Five Things To Know When Picking A Distributor

"A distributor needs to be healthy so he can invest in his logistics operation and have inventory availability," says Merle McIntosh, senior vice president of product and site management at Egghead.com.

2. Know your partner's goals. Be sure they add value to your business and that your objectives, in turn, add value to their business.

"We look for partners with whom we can develop a strong relationship," says Tom Forrester, director of operations at Buy.com. "In doing that, we leverage the strengths of our virtual model."

3. Know your partner's IT capabilities.

"In the Internet world, there needs to be a high level of electronic connectivity to operate the business in a highly efficient manner," McIntosh says.

4. Know your partner's inventory strategy.

"How and where they put it is important to us," Forrester says. "We look for a solid inventory strategy that will keep overall costs down and provide customers with products they want."

Jason MacLean, vice president of operations at uBid, stresses the importance of a strong back-end fulfillment system and "control over modification of the system to sufficiently upgrade it and make it scalable and robust enough to handle future volumes."

5. Know your geography.

"Location is important for getting product out quicker," MacLean says, "and also a factor in finding sufficient, qualified manpower."