More startups are using established distributors as an important marketing channel.  This can be a win for both sides. Established companies often want to add more to the basket of what they sell to their customers to increase revenues as well as deepen customer relationships. And they are more willing these days to include goods and services from startups, often because it helps them appear innovative. Startups want access to lots of customers and to minimize their sales and marketing expenses, and are happy to yield the wholesale margin to a distribution partner. 

A further bonus is those distribution partners might invest in or acquire the startup once the new product becomes a hit. Many established companies have established venture funds in recent years. Many know they need to source much of their innovation from the outside. 

Building effective distribution partnerships is a combination of marketing and sales skills. Companies that consider distribution partners as like a commissioned salesperson, sometimes referred to as “coin operated”, rarely succeed. Instead it is vital that companies consider both how to sell-to (making it worthwhile for the distribution partner) and how to sell-through (showing partners how to sell to their customers).

Success comes from pitching the deal well to the optimum distribution partners, negotiating the best agreement, then putting in the time and effort to make the partnership a success.