Appgrid Point
Choosing a distributor is often treated as a relationship decision — which partner do we already know, who responded fastest to our enquiry. Commercial readiness requires a more structured assessment. Before you commit shelf space, inventory, or margin to a channel partner, verify the following.
Sales capability
Technical sales staff. Does the partner have people who can explain your product’s specifications to buyers? For industrial or technical products, a general sales team without product knowledge will underperform regardless of margin incentives.
Existing category experience. Has this partner sold products in your category in the last 24 months? Ask for specific brand names and approximate volume, not vague assurances.
Retail or trade coverage. Map their actual account list against your target buyer list. A distributor strong in southern Taiwan may not help if your launch focuses on Taipei specialty retailers.
Operational readiness
Inventory handling. Can they receive, store, and ship your product’s physical dimensions? Verify warehouse capacity, not just willingness.
Returns process. What is their standard return policy with retailers, and does it align with your warranty terms?
Order minimums. Confirm their expected MOQ matches your production batch sizes. A distributor who orders 50 units when your minimum production run is 500 creates a mismatch.
Commercial alignment
Margin expectations. Have you modelled their required margin against your price list? A partner who needs 35% margin when your architecture allows 25% will either push for higher list prices or underinvest in selling.
Promotional participation. Will they co-fund launch promotions, or do they expect you to fund all trade marketing? Get this in writing before signing.
Exclusivity terms. If you grant territorial exclusivity, define the territory precisely and set minimum performance thresholds with a review date.
Material readiness
Sell sheets received and acknowledged. Has the partner confirmed receipt of your sales materials and raised questions? Silence often means the materials are sitting unread.
Training completed. For products requiring demonstration or technical explanation, has the partner’s sales team completed your training session?
Pricing agreement signed. A verbal agreement on list price and discount structure is not sufficient. Both parties should sign a price list appendix to the distribution agreement.
When to walk away
If a prospective partner fails more than three items on this list and cannot commit to resolving them within four weeks of your launch date, consider alternative channels. A signed agreement with an unprepared partner costs more to unwind than delaying the signing by two weeks.