A ‘Distribution’ means to widespread your product into market so that a large number of consumers can purchase it. If you want to know more about how to build a product, you will be able to find the best way to sell it.
Distribution combines with following things:
- A good transport system to carry the goods to different areas.
- A good track of the goods reaching its destination on right time and in the right quantity.
- A good packaging for safely reaches via transport.
- Find the right places where your product can be placed to grab maximum selling opportunity.
- It also requires a process to resolve dealers or consumers issues. and take back products if needed.
A good Distribution can make a brand. A distribution system means that the company has great opportunities to sell its products in comparison to its competitors.
The company, which spreads its products on the market at a lower cost than its competitors, will ensure that the higher margins absorb the cost of raw material better and sustain long in difficult market conditions. Distribution is necessary for any type of area or service.
If a company don’t have good distribution, than the best price product, promotions and people come to nothing. Due to lack of good distribution, product can’t reach to the market properly. That means it is not available for its customers to buy.
Especially in the FMCG industry, companies distribute their low and high value products to huge numbers of retail outlets, or points of sale. The most successful brands have the widest distribution networks that spread factory made stock to their distribution points or C&Fs. Also, sending the stocks to the wholesalers, retailers and finally to its consumers. Today, even direct marketing is considered a feasible distribution channel.
What is a Distribution Channel?
There are basically two types of distribution a company uses:
- Direct distribution
- Indirect distribution
In direct distribution the company can directly sell its goods to customers. In the type of distribution there is no third party or channel includes.
On the other hand, through an indirect distribution channel, the product moves via various Distribution channels that ends at the ultimate consumer. Intermediaries between the manufacturer and the customers may as below:
- C & F
- Wholesaler or Distributor
- Retailer of e-retails
- Shopping Malls
Direct vs. Indirect Distribution Channels
In a Direct channel, a company that sells directly to consumers, a catalogue of brands own products, or ecommerce site show products and its features. For example, entrepreneurs who make digital products that include workbooks, audio training, and online courses, sell themselves through their own websites. The digital products and services sell directly from the creator or manufacturer to the buyer.
On a flip side, using indirect channel, companies sell first to distributors, who sell to retailers or dealers, who sell to consumers. That means there are various levels through which product reaches to customer.
FMCG, consumer electronic and other such industries are using multi level, indirect distribution channel.
Using indirect channel lets companies reach their products into a mass market. While indirect channel limits to a smaller market.
Considerations regarding a distribution channel
An indirect distribution having multiple levels makes an impact on products pricing. Because In the whole movement of goods, all the intermediatories like – distributors, dealers/retailers, wholesaler and all others, earns commission.
A product moves from the manufacturer to a distributor and dealers, before reaching to final customer
Product movement in distribution:
- The manufacturer to distributor.
- Distributor to retailer or dealer.
- Retailer to customer
Why right distribution strategies important for a company?
In today’s fast moving world, distribution by a company can be far-off and broad. Because of the rising pricing, Brands want to expand their products in different markets. So that, they can achieve a greater sales and turnover to get more profit.
Company needs the right distribution strategies to deliver the product to the mass customer. The right distribution is a must required thing in whole selling process. Imagine if a customer wants to purchase a product but it’s nowhere available. This is a clear loss of opportunity and, of course, the profit too. Therefore, there is a biggest need for good distribution channel and strategies for a company.
That’s the reason why most companies required distribution consultants, who have a bunch of details about available experienced distributors. And with their help, companies find and select right distribution partner as per their strategic requirement.
Some products, which are premium, might need selective distribution whereas others which are mass products. A distribution consultant understands the company’s requirement and suggest appropriate channel for their intensive distribution need.