What exactly is the product distribution? Distribution, in simple terms, is the way in which you make your merchandise or goods available to possible buyers. In most cases, you are selling directly to the final consumer.
Now, in some cases, you are going to want to partner with another firm in order to increase your exposure, your market reach, or even to increase your sales. You may want to get someone to help you get YouTube likes for your content or market to a specific audience. Some firms will do this as part of their product distribution strategies. Others will utilize joint venture partnerships as part of their marketing strategies. Still others will work with independent firms and these strategies can even extend to wholesalers and retailers who may have very specific product distribution channels in place.
The first step in implementing product distribution strategies is to set up your company’s logistics infrastructure. This includes determining the proper places for your company’s product distribution channels and establishing a logistical infrastructure to support those channels. In many cases, this logistical infrastructure will include the creation of a purchasing system in which the manufacturer distributes directly to your retail customers and the determination of appropriate pricing and discounts for those retail customers. In addition, some companies establish their own customer acquisition departments that will be in direct contact with the retail customers and will also work with your logistics department to determine the appropriate prices for those customers and establish discounts and incentives for your retail customers in order to increase your overall customer satisfaction and retention.
Next, we turn to the implementation of the various product distribution strategies. The most common method used by manufacturers is to simply set up a single distribution channel — in other words, your company only has one product distribution channel. You can use multiple distribution channels, however, as long as they are established and profitable. For instance, you may find that your company’s product type requires that you distribute to distributors that are independent of your primary product. If that is the case, then your company would establish two distribution channels: one that you distribute through your own sales force and another channel that you offer through your product type and a third party logistics provider.
Some manufacturers choose to have a single distribution strategy for all of their product types, including ecommerce orders. If a manufacturer has an online ecommerce operation, it is not uncommon for them to have a single warehouse and fulfillment center located in one geographic location. The company then distributes through warehouses located in different areas around the country. While this may seem like a time-consuming, centralized, distribution strategy, it can provide your company with a strategic advantage. Not only can it reduce costs and improve efficiency (especially in terms of warehousing and shipping), but it can give your company a significant competitive advantage.
Indirect Distribution Strategy
Another strategy that manufacturers often use for the distribution of their product distribution strategies is indirect distributors. Indirect distributors are distributors that transport the goods that your manufacturer sends to your retail stores. For example, if you order electronics from a manufacturer and ship those devices to your company’s retail stores, then some of those devices may end up being sold by indirect distributors instead of directly to your retail stores. For many manufacturers, this is a cost-effective way to distribute their products to their customers because they do not need to allocate additional space or staff to house and manage their own direct distribution channels.
Of course, many manufacturers choose to have more than one product distribution strategy. In fact, some manufacturers will create multiple product distribution strategies depending on what service or product they need to provide to their customers as well as which part of the country or other geographic region they intend to serve. This strategy can be very useful for a small business that is still relatively new and has limited customers in a particular region. By creating several different distribution channels (such as direct, warehouse, and indirect), a small business owner can be assured that he has several options should he have future growth plans that involve expanding into other regions.
No matter what type of product distribution strategies a manufacturer adopts, it is important that each strategy supports the goals of his manufacturing company. For instance, some manufacturing companies create product distribution strategies that include both retail distribution channels that ship directly to retailers or customers at their place of business. Other companies may choose to create only a single retail distribution channel or develop multiple distribution channels depending on the type of device that he wants to distribute and the amount of time it will take him to establish those channels.