Questions to Ask Distributors
Questions to ask distributors when you are the brand, maker or supplier deciding who should carry your product. They cover the accounts a distributor already reaches, who will actually sell your line, margin and payment terms, stock, freight and returns, exclusivity and exit terms, and their record with brands your size. Each has a note on what a good or bad answer tells you, and a few say when to bring in a lawyer, an insurer or a customs broker. The guide underneath picks out ten for a single meeting and the ones to bring back once the distributor is already yours.
The questions
Each question, and why to ask it
Reach and fit
Which accounts do you already serve in the territory I care about?
Why ask it
Ask for named accounts rather than a region or a store count. The whole reason to use a distributor is the relationships they already have, and a list of buyers they can call this week is the only version of that claim you can check.
Do you carry anything that competes with us directly?
Why ask it
Some overlap is normal and can even help, since buyers want a range. Listen for whether the competing line is their own house brand or one of their best sellers, because yours is likely to lose that comparison inside their own catalog.
What categories do you carry, and roughly what share of your revenue is my category?
Why ask it
If nine tenths of what they sell is something else, your line is a sideline to them however warm the meeting is. The share also tells you whether their reps already know how to talk about a product like yours or would be learning on your account.
Which type of customer makes up most of your sales: chains, independents, trade buyers or online sellers?
Why ask it
A distributor built around independents runs on visits and small drops, while one built around chains runs on head-office listings and compliance paperwork. The skills do not transfer as well as either will claim, so match their strongest customer type to where your product belongs.
How long have you been distributing in this market, and who owns the business today?
Why ask it
Years in a market usually mean the buyers already take their calls. Ownership tells you who decides, so if the founder is close to retiring or the company was recently sold, ask what that means for a line as new as yours.
Where are your offices and warehouses, and which areas do you cover from each?
Why ask it
National coverage sometimes means one warehouse and a freight account. Find out where the reps are based relative to the accounts you want, because the territory that gets visited is the one within a day's drive of somebody.
How many brands do you represent right now, and how many did you add in the last year?
Why ask it
The total matters less than the direction. Lines added quickly fill catalog pages, and each new one divides the same selling hours the reps had a year ago.
Do you sell online or on marketplaces yourselves, and who controls those listings?
Why ask it
Their marketplace listing can undercut your own store and your other accounts without anyone intending it. Settle who owns the listing and the images before the first unit goes up, and ask how they decide the price there.
Why do you want our product, and where would it sit in your range?
Why ask it
Someone who has studied the product can say which buyers it suits and what it would replace on their shelf. Someone who has not will answer with a description of their own company, and that tells you how the sales pitch will go too.
What would worry you about taking us on?
Why ask it
Price point, pack size, a crowded category, doubts about your ability to supply: honest hesitations are things you can fix or decide to live with. Hearing no concerns at all means they have not thought about it yet, or are telling you what you want to hear.
Sales
How many salespeople do you have, and how many of them visit accounts in person?
Why ask it
Headcount on its own flatters. Split it into field reps, inside sales and the order desk, then ask how many of the field reps call on the accounts you named at the start. Two people who see your buyers every month do more for you than twenty who never do.
Who at your company would actually sell this: a dedicated person, or every rep with a full book?
Why ask it
In a book of two hundred items, yours gets mentioned when a buyer asks for it and not otherwise. A named person with a target for your line changes that, so ask who it would be and what else is on their plate.
How many lines does a typical rep carry, and how are they paid?
Why ask it
Pay predicts behavior better than enthusiasm does. Reps on commission lead with whatever earns them most, so ask where your product would rank on that list, not whether they like it.
What do you need from us to get this into a sales conversation?
Why ask it
Real answers include samples, sell sheets, pricing tiers, training, and a reason for the buyer to replace something already on the shelf. If they ask for nothing, they have not yet pictured the pitch.
How much of our product do you think you could sell in the first year, and what is that based on?
Why ask it
The working matters more than the figure. An estimate built from named accounts and a guess at reorders can be argued with and improved, while a round number with nothing under it is a courtesy. Write it down, because it is where the talk about minimums should start.
What would the first ninety days look like if we signed next month?
Why ask it
You are listening for a sequence: which accounts get pitched first, by whom, and with what stock already on hand. If the plan is to add you to the price list and see what happens, that is likely the plan for year two as well.
