When it comes to expanding in brand new markets, the top tier brands know that staying on top of their entire sales process is vital to making a deal. But how can you stay on top of your sales process if you aren’t engaged in it each step of the way? Product distribution is a key pillar that many tend to overlook as more brands search for an easy cheap solution versus having a straightforward distribution strategy. In this article, we’ll be explaining everything you should know about product distribution, from distribution strategies to roles in the industry, allowing you to build your own distribution strategy to achieve optimal performance.
Having an effective product distribution strategy is critical to driving sales and growth.
What Is Product Distribution?
By definition, product distribution refers to a company’s ability to make a product available for purchase by distributing it to the markets. It involves transportation, packaging and delivery. Product distribution is a key pillar in your supply chain.
A distributor is defined as someone who purchases products, stores them, and then sells them through a distribution channel. They are in between manufacturers and retailers or consumers, working on behalf of a particular company as opposed to representing the company themselves.
In short, the right distributor can help your business get exposure in the markets while helping you do so quickly and efficiently.
3 Types Of Product Distribution
The type of distribution strategy you use will depend on the product you’re selling.
- Intensive Distribution
- Selective Distribution
- Exclusive Distribution
Now that you know what those 3 product distribution strategies are, let’s break them down to see how they’re unique and differ.
- Intensive Distribution: One of the most effective distribution tactics is to go after as many channels and platforms as possible. The objective of broad distribution is to penetrate as much of the market as feasible. You want to be in everyplace you can be.
- Selective Distribution: This approach is selective, focusing on certain channels and media. There will be areas you want to visit with this strategy. This is typically based on a specific product and its compatibility within a shop. Maintaining a level of control over your brand is important for any company. This helps manufacturers to pick a price point that targets a specific market of client, resulting in a more personalized shopping experience for consumers. Selective distribution limits the number of locations in a certain region.
- Exclusive Distribution: This is a method for limiting the channels and outlets you use. Extremely selective. The first illustration of this approach is luxury brands, such as an exclusive collection, where it’s only available at certain locations or shops. The second way to preserve a brand’s reputation and product uniqueness is through exclusive distribution. High-end designers like Chanel, as well as automobile manufacturers such as Ferrari, are examples of businesses that utilize limited distribution.
Why Distribution?
There’s no two ways to split it, getting your products distributed is vital for all businesses. Product distribution is a key pillar for both startups and established companies. Many startup businesses have created amazing products, only to fail later because they couldn’t secure distribution.
If your business model is designed to rely on distribution partners to get your product out to the markets, you need to take the time to get familiar with distribution channels. This is especially true for startup businesses because distribution can be your ticket to fast growth.
Many startup companies believe in their products but a great product is not enough to be successful. What builds a strong business is a great product and a great team and often your success is built on your distribution network.
You’ve likely been thinking about this…
- What would happen if we can get our product on QVC?
- How fast could we grow if we could get our product on Walmart shelves?
Sound familiar? Look, those moves could be huge for your business, but it takes a lot to get into that position.
Things don’t always go as planned and if you’re looking to get product distribution, there’s some key points you need to learn and understand before you start making moves. In this article, we’re going to break down everything for you.
Distributor Profiles
To better understand the distribution roles, there’s 4 distributor profiles you need to become familiar with.
- Distributor – A distributor is a wholesaler but with more input and responsibility. While distributors fulfill retail orders, they can also help sell products on behalf of producers.
- Wholesalers – Wholesalers fulfill orders of retailers by reselling goods in large quantities from manufacturers. To get a lower price, wholesalers often buy in bulk from distributors and manufacturers.
- Retailers – Retailers are outlets where consumers can purchase goods. A retailer can be a local store or a larger company such as Best Buy.
- Agents/Brokers – Agents handle the logistics of the sale. Agents will handle contracts, marketing and specialized shipments. They can also help with customer service management.
Choosing The Right Distribution Types
Now, most products can be delivered through multichannels, which is a good move for your business. The last thing you want to do is rely on one single channel for your distribution. You may end up getting a distribution channel but it doesn’t mean you’re going to be successful. It’s one thing to get a partner, it’s another to perform.
What you need to do is weigh out all your options.
