You may be naturally drawn to appointing distributors as your principal channels because they are arguably perceived on the surface to be the cheapest and easiest route to your uncharted territories. You consider recruiting a distributor on the basis of their known access to these markets, and the fact that they have an existing organisation with a solid reputation. You assume that they will undertake most of the required investment because you are offering them generous trading discounts.
A distributorship is basically another business like yours. They have similar core behaviours, expectations and challenges. Nevertheless, the distributor margin imposes an extra cost layer on your products or services. The reality is that distributors need to earn enough to cover their own commercial structure such as offices, sales teams, showroom, warehouse, online sales function etc. and they need to make a respectable profit.