Planning to Start a Business? Learn about Dealerships

Getting associated with an established brand is always a very safe way of starting a business. And the most tried and tested way to piggyback on an already successful brand is by taking a dealership of that company.

Why get into a Dealership Business?

Let’s face it. First thing - no matter how fascinating it sounds, starting a business involves a lot. Right from coming up with a unique-out-of-the-box-think-differently-DISRUPTIVE business idea to making a humongous capital investment, developing a team, building a business network, identifying target customers, branding positioning….. and the list goes on and every business enthusiast who has ever given it a try need not be explained further.

Secondly, we should also try to understand what kind of people look for dealership business opportunities? They are either people who are seasoned business owners who take up a dealership business as a side hassle that will help them to roll their money.

Also, there is a section of youth who do not have any prior experience in doing business. The reason they want to start a business could be varied. And since they neither have prior experience nor anyone in their family who have owned a business (in most cases), it becomes too much of a risk for them to put all their family savings into a stake. This is where getting associated with an established brand comes as a saviour. It gives such youth or first generation business owners a stepping stone to get initiated into the world of entrepreneurship.

Dealership with a reputed brand gives the first-time business owners a learning platform. They get the opportunity to interact with the company officials to understand the ropes of the game.

They also get to network with other dealers, build relationships, exchange business ideas, and explore opportunities even outside the dealership. In this way, a complete novice can gather business experience.

What does a Dealer do?

A dealer is a retail distributor of a product. It is a prerequisite for them to have a retail outlet of their own. Most automobile, FMCG, apparel, home appliance, and electronic brands appoint dealers to widen their distribution network and get an expansive reach of the customer base. If you already own a retail outlet, you could stalk up products of different brands and cater to the customers in your catchment area.

Most of these products have an established brand recall and a competitive price point. All the dealer has to do is to present it as an option at the point of purchase. The dealer has to take care of the logistics and warehousing part of the business to make sure that the product is kept in a good shape for the customers to pick it from the aisle. The dealer also has to take care that the product goes off the shelf way ahead of the expiry date.

Dealers bear the trademark of the parent company. They receive training and all other incentives from the parent company and earn a percentage of commission on the MRP.

How is the Dealership business model different from Franchising and Licensing?

Dealership, franchising, and licensing are the three ways for a company to establish its presence across geographies. All three business tie-ups aim at the same purpose of making the product available to a larger customer base. A contract is signed between the parent company and the dealer/franchise/licensee. They receive training and a complete business route map from the parent company that they follow to expand the brand presence within their catchment area.

In licensing, the company allows the licensee to use its patent in exchange for a licensee fee. This enables the licensee to use the designs and logo of the brand in a selected set of merchandise that has been agreed upon between them. The best examples of licensing include Disney, Avengers, Spiderman, and likes. The entire merchandise aimed at kids, be it apparel, sports gear, stationeries, and even school supplies, the market is infested with licensed products.

Franchising is a business partnership where the franchisee plays a bigger role in promoting the brand presence. They help to make the product or service to the people in their vicinity. The franchised arrangement is opted when a company does not have the capital or direct access to set foot in a new place. In such a situation, it is considered best to have a local partner who has a better understanding of the place and the people who live there. The franchisor earns a franchise fee and a royalty on the total sale incurred by the franchisee. Some of the most glaring examples of franchising include KFC, Dominos, and Levis to name a few.

Best Dealership Business Ideas for 2020

Due to the unprecedented pandemic of COVID 19, a lot of retail outlets have faced closure. The apparel and the automobile industry have been majorly impacted. Also included in this bracket are home improvement, hospitality, kids, and entertainment segments. However, several segments have experienced healthy growth during this time.

Some of the promising segments in 2020 include health and wellness, home essentials and groceries, organic, eco-friendly products, and ayurvedic products to name a few. The sale of hand-sanitisers, surface sanitisers, and anti-pollution masks has experienced commendable growth during the COVID 19 pandemic. Another range of products that have gained popularity includes touchless dispensers, taps, and bathroom fittings. The way people are getting used to these products in their daily life certainly indicates that these products will be used even after the COVID 19 pandemic gets over.

Opportunities are aplenty when it comes to dealership business in India. Apart from domestic brands, a lot of international brands are also setting foot in India. And these companies are always on the look-out for enthusiastic and energetic people who are ready to give it all for the growth of the business. Hence, if you think you have the right inclination, skill sets, and willingness to be part of a success story and also take it ahead, explore dealership opportunities. You never know, you may hit gold!

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FAQs

Q. Should I get in touch with the company directly to get their dealership or should I go via business consultants?

A. It is important to research thoroughly the company’s background and understand its dealership business plan before getting into any kind of business deal with them. You may do it on your own or hire a business consultant to help you. You should compare more than one company before deciding whether you should go for it or not.

Q. What are the criteria for getting into a dealership business?

A. Every company has its criteria that are different from another company. The company professionals will be the best people to guide you on this.

Q. Can I get a bank loan for a dealership business?

A. Yes. Like any other business, bank loans are available for dealership businesses as well.