A few weeks ago, during a meeting of Confindustria Vicenza’s Mercati in Vista service, I analyzed the foreign sales network of a manufacturing SME.

The company policy was clear: one distributor per country.

On paper, France, the United Kingdom and the Czech Republic were therefore covered. But looking at where the distributors actually operated, a different picture emerged: large geographic areas and several pools of potential customers remained untouched.

Hence a consideration:

Having a distributor in a country does not necessarily mean covering that market.

Presence and coverage are not the same thing

A distributor may buy regularly and maintain a good relationship with the manufacturer, yet operate only in certain regions, serve a limited share of customers, or promote only part of the product range.

HAVING A DISTRIBUTOR DOES NOT MEAN COVERING THE MARKET.

Revenue alone is therefore not enough to assess coverage. At the very least, you need to understand:

• which territories, sectors and customers the distributor actually reaches;
• which part of the range it promotes;
• which commercial opportunities it is actively developing.

The distributor’s name on the map does not automatically color in the whole market.

The ideal network is not always available

That said, market realities also need to be taken into account.

In the most competitive sectors, the best-structured and best-connected distributors are often already tied to competitors. A manufacturing SME entering a new country can rarely pick the ideal partner right away.

In an initial phase, it may therefore be necessary to “settle” for a smaller distributor, one present only in certain areas or less organized than one would like.

This is not necessarily a mistake. That partner can serve as an entry point, allowing the company to learn about the market and generate its first customers.

The risk arises when an initial solution is treated as final, without ever revisiting its limits.

The goal shouldn’t be to immediately build the perfect network, but to know which parts of the market are actually covered and which opportunities still lie outside the distributor’s reach.

When exclusivity is requested too soon

At international trade fairs, especially in growing markets, the opposite situation also comes up often.

A trading company visits the booth, gathers a little information, and immediately asks for national exclusivity. It hasn’t yet looked closely at the product, the positioning or the potential customers, but promises significant sales and rapid growth.

I’ve run into this directly in the United Arab Emirates and Saudi Arabia.

The prospective partner wants to avoid the opportunity going to someone else. From their point of view, that’s understandable. For the manufacturer, however, granting exclusivity right away can mean locking up an entire market based on promises that are still unproven.

Initial enthusiasm is not a business plan.

Exclusivity should follow results

Exclusivity can be justified when the distributor invests in launching the product, trains its sales network and carries out promotional activities.

Before granting it, though, it’s worth checking the distributor’s track record, the brands it already represents, the customers it serves, its territorial coverage and its proposed development plan.

In many cases, it may be preferable to start with a trial period without exclusivity, or to limit it to a specific area, sector or part of the product range.

This isn’t about distrusting the distributor, but about tying the rights granted to the commitment made and the results achieved.

Knowing the picture in order to improve it

Discovering that some areas are poorly covered doesn’t mean the distributor needs to be replaced right away.

The first step should be a conversation with the partner: share the uncovered areas and segments, assess their potential together, and agree on possible actions.

The distributor might need training, sales materials, joint visits or qualified leads. In other cases, it might acknowledge that it doesn’t have the resources to cover the entire country.

At that point, the company can evaluate — at a pace and in a way compatible with its own structure — whether to bring in a second operator, split the territory, differentiate partners by sector, or keep some customers under direct management.

Not every SME can quickly change its distribution network. But every SME should know its strengths and its blind spots.

The decisive question is not simply:

Do we have a distributor in this country?

But rather:

Which part of the market are we actually covering, and where do we still have room to improve?

The current situation may not be the optimal one. Describing it clearly, however, is the first step toward improving it.

Pier Paolo Galbusera