Contracting with a national distributor is one of the biggest gambles an offshore manufacturer can make.

While distributors claim to have established reliable pathways through the local cultural, geographic, and economic barriers, their execution can be highly inconsistent. When it fails, the distributor’s problems instantly become the manufacturer’s problem.

Some common challenges that offshore manufacturers experience in Latin America:

Cargo Held Hostage – Cash flow problems can keep inventory in limbo for weeks, even months, forcing manufacturers to “rescue” it with additional funds and assume liability for recent currency fluctuations.

Difficulty Collecting Revenue – Unexpected challenges in moving funds out of the country.

Lack of Response to Product Issues – Warranty claims and DOA warranties expose the weaknesses of even the best distributors – but it’s the manufacturer that takes the hit. 

Complete Lack of Transparency – Transparency, in both the marketplace and operations, is critical to future revenue… but easily obscured when a third-party distributor takes the reins. If the distributor mishandles the merchandise, neglects market feedback, or ignores red flags and opportunities, the manufacturer has no way of knowing until the damage has been done.

And, because the manufacturer is unlikely to fly a representative to Latin America to confirm the problem every time something arises, there is no way of knowing whether the problem itself is authentic or manufactured by a shady distributor to increase profits.

Without accurate and true market intelligence, manufacturers cannot capitalize on the opportunities available in Latin America.

With margins growing thinner every year, manufacturers are recognizing that this risky and inefficient distribution system is inherently flawed. Fortunately, it can be modified, even bypassed.

Many manufacturers are now exploring a new distribution model – an outsourced direct-sales model that effectively navigates these factors, creates transparency, safeguards brand integrity, minimizes risk and maximizes profit. Thoroughly tested and proven viable by Sharp Electronics, Castelmec’s SDO platform is changing the way business is done in Latin America.

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