out reporting, in an agreed format, at an agreed interval — the same point made in Distributor Onboarding. A partner who will not commit to this at signature is telling you something, and it is much easier to hear now than in month nine.
- Decide who at your end owns the relationship, and give that person a travel budget. A partner nobody visits drifts by default, and the drift is not their fault — see How to Manage the Distributors You Never Visit.
The compromise is not the problem. An undocumented compromise is, because in eighteen months nobody will remember which risks were accepted deliberately and which ones were missed.
What "found the right one" actually looked like
The partner we eventually signed came from the outbound route. They were not at any fair. I had seen the brands they already carried merchandised the way they were supposed to be, in stock and at consistent prices, across more than one retail chain.
They were also lukewarm early on. They asked what our support commitment would be before they asked what our margin would be, which in hindsight was the most useful thing that happened in the whole process. A distributor who leads with margin is pricing a trade. A distributor who leads with support is estimating work.
They gave us a smaller first order than the enthusiastic candidate had proposed, and they hit it.
The five-line version
Your turn
Sources
- Adverse selection — George A. Akerlof, "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism", Quarterly Journal of Economics 84(3), 1970, pp. 488–500.
- Common agency — B. Douglas Bernheim & Michael D. Whinston, "Common Agency", Econometrica 54(4), 1986, pp. 923–942.
- The selection steps and the closing example come from practice, not from the literature, and are offered as such.
Cases are drawn from real appointments with countries, companies, brands, individuals and proprietary figures removed; only the structure remains. The funnel numbers and portfolio shares are illustrative. This is not legal advice.
Written from the brand side of this table — twenty-two years appointing and managing distribution partners across Asian markets, across categories and price tiers.
Previously in this series: How to Evaluate a Distributor Before You Sign · Exclusive or Not · When to Stop Selling Cross-Border and Set Up Locally · What to Do When Your Distributor Asks for a Lower Price · When Is a Market Ready for a Local Launch? · Marketing Money in a Distribution Agreement · When Your Distributor Stops Paying · The Month-Seven Test · How to Manage the Distributors You Never Visit · Parallel Imports Are a Price Gap, Not a Piracy Problem · Stop Pricing One Export Market at a Time · Your Marketplace Store Is Four Rights, Not One Decision · Distributor Performance Evaluation · Distributor Onboarding · Distributor Margin