Master distributorship can be termed as an agreement in which a company or brand gives permission to a particular distributor to appoint sub-distributors under him for a specific geographical area. A master distributor represents a wide range of manufacturers.
Generally master distributors have a lot of influence in a geographical area and they command a large following. It is seen that many start-ups try to seed their businesses with master distributors because of their scope of influence. Master distributors have a lot of influence because they help young companies to grow so that they can capitalize their businesses with momentum and excitement. Time and again companies have used master distributors to grow product offerings and also build an online presence. The role of master distributors become more important when there is recession or economic uncertainty in the geographical area. Because of their growing importance, companies also provide financial incentives to master distributors via some sort of special bonuses.
These bonuses may vary among master distributors from area to area and usually comprises a small part of the total revenue. However there may be a drawback as well while making an arrangement with master distributor that they do deals with certain companies that may go undisclosed thus reducing the transparency in business. Disclosure is important in this case because when a master distributor is promoting a viable opportunity with only one member, other prospective members may not know of this opportunity and they might perceive this as misleading. A master distributor normally has a high volume inventory and is able to ship orders immediately from his stock. He also puts a highly trained sales force in the field to open up new avenues and increase his revenue as well. Generally, a master distributor enjoys custom converting capabilities and custom printing capabilities in house.
Hence, this concludes the definition of Master Distributorship along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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