How do you train reps on a new line, and how often is it refreshed?
Why ask it
One launch presentation fades within weeks. Offer to run sessions or ride along on calls, and notice whether the offer is welcomed, because reps lead with what they can explain without looking anything up.
How do your reps open new accounts, as opposed to taking orders from existing ones?
Why ask it
Plenty of distributors serve their current customers well and do very little prospecting. If your growth depends on doors nobody has opened yet, ask for one account they won cold in the past year and how it happened.
What do you spend on marketing for the brands you carry, and can you show me a recent example?
Why ask it
Catalog features, trade show space, email mentions and demos all count, and so does the answer that nothing happens unless the brand pays. One real campaign done for somebody else shows you the standard yours would get.
How do you handle customer questions, warranty claims and repairs after the sale?
Why ask it
For a technical or durable product the distributor becomes your service desk whether or not anyone planned it. Pin down who picks up the phone, what they may resolve on their own, and the point at which a problem comes back to you.
Who would be our day-to-day contact, and who can approve a price or a promotion?
Why ask it
These are often two different people, and it helps to have met both before you sign. Ask how long an ordinary approval takes and who covers when your contact is away, since a sample request that waits two weeks for a signature tells buyers the line is not a priority.
How often would we review the numbers together, and who would be in the room?
Why ask it
A quarterly meeting with someone who can change things beats a monthly call with a coordinator who cannot. Agree what gets looked at each time, and ask whether calls and orders are logged by account or pieced together from what a rep remembers.
Money
What margin do you need, and is that calculated on cost or on selling price?
Why ask it
Thirty percent added to cost and thirty percent of the selling price are different amounts of money, so settle which one you are both talking about. Then work the chain through to the shelf, because a margin that suits them can still leave your retail price out of range.
Who sets the price your customers pay, and how do you handle discounting?
Why ask it
Hard discounting to make a quarter can reset what buyers think your product is worth. What a supplier may require on resale prices differs by country, so find out how it works where you sell before putting anything in writing.
If we change our list price, how much notice do you need, and what happens to stock you already hold?
Why ask it
Increases cause arguments over orders rushed in at the old price, and decreases over credit for inventory bought at the higher one. A notice period and a rule for stock on hand take ten minutes to agree now and weeks to argue later.
What fees or deductions could come off our invoices: promotions, listing or slotting fees, anything else?
Why ask it
Get the answer as a written list of every deduction that could appear on a remittance. Advertising contributions and discount programs are the ones brands tend to learn about when a payment arrives lighter than the invoice.
Would you buy the opening order outright, or are you asking for consignment or sale-or-return?
Why ask it
An outright purchase puts their money behind selling it. Consignment leaves the risk with you, which can be reasonable for an untested line as long as there is a date on which it converts to a purchase or ends.
What are your payment terms, and when do we actually get paid?
Why ask it
You want two numbers here: the terms as written and how many days they really take on average, since the two often differ. Long terms mean you are financing their stock, and a good margin is no help in a month when the cash has not arrived.
Can you give us a trade reference and a bank reference before we ship on terms?
Why ask it
Shipping stock on terms is lending money, so this is a lender's question. A private company that will not hand over its accounts is ordinary. One that offers no reference of any kind while asking for long terms is the combination to be careful with.
What currency would we invoice in, and who pays duties and taxes at the border?
Why ask it
Skip it for a domestic deal. Across a border an exchange rate swing can erase a margin that looked settled, and duty rules vary by country and product, so have a customs broker confirm how they apply to yours.
Stock
How much would you order at a time, and how much notice would we get before a reorder?
Why ask it
Order size and rhythm set your production runs and your cash flow. Ask what they do today for a comparable line, since a large order twice a year is a different business from a small one every month. Tell them your own lead time now, so nobody promises a buyer a date you cannot meet.
How many weeks of stock would you hold, and what happens when you run out?
Why ask it
Too little and accounts get shorted and quietly stop ordering; too much and a returns conversation is on its way. Their target for a comparable line, and how fast they reorder after a spike, tells you which problem to expect.
Once a customer orders, how fast do they get it, and how often does an order go out short?
Why ask it
As far as the buyer is concerned, their delivery promise is yours. If they measure fill rate, ask to see it for a line like yours. If they do not, ask how they would find out that the same store had been shorted three times running.
