Have you ever thought about becoming an authorized reseller to start selling things online or in the real world? Ever wonder how you even get started down that path? The channel sale is one of the most exciting things to be in and it is the middle between the manufacturer and the customer — the authorized reseller! We like it because it is lucrative, can be very fast paced, and is a team sport – at the end of the day, the customer wants a great product, the manufacturer wants to make it easy to sell, and authorized resellers can solve customer problems and recommend solutions to help them with those. Huge businesses have been made selling different products from official manufacturers – companies like CDW, Zones, and SHI (multi billion dollars a year in revenue!)
In this post I’ll discuss the couple steps you need to get started in this exciting world of channel sales and we are going to focus mainly on IT in the US, however this will apply to any sort of branded products. I’ll try to sprinkle in how the sausage is made. Really it boils down to these few steps:
- Have an official company (LLC is easiest to get started)
- Create an account with a distributor (for large manufacturers)
- Sign up to be a reseller with the manufacturer
- Get to selling!
These couple steps will get you started and tend to be easy to follow but the real work starts when it’s time to get selling. Also something you will quickly come to realize – this is a relationship business. People like to work with people who are easy to work with. Take this seriously if you want to succeed after the steps below.
Step 1 – Create An Official Entity
Let’s start with why you need to have an official company. In the business world it’s important to have an identity and an official business entity so you can do business. Reasons are that manufacturers basically want to make sure you’re legit. The last thing they want to be doing is spending time with a dude who sells 1 product a month and doesn’t show any promise of upside. It’s a waste of their time. Channel sales is a two way street and a partnership game where if they are spending time helping you learn the products that they get a return in you being able to move their products (and put money in your own pocket). When the channel sale is going well, everyone is winning – Manufacturer sells the product, you get your reseller fee, and the customer gets a good price.
To do this, simply search how to create and LLC in your state. There is usually a nominal fee associated with it ($150 in the case of Illinois), but the important thing you get is an EIN number. This is basically the equivalent of a Social Security Number in the US. It allows companies to look at your credit and make sure they are comfortable doing business with you. This number will be important for our next step – signing up with a distributor.
Step 2 – Distributor Account
What is a distributor and why do you need an account with them? Basically a distributor is a massive company that has agreements with manufacturers to distribute their products. The reason that large manufacturers go with distributors is that they don’t want to have to manage all the reseller relationships. Instead of dealing with thousand of reseller accounts, they can put that work off onto distributors to do that work for them as well as manage credit of those resellers. In return, distributors usually mark up the products a couple percent. Thoroughly confused? – See the example below.
Example: Cisco Systems is a huge IT manufacturer that sells over $50 Billion dollars worth of equipment every year. For the US market, they utilize only a few distributors – around 5. So, instead of needing to invoice and collect money from tens of thousands of resellers, they can just collect from those 5 companies. Those 5 companies in turn then manage all the reseller accounts (tens of thousands of them) and in return, make a small percentage on all those products sold through those resellers.
There are tons of benefits for the large manufacturers to utilize distributors as well as benefits to the resellers. They include but aren’t limited to:
From a reseller perspective:
1. Multiple manufacturers, one account. As a reseller, you can utilize one distributor to order many different products from many different manufacturers
2. Credit lines – ability to order stuff on credit so you don’t have to pay up front for every order
3. Education – the distributors can help get you educated on all the products you want to sell
4. Business relationship – in all likelihood you’ll have an account manager and someone who you can call to help you out with questions.
As you can see, this is an important relationship. These distributors are your key to building your business and growing your product portfolio.
Distributor examples: Ingram Micro, Tech Data, ScanSource, Synnex.
3. Manufacturer Application
This one tends to be a bit faster. After you have your distribution account with you’ll need to go through the application process with the actual manufacturer. This tends to be more of a check box, but, can actually be a little time intensive depending on the manufacturer. More technical manufacturers may have certifications you need to pass before they approve you to resell their products to ensure you are knowledgeable to do so. They tend to also want you to understand their brand policies to make sure you stay on brand as you promote their product lines. Lots of them may also have price protections in place so you cannot sell certain products for less than certain prices.
Many cases your distributor can help point you in the right direction of what you need to do to be eligible to sell certain brands. Reminder that they are very incentivized to have you sell as many brands and as much product as you can because they make their money when you succeed in doing that!
4. Sell baby, Sell!
Now that you have checked all the boxes and gotten green lights to start selling, it is time to do just that. There are tons of channels you can use to start selling and online should be a big part of that and hence why Auresma exists in the first place. We’d like to take the challenge out of selling online off your plate so you can focus on customers and larger deals that may need a bit more hand holding.
It is much easier to keep current customers than to find new ones so any customers that are buying from you, make sure you keep happy!
Follow these steps and you’ll be up and running in no time. Remember to create an authorized reseller account here and select all the manufacturers you are eligible to sell. Good luck and we can’t wait to see you thrive!