- Retailers
- Consultant
- VAR (Valued-Added Reseller)
- Wholesale
- Dealer
- Sales Agent
- Internet (Direct)
- Catalog (Direct)
- Internal Sales Team
Before you start reaching out to potential partners, you need to think long and hard about what you need in your partner. You want to find a distributor that has experience in your specific niche and industry.
What Is Distribution Management?
Distribution management is the process of moving a product from a source to the point-of-sale, which may include storage at warehouses, retail distribution points, shipping and delivery, and other resources.
- Warehousing – This is going to refer to the location(s) you choose to store your product.
- Packaging – This is going to point toward packaging in two areas, packing that keeps a product safe and packing that builds brand value.
- Inventory Management – Proper inventory management is a huge pillar to distribution. Managing your inventory is one of the core pillars most important foundational elements to proper distribution.
- Order Processing – When customers put in orders, distribution management needs to have a plan for delivering those items. This involves collecting the stock, loading it and delivering it in a timely manner. Approval needs to be sent and invoicing done for this step to be valid.
- Logistics – You always have to think about how products are going to be shipped. What type of transport and shipping you’re going to use is important to your bottom line. If they require overseas shipping there must be agreements in place for permits to be approved quickly.
- Communication – Clear communication along the entire distribution channel is always vital to success. You want to make sure you have such processes in place. This is to ensure that the correct products are shipped and customers know when they will receive their items.
What Is E-Distribution?
The term “E-distribution” isn’t used a lot, but it refers to the dissemination of things like software and digital downloads.
E-distribution is a key factor in numerous areas, including video games, computer software, marketing tools, online advertising, films, music, e-courses and digital ebooks. This sector is rapidly expanding and extremely lucrative since it is simple to produce many goods or subscriptions.
Customers expect to receive a digital product immediately after purchase, as they have done with physical products in the past. If you buy a digital good but don’t get it, your excitement will fade rapidly. In the background, there are several mechanisms in place to ensure that digital items are delivered correctly.
The benefits of this business are limitless, since there are few adverse elements to providing these sort of products and services.
What Is Marketing Distribution?
As slightly different from e-distribution and supply chain distribution, marketing distribution is how the marketing department makes products and services available to potential prospects and customers. Availability can be through the manufacturer, supplier, distributor, retailer, or wholesaler. Marketing distribution, from a marketing mix point of view, can be classified as place. Marketing distribution methods that fall under this category include:
- A manufacturer can use a distributor to contact suppliers or shops to acquire their products.
- A vendor might put their products on a marketplace for merchants to discover and sell.
- A retailer can stock many products in strategic locations across their store to influence customers to buy.
- A wholesaler can build a website so customers can order products directly from them.
Who’s The Best Distribution Partner For Our Needs?
You need to start thinking who would make a great distribution partner in your specific category. Don’t get caught up with the brand itself, but rather, dive deep into the proper category.
Take a close look at the descriptions of each partner, you’ll use this in the next step to begin building your partner list.
Here’s some questions you need to ask yourself.
- What types of skills will help this company sell my products?
- Does this company have experience selling products like mine?
- What types of customers can they help me find to buy my products?
- What special needs, skills, resources will they need to sell my products?
Start Creating Your Target List Per Category
Once you’ve went through the first 2 steps, you can now begin building your list out per company, per category.
Here, you want to create your list of potential partners you’d want to work with based on the research you’ve outlined above. It’s always best to have your team on hand for this rather than doing it yourself.
Create Your Partner Pitch
You have to remember, partnering with a distributor is a two-way relationship. You want a partner that’s going to help you get out to the markets and they want a partner they can rely on. It’s a win-win relationship with everything goes right, that’s why it’s important to choose the right distribution partners.
- What are the key benefits working with you?
- How will you support your distribution partners?
- What type of marketing support will you be helping with?
Choosing a distributor should be a carefully thought out decision. You want to make sure you choose the right distribution partner and it’s an equal relationship. A healthy relationship can ensure the success of both parties, but you must make sure they’re a good fit for your business.
There you have it, every end and beginning of product distribution. Now, it’s your turn – who are you going to depend on for a product distribution partner?
Thill Inc. has over 50+ years of order fulfillment experience, helping our clients pick, pack, and ship out orders. As an award winning 3PL fulfillment company, we offer a wide range of fulfillment and warehousing solutions, including order management, ecommerce fulfillment, returns management, warehousing, analytics, value-added services, and more.