How would our product be stored, and how do you rotate stock that carries a date?
Why ask it
This matters most for anything fragile, temperature-sensitive or dated. Ask whether stock moves between their sites as well, because transfers are where cartons tend to get damaged or miscounted.
Can I walk through your warehouse?
Why ask it
Twenty minutes on the floor shows how product is stored, how old the stock on the racks looks and how the dock is run, none of which comes across in a meeting room. If a visit is difficult to arrange, ask why.
How do you forecast, and how often would we see those numbers?
Why ask it
Without a forecast you are producing on guesswork while they carry none of the risk. Ask whether it binds them in any way, since a forecast that can swing by half from one month to the next is not something you can plan a production run on.
What sell-through data would we get, and is it broken down by account?
Why ask it
The difference between sell-in and sell-through decides whether you can tell if your product is moving or just sitting in a warehouse. Many distributors treat account-level data as proprietary, so establish this before signing rather than after.
Who arranges and pays for freight in and out?
Why ask it
Freight terms can move several points of margin between you. Also ask who bears the risk while goods are in transit, since that decides who files the claim when a pallet arrives crushed.
Who carries the cost of returns, damages, and stock that passes its date?
Why ask it
Get the categories separated, since damage in their warehouse, damage in transit, and unsold product coming back are three different arguments. One vague clause covering all three tends to be read in favor of whoever is holding the money.
If we had to pull a batch, how quickly could you tell us which customers received it?
Why ask it
Hours is the answer you want. Without tracing by lot or batch, a small recall becomes a recall of everything they ever shipped, with your name on the notice.
Who handles import paperwork, labeling and product registration in your market?
Why ask it
Rules on labels, registrations and certifications vary by country and product type, and in some places the importer is the party held responsible. Ask whose name any registration would sit in, since that can decide how easily you could move to another distributor.
Contract
Would this be exclusive to a territory or a channel, and for how long?
Why ask it
Exclusivity is the biggest thing you have to give, so trade it for a volume commitment and a fixed term instead of handing it over. Spell out whether it shuts out your own direct and online sales, since that is the clause people fight about later.
Which accounts would we keep and sell to directly?
Why ask it
Name them out loud and then in the contract. House accounts carved out at the start are accepted as part of the deal, while a direct sale discovered later feels like a betrayal even when the paperwork allows it.
What performance minimum would you be willing to put in writing?
Why ask it
Start from the first-year figure they gave you earlier. Someone who believes their own estimate will usually accept a floor some way below it as the price of keeping exclusivity, and a refusal to name any number leaves all of the risk with you.
How long would the first term run, and how does renewal work?
Why ask it
A short first term with renewal tied to targets suits both sides while nobody knows how the line will sell. Read for automatic renewal with a long notice window, which is the kind of clause that gets missed by a week.
Would you sell through sub-distributors or agents, and would we know who they are?
Why ask it
Every extra layer takes margin and puts your product with a company you have never met. It can be the sensible way to reach remote areas, but you want the names and a right to say no.
Who would own the customer list, and any trademark or web address registered in your market?
Why ask it
Brands entering a new country have found the local trademark or domain registered in the distributor's name, sometimes with good intentions. Register your own marks first where you can, and have a lawyer who works in that market explain how ownership is treated there.
What insurance do you ask suppliers to carry, and what do you carry yourselves?
Why ask it
Some distributors want a product liability certificate before a first order, and their larger customers may set the amount. What cover you need and what the certificate has to say depend on the product and the country, so take their requirement to your insurer or broker and let them tell you what it costs.
If either of us ends the agreement, what happens to remaining inventory and open orders?
Why ask it
Exit terms are negotiated best at the start, when everyone is friendly. Cover buy-back price, how long they can keep selling stock, and what happens to the accounts they opened using your product.
What does the law in your market say about ending a distribution agreement?
Why ask it
Some countries give distributors or agents notice periods or compensation on termination whatever the contract says. Treat the distributor's reading as a starting point and have a local lawyer confirm how it works there before you sign.
Track record
Roughly what are your annual sales, and how have they moved over the past three years?
Why ask it
A range is enough, and a private company may not give more. You are checking fit as much as health: to a very large distributor your line is a rounding error, and a very small one may not be able to fund the stock you need held. Three years of direction says more than one good year.
