I Am a Supplier. What Are the Benefits of Using a Reseller Arrangement?

If you are a supplier looking to sell more products, you may want to consider engaging a reseller. This involves connecting with another business that will promote and sell products on your behalf. A reseller arrangement can offer: 

• increased brand awareness;
• access to a previously untapped market; and
• the potential for more sales. 

This article will explain how a reseller arrangement can benefit your business and what terms to include to ensure that the agreement advantages you. 

How Does a Reseller Arrangement Work?

As a supplier, you can choose to:

• sell your goods or software directly to customers;
• engage distributors to purchase your goods or software from you to sell it directly to their customers; or
• engage a reseller or ‘middle man’ to effectively do your selling for you. 

It is essential to distinguish between distributors and resellers. Although both options have their benefits and will increase brand awareness by reaching new markets, they are distinct in the way they interact with your business and sell your products.

Resellers will usually market and sell your products in exchange for a commission. They act as an intermediary between your business and customers who wish to purchase your products. This means that they generally will not have ownership over products at any stage in the process. In contrast, distributors will buy and store your goods in their own warehouse before selling them to end consumers.

A reseller arrangement is generally used by suppliers who sell:

• goods, such as homewares or technology hardware; and
• software licenced for resale to customers.

Benefits of a Reseller Arrangement 

Engaging a reseller could benefit your business because they:

• have an established presence in the market, with a well-known store and a solid customer base;
• may be able to sell a high volume of your products;
• can handle the sales and customer interaction process;
• can increase awareness of your brand;
• may be able to bundle your products with other products they sell, with your permission to do so. 

What to Include in a Reseller Agreement 

You will need a reseller agreement to set out the arrangement between you and the reseller. This should be a mutually beneficial relationship, but you must ensure that you are adequately protected so that the agreement does not disadvantage you.

The table below sets out some of the points that you should cover in your contract.

Key Takeaways

As a supplier, you probably want to focus on manufacturing your products. Therefore, engaging a reseller may be an appropriate way to sell a high volume of goods and to reach new markets. However, it is vital that you prepare a reseller agreement to ensure that your business benefits from the arrangement. If you would like help drafting, reviewing or negotiating your reseller agreement, contact LegalVision’s contract lawyers today on 1300 544 755 or fill out the form on this page.