Introduction on how to start a Distribution Business in India
If you plan to become a distributor in India? The distribution business is basically about you supplying goods to others who will sell to the end customers. Distributors normally act as mediators between manufacturers/wholesalers and retailers.
A step by step guide to start a Distribution Business in India
Distribution is a very worthy and income-generating business if you can develop a good retailer and business contacts. Nowadays distributors are even building networks directly with end customers. If you want to begin a successful distribution business you must first consider a few things well-before operating it. Here, we have provided a list of steps to follow to start a successful distribution business in India.
Market potential to start a Distribution Business in India
India is growing day by day in the distribution business around 3.3 lakh tonnes of products are used for the distribution business. In India, some of the states who are majorly involved in Distribution Business are Kerala, Assam, Karnataka, Tamil Nadu, Meghalaya, and West Bengal. Apart from the domestic consumption our country earns foreign currency from the export as well.
Registration, licensing, and permissions required to start Distribution Business
Registration is very important for any business and there is no exception here so register your business with the perfect form of organization. For the proprietorship operation, Trade License is enough for the beginning. However, you must register the company in the case of LLP, Private Ltd, or Ltd Company.
After the registration, it is advantageous to apply for MSME online registration. Obtain an FSSAI license as this business comes in the food sector. Also, you can obtain the brand in the future if you have a Trademark registration. Apply for GSTIN for the tax liabilities. If you plan to capture the foreign market, then you should obtain the IEC (Import Export Code).
The following are the permission and licenses required for starting Product Distribution Business in India:
- Obtain a trade license from the local authority.
- Next, apply for the VAT registration.
- Thirdly, get the BIS Certification (Bureau of Indian Standards) which is essential.
- Next, register your business for a trademark.
- You do not need a pollution control NOC. But it is recommended to verify with the local office.
- Also, ensure to register your business with ROC.
- Furthermore, it is important to apply for Udyog Aadhaar MSME available online.
- As it is a food-related product, you should apply for the FSSAI (Food Safety and Standards Authority of India) licenses
- Also, the unit must have compliance with the following: GMP and PFA Act which are very essential.
- The products should have ISO certification for building trust in consumers so apply for ISO 9001 certification.
- Lastly, you must ensure the unit to have exhaust fans to ensure a comfy environment inside the unit.
Detailed steps to start Distribution Business in India
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Here are some of the primary steps you must follow to become a distributor and gain profits in India:
Choose the product which you want to do business
Firstly, select the products which you are planning to sell. You must carefully select the products to sell. You must find out the products which crowd use in your locality. You must invest some time in market research about the demand of the consumers within your region. Talk to retailers, dealers and if possible the customers as well. You can take support from market research experts to check out the demand if you can afford it.
Contact suppliers related to the product you choose
After you decide on the products, it is now the perfect time to search for the right manufacturer, wholesaler, or established big distributors who can get the products. If you are fresh to this business it is suggested that you should first find dealers close to you. The margins might be less, but you will save a lot of cash in transport expenses and also good for verifying the market demand.
Set up a workplace
You must arrange your office in a planned manner. Make sure you acquire a place to keep the inventory. If you have low capital to invest, set up your office from home. You will save a lot of capital in this way.
Give an effective name your business
It is so important to have an attractive name for your distribution business. Register your business in the form of a business entity. Check out the licenses and permits that are required to start the business.
The important step is to find franchiser
If you are not willing to start from scratch, you can plan for buying a franchise of reputed brands. You will get a lot of options on the internet to check one including this website.
Set up a credit policy
Establish a credit policy for your business. It is very essential to establish a competitive credit policy. Some of your dealers or retailers may not be in a position to buy products from you in bulk due to money constraints. Check their market goodwill and prepare a credit policy to fascinate them.
Buildup a network
The key while running a successful distribution lies in building an effective network of dealers and distributors. Try to approach as many as resellers you can. Create a catalog and product kit and talk to the people related. Meet them with order forms when you get orders if you plan to work with him/her.
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Marketing strategies to promote your Distribution Business
Collect retail or wholesale trade publications if any in your segment. Place a classified ad in many trade publications. Add your website address, if possible in the classified ad.
Be a pro while setting up a purchase policy
It is always cost-effective to purchase products in large quantities. This will help you to repack them in smaller packages. Your resellers will feel it easier to sell your goods.
Investment required to start product Distribution Business in India
You can start this business with little investment as the process is simple and requires only a minimum amount. If you have a minimum of Rs. 50,000 then you can start the business immediately at a small-scale.
Profit margin in Product Distribution Business in India
You can expect a minimum of 20-25% of the profit margin in the Product Distribution business if you start the business on a smaller scale. On a commercial scale, the profit goes up to 35%.
Monitoring your business
Always, maintain a personal touch with your dealers and retailers whenever possible. This supports immensely in sustaining your customers. Remember everyone loves to approach the boss. Whenever you find the time, visit your resellers personally at their office. Talk to them about the business and what else you can help to support their business volume. Finally, the distribution business can be the most profitable venture. But to be a successful distributor, one must do hard work and dedication.
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