Product Brokerage - Fancy Name, Simple Concept

A product brokerage (a.k.a. "distributorship") is any organization that sells products it doesn't manufacture. Many small retailers and online businesses fall into this category and it's one of the simplest ways to get into business without spending a fortune on start-up costs. So how does it work?

Market America has exclusive contracts with 70+ manufacturers in the United States, but doesn't physically produce a single product. They work with whichever company is the best at producing any given type of product, and then funnel that product to waiting customers. They don't pay for R&D, tooling, or advertizing and their employee expenses are limitted to support staff and Quality Control.

In addition to these cost savings, this approach also means that they are not tied down to a single product family, but can move freely to follow the market trends. If a product stops selling, they simply stop carrying it and move on to something that is in greater demand. Rather than producing products and trying to convince people that they need them, Market America asks it customers what they want and then finds the best way to provide it for them.

So what does all this mean?

Well, the customers get the best products available at the best price because they aren't paying into all of the development and advertising of "brand name" goods (a single 30 second Super Bowl commerical cost $2.5 million last year!). For the distributors, it means retail profit and commission checks. It seems like a win-win situation to me, so make sure to let me know if I'm missing something...