5 Key Factors to Consider When Selecting B2B Distributors 

The business-to-business (B2B) sector is a billion-dollar industry.  

According to estimates, B2B e-commerce sales in the United States alone were worth $1.7 trillion dollars in 2021. Projections indicate that the industry may register a compound annual growth rate (CAGR) of 10.7% from 2021 to 2027.  

The rising demand for B2B services signals a dramatic increase in startups. However, choosing the right B2B distributor for your business isn’t a walk in the park. You’ll need to undertake extensive research, along with due diligence, to find a commerce vendor that suits your needs.  

Fortunately for you, we’ve compiled the five key considerations when selecting a B2B distributor.  

1. Define Your Requirements 

There’s a B2B supplier out there for virtually every business under the sun. However, what suits the store next door may not necessarily serve your needs.  

Therefore, the first step in finding a suitable B2B vendor is to understand your company’s needs.  

First and foremost, start by defining whether you’re a product-based or service-based business. Each option attracts specific types of B2B distributors. While grocery store owners will likely collaborate with farmers, data management firms seek meaningful partnerships with cybersecurity vendors.  

Next, know your niche and narrow down your options accordingly. For instance, are you in the equipment business? If yes, does your company primarily deal in hand implements or heavy-duty industrial machinery?  

Factors like a vendor’s shipping locations and preferred supply chains will also determine their suitability for your company’s needs.   

2. Understand Your Business Model 

Depending on the business model, there are four different types of B2B distributors. They include; 

Manufacturers 

Manufacturers let you purchase business inventory right out of the production line. They’re suitable where you desire to eliminate middlemen markups and maintain product integrity through the supply chain. 

Distributors 

Distributors bridge the gap between manufacturers and retailers. They handle all the logistics of shipping merchandise from manufacturing plants to retail outlets. 

Importers 

If your business deals in foreign-produced goods and services, there’s a complex maze of custom regulations to navigate. You can avoid these logistical nightmares by liaising with importers. 

Dropshippers 

Dropshipping is a retail fulfillment model where businesses don’t own or maintain the inventory they sell. When a customer places an order, a drop shipper relays such requests to third-party companies, which ship the products directly to the client using the drop shipper’s company information. 

3. Research and Analyze the Market 

Conducting in-depth market research can be instrumental in finding a B2B vendor that caters to your needs. Tap into online resources, including reviews and testimonials, to uncover the leading and reputable distributors in your niche.  

While reading user testimonials, don’t only pay attention to a vendor’s star ratings. Rather, endeavor to understand the key aspects most clients liked or disliked about the company.  

A distributor might be reliable in terms of availing merchandise when required. However, the company may have received negative reviews due to its unresponsive support. The idea is to weigh the positive against negative reviews and decide whether the vendor is truly worth your partnership.  

As well as the internet, you could analyze the vendor landscape by reaching out to other businesses in your niche. Inquire about your competitors’ current distribution channels as you implore them to share valuable nuggets on land with a reliable vendor.   

4. Draft a Budget 

By this point, you’ve hopefully identified several potential B2B distributors. It’s now time to interrogate your inventory budget as you narrow down your search. 

Most manufacturers offer their produce at wholesale prices. So, it’s more affordable to source your inventory right from the factory than to have it delivered to your retail outlet by a distributor.  

However, buying directly from manufacturers works best for bulk orders. If your business is still fledgling, you may want to consider working with a distributor instead.  

Besides, some manufacturers strictly insist on shipping to approved local dealers. That’s especially true for electronics, machinery, and automobile companies.  

Another way to interrogate your inventory budget is to determine whether you deal in seasonal commodities. Since the prices of such products vary throughout the year, you’ll want a B2B vendor that can supply to you at standard rates despite seasonal market dynamics.  

5. Have a Supply Chain Risk Management Plan 

No B2B vendor is 100% reliable. Even the most careful distributor will occasionally run into supply chain risks, which could cause significant shipping delays.  

Cases abound where flights were canceled due to adverse weather or in response to potential terrorist attacks. Besides, numerous companies have had their operations grind to a halt after major cyber-attacks.  

But while supply chain risks are inevitable, you can mitigate their impact by having a robust supply chain risk management plan.  

Ideally, your supply chain risk management strategies should correspond with the expected threats.  

Assume that you foresee shipment delays due to geopolitical tensions. In that case, you may engage backup vendors outside the crisis-hit areas. This allows you to stay in business even when one supplier is incapacitated.   

Wrap Up 

Every business operates within a unique micro and macro environment. Therefore, choosing a suitable commerce vendor comes down to your company’s setup and challenges.  

The trick is to define your pain points and then find a distributor that provides the relevant solutions.  

Better yet, you can rely on this post as your handbook guide to picking the perfect B2B supplier from a sea of recommendations.