An authorized dealer is an individual or company authorized by a manufacturer to sell its products. This dealer has a franchise to represent a well-established brand and distribute its products.
Some manufacturers require your company to only sell their products, while others allow you to provide customers with other products or services.
Why become an authorized dealer?
Whether you’re starting your business or want to be a reseller to supplement your current company, becoming an authorized dealer has several advantages:
- it allows you to receive certification from experts;
- it provides you with financial support;
- it enables you to sell products from a famous brand;
- it allows you to use an established brand name.
You can sell products from well-known brands in large quantities to commercial customers online or in retail outlets if your company meets certain requirements. The manufacturer or service provider will inform you about the requirement you’ll need to fulfill.
Now that you know the pros of becoming an authorized dealer of an established brand, let’s explore the difference between authorized and unauthorized dealers.
Authorized Dealer vs Unauthorized Dealer
When it comes to buying and selling products, it is essential to understand the difference between authorized and unauthorized dealers.
Becoming an authorized distributor has several advantages:
- a contractual relationship with a manufacturer;
- official rights to sell the brand’s merchandise;
- recognition from the brand;
- a good reputation as the manufacturer verifies its merchandise is authentic;
- the products are covered by the manufacturer’s warranty.
Famous brands prefer authorized dealers as they ensure supply chain transparency, pricing consistency, and greater revenue.
On the other hand, unauthorized dealers have no official rights to sell the products of a specific brand. These dealers usually get genuine merchandise from overseas and bring it to the country to sell. However, such products are of low quality because of the damages and defects which appear on the product during improper shipping. Also, they can be acquired from unreliable sources which can result in you selling used or stolen goods. Although buying from unauthorized dealers doesn’t guarantee high quality products, customers still do it because of the lower prices.
Grey market goods affect the sales price. As a result, authorized retailers have to sell their merchandise for less to compete with lower-priced authentic products.
To alleviate any confusion with the process, we’ve put together a step-by-step guide to becoming an authorized dealer. Follow the five steps below.
How to become an authorized dealer
- Choose the industry
- Find the right location
- Handle the documentation
- Get enough inventory
- Launch your distributor platform
An authorized dealer is a company that has official permission to sell products from a particular brand. It allows you to provide customers with products or services of an established brand and access their built-in consumer base. To become a distributor, you’ll need to register your business like any other startup. If you’re giving a thought to becoming an authorized dealer, here are five steps to consider.
1. Choose the industry
Decide what industry you want to tackle and what the best fit for you is: electronics, food, apparel, or shoes. There are dealers in almost any retail industry, so there is no limit for you to choose.
Let’s take the world of sports, for example. The National Hockey League enables businesses to become commercial licensees and sell their official merchandise. However, if you decide to become a beer distributor, you’ll need to get a permit from the United States Alcohol and Tobacco Tax and Trade Bureau.
2. Find the right location
Different distributors have different strategies that result in different functioning. Although you can start your business from home, you’ll still need to have a warehouse to store your products. First of all, choose inexpensive warehouses that are close to your customers. Some manufacturers even require it from their sellers. For example, Katun, a manufacturer of printer and copier toners, asks its distributors to provide local delivery.
3. Handle the documentation
Research which licenses and permits are necessary to get started with your reselling business. You’ll need a wholesale license to act as a middleman and purchase products wholesale from manufacturers without paying sales tax. Additionally, you will need to contact the manufacturer to discuss product distribution. Start by filling out an online application form or contacting the local sales office.
For example, Apple asks its authorized dealers to use Apple-certified repair technicians. So your technicians will have to go through the certification process.
4. Get enough inventory
The industry you choose defines the amount of inventory you’ll need to have. Calculate the approximate required number of products that you should have in stock. Keep in mind that if you don’t have enough inventory when your customers need it, they may use your competitor’s service or if you buy too much, you run a risk of not selling all of it.
5. Launch your distributor platform
Once you have all the necessary documentation and enough inventory, run your platform. Many businesses open shops on eBay or Amazon. Tech resellers prefer these platforms as they allow different types of businesses to enter the market whether it’s an established brand or a startup. For example, with Amazon, you need to select a selling plan, consider a strategy, and create a selling account to start reselling products.
Whether you decide to start a new business or add to your existing portfolio, becoming an authorized dealer is a great idea. You can start this business in any industry you wish. Ensure that you have enough inventory, a license and permit, and a place to store your products to start your new business.
- The article “How to Become an Authorized Distributor” on the Career Trend blog provides readers with the steps necessary to become an authorized distributor.
- The article “How to Become an Authorized Distributor” on the Small Business blog gives several tips on how to become an authorized distributor.
Last Updated: 29.01.2021