Tell me about a line you built from a first order into a steady seller. What did it take?
Why ask it
The details are the answer: how long it took, which accounts came first, what the brand contributed. Their story shows what they believe makes a line work, and you can judge whether you could supply your half of it.
Which line in your book has disappointed you, and what went wrong?
Why ask it
The way they explain someone else's failure is the way they will explain yours. If the brand was entirely to blame and they would change nothing on their side, expect the same account of a bad year with you.
Which brands have left you in the past couple of years, and why?
Why ask it
Every distributor has losses and a candid answer is a good sign. Vague answers about brands going direct are worth probing, because going direct is often what a brand does when distribution stopped growing.
Can I speak to two brands about your size that you carry now?
Why ask it
Ask for references at your scale rather than their largest account, since a large brand gets attention you will not get. When you call, ask about payment timing and data sharing, which are the two things nobody volunteers.
Choosing and negotiating with a distributor
Practical guidance for the conversation itself
Before the first meeting
- Know your landed cost per unit and the lowest price you can accept. Distributors negotiate from your price down, and a number you have not calculated will be agreed to in the room.
- Map the full chain: your price, their margin, the retailer's margin, and the shelf price. If the end price is not competitive, the deal cannot be fixed later with volume.
- Decide which accounts or channels you want to keep for yourself, and write them down before exclusivity is discussed.
- Have your capacity number ready. Winning distribution you cannot supply damages the relationship faster than losing the deal would have.
- Bring a sample and a one-page sell sheet. A distributor evaluates how easy you are to sell partly by how ready your material is.
Which questions to ask when
- First call: Reach and fit, then who would sell the line and what the first ninety days would look like. If the named accounts and a selling plan are not there, the terms do not matter yet.
- Second meeting, at their premises if you can manage it: Money and Stock, with the warehouse walk on the same visit.
- Before any draft changes hands: the Contract questions, so the agreement records what was said and not the other way round.
- Track record fits anywhere, but call the references before you discuss exclusivity, since what you hear should set how much of it you offer.
- Talking to several distributors? Put the same short list to each in the same order, and write the answers down the same day so they can be compared.
Ten to ask if you only get one meeting
- Named accounts in the territory you care about. Everything else rests on this one.
- Competing lines, and whether any of them is a house brand.
- Who would sell it: a named person, or every rep with a full book.
- Their first-year estimate and what it is built from.
- The margin they need, and whether it is figured on cost or on selling price.
- Payment terms as written, and the number of days they really take.
- Whether the opening order is bought outright or held on consignment.
- Sell-through data by account, and how often you would see it.
- Exclusivity: which territory or channel, for how long, and against what minimum.
- Two brands your size that you can telephone afterwards.
Terms people forget to negotiate
- Data: account-level sell-through, at a stated frequency, in a usable format. This is easier to get before signing than after.
- Price protection, which decides who absorbs the loss on their inventory when you change list prices.
- Deduction rules, including what they may take off an invoice without asking and what requires your approval.
- An advertised-price policy, if discounting in one channel damages your other accounts. Whether you may have one, and how far it can go, depends on the country, so check before you write it down.
- Term length and renewal. A multi-year agreement that renews itself takes away most of your leverage.
- What happens if their key salesperson or owner leaves, which is often the person the relationship was actually built on.
Warning signs
- Cannot name specific buyers or accounts, only regions and totals.
- Wants exclusivity with no volume commitment and no term limit.
- Refuses to share any sell-through information, or shares it only in aggregate.
- Payment terms far longer than the industry norm, or references who hesitate when asked about getting paid.
- Asks for a very large first order at a deep discount to open accounts, without commitments attached to it.
- Cannot explain how your product differs from the competing line already in their book.
If the distributor is already yours
- Most of this page is for choosing a distributor, but a good part of it works again at a yearly review. Bring back the questions on named accounts, sell-through by account, weeks of stock and the first-year estimate, and set this year's answers beside what was said before you signed.
- Ask which of your items are selling slower than you both expected, and which accounts have stopped ordering. Knowing why a buyer dropped the line is a sign they are paying attention to it.
- Ask what their customers request that you do not make, and where you are harder to deal with than their other suppliers. Late shipments, short-dated stock and slow answers on pricing are things you can fix.
- Well before a renewal date, go back over term, minimums and exit under Contract, while the notice period is still open to you.