Practicing Due Diligence while dealing with Dealers & Distributors

India’s retail industry has grown considerably over the last few decades. This growth not only comes with the rising demand for dealers & distributors but also a systematic due diligence process to ensure compliance with best practices. A distributor is like a middleman between a producer and customers or retailers, and it's important to perform due diligence on their operations. So, it is safe to say that a considerable portion of any business’s relationship with its customers is reliant on the distributors. They are your business partners who carry your brand to the public and in many ways affect your brand reputation, making it essential to conduct due diligence on their practices.

As such, it is crucial that you only work with diligent, responsible, and trustworthy distributors, who share the same values and visions as your business, no matter which field of business you are in. The best way to make sure that you partner with reliable distributors is through thorough customer due diligence. So here are some aspects of due diligence you need to explore before entering into a deal.

1. Dealer’s approach towards selling

   When you are researching for a dealer/distributor, you are looking for a long-term relationship with a consistent supply of goods to keep your business flow consistent. When you are talking to a distributor, do they provide solutions to your queries or simply try to wrap up and push you into an obscure deal? Do they answer your questions or imply their own answers? A good dealer will not only clear your doubts, they will also provide you with better solutions than you were originally looking for. Of course, per the business culture in India, we cannot expect the dealer to cater to each and every one of your queries unless they have some kind of assured benefit from the deal, but you can at least judge between how they are tackling your issues.

2. Do you feel confident with the staff?

   One way to gauge the stability of your dealer is by observing the stability of their working staff. If the staff well trained, do they provide satisfactory answers to your questions, do they escalate issues to their seniors or simply rub it off on their level, is the staff constant or ever-changing?

   Asking these questions will automatically give you the answer to whether you are confident enough that this dealer will provide you uninterrupted smooth service, ensuring you perform due diligence before committing. You can also check the financial stability of your dealer by checking their company credit report and company credit score as well, which are essential components of financial due diligence.

3. Importance of After-Sales Service in Due Diligence

   A deal is not over with a sale, especially when it’s a perpetual one. Since you will be buying products from your dealer on a continuous basis, you may have times when a particular lot/batch is faulty or damaged or is just not what you wanted. In such cases, is your dealer willing to take back the products or is there any other concrete way out for both of you? Some dealers also provide service options wherein they can refurbish or repair a particular product and return it to you. In such cases, the dealer usually offers a temporary replacement for your product to keep your business from halting while they repair yours. Then comes the communication part:

• Are they willing to attend to you personally or do you have to go through an automated call attendant each time you need assistance?
• Are they proactive enough to let you know what you can do to solve the problem?
• Will they carry the defective product themselves or you have to transport it yourself?

Why Choose CRIF for Practicing Due Diligence with Dealers & Distributors?

It may seem that we are going overboard in expecting a few things, but in reality, when you consider these, you actually come to a practical solution profitable to both the parties and save yourself the frustration of the future. CRIF is a microfinance credit bureau in India providing due diligence report services along with supplementary services such as providing business credit score and credit report, personal credit score and credit report, and other business solutions. For your financial and security needs, contact CRIF, today!