As a business owner, there are many aspects of your company you can choose to focus on – from your sales strategy and social media marketing to your financial situation. Most people tend to put most of their attention on those three aspects, so the distribution strategy is often left behind.
However, that shouldn’t be the case. Having a great distribution channel strategy will help you improve your company’s financial situation by generating more profit and stimulating business growth. So, if you haven’t put the proper focus on enhancing your distribution channel strategy, let’s change it by looking at the simple things you can do to make it more effective.
Effective Ways to Improve Your Distribution Channel Strategy
Even if you have a ton of experience managing a business, figuring out how to improve your distribution channels can be difficult. However, there are a few main tips that you can follow which will help you enhance your strategy, no matter if you’re the head of a large enterprise, small business, or start-up. They are
- Knowing the advantages and disadvantages of your current distribution channels
- Making sure to move products to end-users efficiently
- Ensuring that your distribution channels are cost-efficient and able to save you time
Now, when one puts things like that, they seem very easy. However, achieving them is a challenging task. Let’s see how you can implement them in your company.
Understanding Your Distribution Channel Strategy
As we mentioned, the first step toward improvement is evaluating how things are going on. Product distribution channels tend to be categorized by the supply chain’s length or by the level of market penetration. The main categories include
- Direct distribution
- Indirect distribution
- Intensive distribution
- Selective distribution
- Exclusive distribution
Direct distribution refers to when the product is sent directly from the manufacturer to the end consumer. It requires the business to have its own warehouses, transport vehicles, and a logistic system in place. Often, having this kind of company requires a substantial financial investment. However, in the long run, this distribution can become more effective as it bypasses the so-called “middle man.”
Indirect distribution is when there are numerous intermediaries between the manufacturer and the end customer. This model typically inflates the prices, as all the people involved in the process need to get paid. Additionally, it can lead to product delivery delays if faults in communication occur.
Intensive distribution is used when selling mass-marketed products, meaning the kind of consumer goods that usually get sold quickly. If you face competition from many alternative brands, then this model is the way to go. The idea behind it is that the more people see the product, the more they will trust it, and so the likelihood of purchasing it will also increase.
Selective distribution occurs when products get distributed to only a selected number of sellers. Typically, this gives a brand a more premium feel and allows companies to enter deals with retailers that forbid them from selling direct competitors’ products.
Exclusive distribution is when manufacturers agree to sell their product only to exclusive distributors so that their product can get the recognition of being a high ticket item. This distribution channel strategy can only work for luxury items.
As you can already see, these different types of distribution channels have their own benefits and disadvantages. The first thing you have to do is decide which kind of distribution makes sense for the products you sell. By having an in-depth understanding of the nuances of your distribution channels, you will easily find which areas can be improved quickly.
What Can You Do to Improve Your Distribution Channel Strategy?
Finally, we’ve arrived here. Let’s take a look at a few ways you can make your channel strategy more efficient.
Streamline Product Movement
Regardless of your distribution channel strategy, streamlining product movement is key. Late or incomplete deliveries can ruin the reputation of your business and should be avoided at all costs. If you want to avoid losing customers because of inefficient distributions, you can do the following:
- Optimize warehouses
- Have direct vendor shipments
- Deliver to parcel lockers
All of this will result in better delivery times, more productive workers, and happier customers.
Control Costs of Distribution
There’s a chance that you’re currently overpaying for your distribution process without even knowing it. That’s why it’s a good idea to spend time auditing your distribution channel strategy. The easiest way to do this is by developing ways to track performance, review channel intermediaries, and build strong partner relations.
If you genuinely want to have an effective distribution channel strategy, you just need to follow these few points:
- Have a distribution channel that’s tailored to the product you will be selling. Consider what items you’re offering: are they easily perishable, are they everyday consumer goods, or is it a niche, luxury product that wants to make a name for itself? All of these types of goods need to follow their own specific distribution channel strategy.
- Make sure your distribution is well-organized. Customers want to receive their products on time, and if that isn’t happening, it’s a clear signal that your distribution strategy is failing.
- Regularly reevaluate your distribution strategy. After doing so, you can find opportunities to make new deals with your partners or reword old ones if you’ve found a stagnation issue.
Distribution channels breed success when they work properly. They’re more than just the way products move from one place to the next one. No matter how terrific your products are or how incredible your marketing is, if your business is unable to keep its promises and deliver quality products on time, no one will buy from it.
Hopefully, this article helps you find ways to improve your distribution channel strategy quickly. For more similar articles, visit the Camberlion blog – there’s plenty more you can learn.