Rice is the most consumed staple food in the whole world. This shows that any rice related business anybody invests in; whether rice farming, rice hulling service, or wholesale distribution of rice will definite have a ready market for the product or services. I will focus on rice distribution business in this article including why you need to start a distribution business and how to get started and become a big time wholesale distributor of rice.
As a wholesale distributor, your duty is to serve as a distribution link from the rice farmers to the retailers. Most retailers do not have the capital required to purchase in bulk quantities from the rice farmers. It is the wholesaler or distributor that will buy in large quantities and sell in smaller bulks to the retailers; so the service of a distributor is needed in order to get the rice to its needed locations. With the rate rice is consumed around the world, getting retailers to supply to will not be a problem at all.
- A Supplier-: This should preferably be a rice farm because as the wholesale distributor, you need to buy from a source where you can get the rice in very large quantity and at the cheapest possible rate, so that you can still make profits after spending for the logistics involved in getting the rice from the supplier to the retailers.
- Warehouse-: Most times, you don’t get to sell of the whole bulk of supply you get at once to the retailers because there may be times when the market demand may be low, that is when you need a warehouse to store your rice until you are ready to ship out to retailers.
- Capital-: To become a wholesale distributor, you need to buy in very large quantity from the rice farmers and sell in smaller bits to the retailers; so starting a rice distribution business requires much capital. The only exception is if you have a mutual understanding and agreement with the farmers where they supply you the goods on credit sales, you sale to the retailers and pay them off as soon as you are done with the sales.
- Transportation-: As the distributor, you may have to be in charge of transporting the rice from the rice farm to your warehouse or delivery to customers when orders are placed. You may need to get few trucks to handle the distribution process or you can strike an agreement with a logistic company to take care of the transportation process.
With these four factors in place you are now set to start your distribution business. The next subsection will be on how to start a rice distribution business.
Starting a Rice Distribution Business – Sample Business Plan Template
1. Carry out Feasibility Study-: In as much as any rice business have an available market, you still need to conduct a feasibility study on the demand of rice in your location. You need to find out if there are retailers who are available to buy your rice produce and how fast they sell out to consumers. This will help you have an idea of the market you have in your location; though you are not subjected to a particular location as a distributor because you should be able to distribute fast and wide within and outside your country wherever there is demand for your produce.
2. Get the Necessary License Required to Become a Distributor-: You may be required to get some sort of license in order to operate as a wholesale distributor in some states. Find out the license and other legal formalities applicable to your state and get them.
3. Get Your Supply of Rice from the Rice Farmers-: After you are done with your feasibility study and you are sure that there is an available market for your produce, it’s time to contact your supplier to supply the first consignment of produce for you. When you get the produce, you can choose to repack them to become your own brand. The branding may involve packing the rice in personalized sacks.
4. Promote Your Products to Retailers Around-: At this stage, you are done with the licensing, supply and branding, its time to find retailers and promote your product to them. chances are that they already have other distributors they buy from, so you have to give them reason to patronize your products; some incentives you can give to retailers to make them buy from you includes:
- Free Samples-: Some retailers maybe afraid to order from new distributors whom they don’t know the quality of rice they have to offer; one to get around the issue is to offer a small bag of rice; lets say 2kg as sample to any retailer who feel is a potential customer.
- Discount-: You can also offer to give some percentage discount for any distributor that will order a certain number of bags, or that can refer other distributors to buy from you.
- Free Delivery-: You can offer to give retailer free delivery services to any destination of their choice, if they can order for a certain number of bags of rice from you.
- Payment on Delivery-: You can offer this service to retailers who are in another location to build their trust; you ship out the produce and they pay once they get to see it.
- Credit Supply-: When you succeed in getting few regular retailers that large customer base, you can make a deal to supply them on credit for them to pay back after sales.
5. Accounting-: When the business is up and running, you need to have a good accounting system to keep track of income and expenditures. This will help you keep track of the business progress and to make amends in financial structures when necessary.
On a final note, this rice delivery business is very viable for anyone who wants to make quick turnover on his investment within the first few years.