How to Identify, Evaluate and Manage Distributors in Latin America

You’ve identified Latin America as a priority area for expansion. Your strategy indicates that you will target this region by appointing distributors in various markets. But how exactly do you find them? And how do you approach them?

Managing the process of selecting and working with foreign distributors with different cultural backgrounds is no easy task.

• The search for distributors is an ongoing process. Continuous networking is important to connect with many industry stakeholders and explore new regions to identify the best places to sell your product and the best partners to help you do so.

• Online research can be difficult in Latin America. Even large companies tend to have limited online presence, and websites don’t provide much information. To identify the most important players in the industry, it’s best to approach the companies for interviews or in-person meetings.

• If your strategy permits it, establishing a physical presence and having “boots on the ground” to connect with local partners and ask for recommendations is a direct way to identify and meet distributors.

• In-country consultants with existing networks and information are indispensable, especially when establishing a physical presence is not a viable option. Foreign commercial services offices are also helpful in providing connections and information.

• Valuable characteristics of a distribution partner in Latin America include: experience importing similar products into the country, proven successful sales channels, and knowledge of the product. A crucial element is finding a partner that understands how to get the product into the country.

• When importing products that require registration before a regulatory agency, it can be risky to let your distributor be the title holder on the registration as they will have full control and can hold your product “hostage” if you decide to switch partners.

• Virtual calls, interviews, background checks, credit checks, in-person meetings, site visits, and reviewing client references are common pieces in the due diligence process when considering a potential distribution partner. When evaluating a distributor, they must meet the basic requirements for your business. A solid partner believes in your product and is willing to put in the effort on the commercial side. Sometimes, large distributors may not prioritize your product, and you won’t get the attention and effort you might from a smaller, more ambitious firm who is looking to grow

• As Latin America is very relationship based, it is important to demonstrate your commitment to the relationship and gauge how committed your partner is to your company and moving your product.

• Lack of research is the most common mistake when looking for a distribution partner. It’s not good practice to simply work with the first distributor you meet. Companies should take the time to get to know a variety of distributors and to better understand what options are available and how they stack up against each other. As urgency rises, so does risk. More touch points will give you a clearer picture of the local environment for your industry and help you make a sound decision.

• Exercise caution when it comes to payments. It is best to avoid deals that could significantly damage your business economically if a provider doesn’t pay. For the first payments, it is best to receive payment up front if it can be negotiated.

• It’s very important to communicate clearly and define expectations as explicitly as possible to ensure each party fully understands their responsibilities. Priorities vary from culture to culture which is why goals and requirements should be abundantly clear from the beginning

• Regional distributors are few and far between. You will likely have to find a different partner for each country or even multiple partners within a country to have a full regional coverage.

To learn more about how to enter Latin American markets or for assistance with finding a local distributor in the region, reach out to us to schedule a call and discuss your go-to-market strategy.