The Ultimate Guide For Starting A Dealership Business In India

India’s dealership markets for several sectors are expected to grow at a double-digit rate in this decade. So, a dealership business might be worth a shot at for anyone looking to start a new venture. Also, with so many recent government efforts to encourage dealerships, new businesses will be popping up and making huge strides in India. It’s well-established that dealerships are profitable, but what still confuses newbies is how to go about starting their first one. So, we’ll look into the actionable approaches you can take to become a dealer. 

Franchise Vs. Dealership Business – How Are They Different?

Here are some points of differences between dealerships and franchises.

• Control– A franchise is subject to certain conditions regarding the working hours, pricing, etc., which must be maintained for standardisation. However, dealers have more flexibility with how they want to price their services and other operational tactics. 
• Initial investment– Some franchises match the investment required for dealerships, and some exceed it. The higher costs are justified for franchises because of the capital needed for hiring and training employees.
• Monitoring and advice– Both dealerships and franchises have operation and management suggestions from the umbrella company, but franchise owners have more access to a broader information base as compared to dealers. 

How a Dealership Business Works

Unlike D2C brands, most Indian businesses follow a multi-level hierarchy, starting from the manufacturer and ending with the customer. People responsible for regulating the flow of products via supply chains are called dealers. Once the manufacturer has a market-ready product, they hand it over to dealers, who then use their supply chains and networks to distribute the products to retailers. We then buy the products directly from the retailers. 

Steps to Create a Successful Dealership Business

Starting a business is exciting but also quite scary in the beginning. To help you through the initial phase of toiling, here’s our action plan for aspiring dealers.

Research the purpose and reach of the industry

The first step towards starting a dealership is researching the industry specifics well. Many different categories exist in this sector, so choosing one whose purpose connects with you and one that’s profitable is advisable. You’ll only gain relevant insights into the local markets through research and talking to industry professionals. Once you have what you need, start formulating a practical strategy that lists all your business goals and other relevant details. An ideal business strategy is one that factors in the financial estimates, aligns with the current market trends, and offers a sustainable phase-by-phase expansion plan.

Finding the Right Supplier

The relationship between a dealer and their supplier will determine the success of the dealership business to a certain extent. Finding local suppliers is always recommended for greater profitability as the delivery chains operate smoothly. Beginners often need to pay more attention to this point. That’s because having the right supplier for your business will prevent roadblocks and fast-track growth.  

Identifying the Target Market

After you’ve figured out the supply part, the next arena to tackle is the market. A good marketing plan will function like pieces falling into place, while a bad one can make everything fall apart. Find ways to directly connect with the customers’ needs for the best results. Focus on your target market while staying consistent with your service or product quality. Once you launch a campaign, list all the best respondents and go from there. Use customer data to your advantage, and the rest should be easy. Another helpful tool can be customer feedback. Use the responses from previous campaigns to design better ones. 

Focus on network building and enhancement 

In the dealership business, networking becomes crucial. There are several ways to go about this. You can meet other dealers at events or find people with similar professional interests on social media apps. Networking and being part of a community will help eliminate some obvious roadblocks and dodge foreseeable ones. Connecting with other dealers could also open up new distribution channels and introduce you to previously unknown products. When forming your network, don’t restrict yourself to people in your specific business category. 

Periodically track your company’s and the competition’s progress 

To survive in the dealership business in the long run, you’ll need to keep revisiting deals and track your company’s progress. Keeping finances in check, brainstorming on clearing any blockages, and finding new marketing ideas will curate the recipe for success. Also, keep a keen eye on your competition, learn from their failures, and adopt their better approaches (if any), and this should be enough to establish a successful dealership business. 

Striking a balance between product quality and margins

Sometimes dealers are confused about handling their product margins. Some products offer better margins. However, some others may still be in demand and offer lower margins. In such a situation, knowing how to strike a balance between keeping relevant products and also ensuring that your margins aren’t hurt is vital. There will always be products that overlap both criteria. Also, this is where networking will come to your rescue. Connecting with other dealers will help you navigate common problems quickly. Any market shifts can be handled by the community more effectively than by an individual. Tweaking the supply chain and optimising your product range takes some experience in the dealership business. For a beginner, the focus should be on improvement rather than perfection. 

Also read: Founder Story: Teavaro- A Modern Tea Franchise

Conclusion

Starting and operating a dealership business can be a lot to undertake for an independent owner. However, using the points we’ve detailed in this guide, you can tackle many obstacles and expand quickly. Gaining stable and reliable suppliers is something to pay strong attention to, especially in the initial stages of the business. Remember to think of the long-term consequences of your strategy and prepare accordingly. The numbers for this category point towards an expansive future. So, now’s a good time to own a dealership for those interested.