Distributorship business start somewhere in 1990's. Many company go for this kind of marketing strategy. It is not costly in terms of manpower and lower risk in bad debts. The business goes like this:
The Principal (the original owner of the product/products will look for another company that will sell their finish goods. The principal company will extend discount to their distributors..extend terms and conditions, support the distributors in terms of promo and merchandising. The distributor will be the one to sell the products of the principal in the specific agreed area of responsibilities. Distributorship is simply buy and sell business, but will bound the two companies in the specific contract.
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