A good distribution strategy will identify the best sales channels for your firm and tell you how to exploit them. It can open up new opportunities, fuel growth and dramatically boost your takings and profits.
Your distribution channel requirements
If you sell food, the chances are you sell it face to face, either through a shop or delivery service. Customers want perishable goods quickly and they usually want to see what they're getting.
But selling face to face can be expensive and it might not be the most efficient or profitable way to reach your customers. If you sell software, for instance, you probably sell via online downloads.
Many firms find it more cost-effective to sell through other companies rather than direct to the end-user. A stapler manufacturer will probably sell through an office supplies wholesaler rather than individual stationery retailers. Even service providers use partnering strategies - a carpet-fitter working alongside a carpet retailer, for example.
Your choice of sales channel will also be influenced by what you want it to do. You might need a channel that showcases your product, for instance, or provides installation and customer support. If you want to build relationships with end-users, you'll need a sales channel that gives you direct control.
Distribution strategy preferences
The right distribution strategy will fuel your business growth. Working with sales agents and companies with established customers, for example, is an excellent way to expand into new markets where the cost would otherwise limit your ability to reach customers.
The degree of control you want to retain is important, too. By working with a sales agent you can control your pricing and perhaps establish a direct relationship with the customer. If branding matters to you, work closely with a small number of distributors rather than selling through too many different intermediaries. The same selective approach applies if you need to invest in your distribution channels - by giving sales agents product training, for example.
Distribution channel management
An effective distribution strategy will enable you to use your sales channels effectively and maximise profits. Focusing on a small number of sales channels lets you invest in each one and build strong relationships with key intermediaries.
A strategic approach to distribution will also identify conflicts and minimise them. For example, if you sell your product directly online and through other offline retailers, you will find yourself in competition with your own distributors.
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