As a growing company, if you want to expand your potential audience and reach more customers, you’ve got to get a solid plan for your product distribution. This is the only option to ensure your products are reaching thousands of customers where they are, so you can accumulate sales across the country or even the globe. Today, we’ve got a helpful product distribution guide that highlights the basic information you need to know before planning your product distribution strategy. Let’s start with a simple definition.
What is Product Distribution?
Product distribution is the process of scattering your products throughout the market to make them available to multiple customers in many locations. The entire process involves a lot of planning when it comes to where your products are going, which markets you hope to reach, how the packaging withstands the different storage and shipping environments, plus more. If you aren’t familiar with the different distribution channels and key players, we’re going to discuss them further in this article, so just keep reading.
3 Types of Distribution
There are three main types of distribution you can choose from, which are intensive, selective, and exclusive.
If you plan to follow an intensive distribution strategy, your goal will be getting your product into as many channels as possible, which allows you to gain as much market share as possible. This method doesn’t allow for specific customer targeting as much as the other types of distribution do, so you’ll have to keep in mind that the audience you’re reaching is more generalized.
A selective distribution plan involves carefully picking and choosing which stores you want to sell your products in. This method of distribution allows you to find retailers who appeal to the specific customer base you want to reach. This gives you specialized targeting for sales rather than putting your product in front of everyone and hoping your ideal customers will find it.
The exclusive distribution method limits your outlets to only those that uphold the image of what your brand should be. This is commonly seen with luxury products, such as a designer handbag from Louis Vuitton to an Italian sports car from Ferrari. This method works well for companies who want to keep their products exclusive to very targeted markets.
Key Players in Product Distribution
Manufacturers create products out of raw materials. They are the starting point of the distribution channel, as you need a manufacturer to make a product before you can sell it. Manufacturers are also referred to as producers.
Distributorshelp fulfill retail orders on behalf of a manufacturer. They will also actively sell products for the manufacturer in addition to fulfilling retail orders through the proper storage and delivery systems. They have an agreement with the manufacturer to help make sure product is always moving off the shelf, as well as stocking and shipping it. This partnership allows them to develop strong relationships with various manufacturers.
Wholesalersare similar to distributors, but they simply fulfill retail orders without actively selling for the manufacturer. They only control the storage and delivery of goods. They have the ability to buy large quantities of an item from the manufacturer and distribute it in smaller groups to various retail outlets.
Retailers are the ones who provide a place for customer to find and purchase your product whether they offer it in a brick and mortar store or online. Retailers usually pick up orders from distributors and wholesalers, so your channel will typically be a bit more involved if you want to reach retailers. Some examples of popular retailers would be Walmart and Target. Retailers stock multiple products from multiple manufacturers sometimes, so depending on your retailer selection, there may be competition to deal with.
Agents provide customer and logistics management for sales on behalf of a manufacturer. They handle the marketing and customer relationship portion of your business and act as the representative of a particular company. Agents are commonly seen in service industries, such as individual insurance agents who sell insurance packages for a larger corporation.
Distribution Channel Options
Manufacturer to Consumer
With this channel method, you make and package the product to send directly to the customer. There is no middleman who helps you distribute anything, and there are no other ways for consumers to find your products. All of the distribution work is on your shoulders, including packaging and mailing the products out to different customers. You are responsible for all of the moving parts and making sure your products get where they belong.
Manufacturer to Distributor to Consumer
Manufacturers can send products a distributor who ultimate helps you find customers to buy your merchandise. They handle the selling and marketing of your products, as well as the storage and delivery of those products to your customers. Manufacturers who partner with distributors can focus on making amazing items to sell rather than having to expand marketing and sales departments to keep product moving. Instead, the manufacturer’s resources can be spent on improving their ability to create products.
Manufacturer to Distributor to Retailer to Consumer
Some manufacturers choose to send their products to a distributor who will handle the storage and delivery of your items, as well as ensuring they are sold to retailers on your behalf. Distributors help provide connections to retailers and manufacturers, which ultimately helps move product quickly. The product moves from the manufacturer to the distributor to a retailer, which is the final stopping point before a customer makes a purchase. Retailers present products to customers in an attractive way, either in a physical store or e-commerce website.
Manufacturer to Distributor to Retailer to Consumer
Sometimes manufacturers can sell to distributors who work with agents to sell to specialized retail locations. Agents work with companies to help provide selling and marketing for different products. They argue on behalf of a company to get the best deals and the right products, so you may end up pitching your product to an agent who then takes it to where you want it to be.
Creating a solid product distribution plan will help you reach the largest number of customers. It’s essential that you take into account the type of customers you want before choosing the key players in your specific distribution strategy. There are plenty of options when it comes to distributing your products, and you may have multiple different channel systems running at any given time to ensure your products are exactly where they need to be. We hope this guide has given you some insight into how product distribution works, and what types of systems you can implement for your own business.