First of all, one size of distribution channel does not necessarily fit all of your products. You may have different approaches within your company. So, how do you know which distribution channel is the best for your product or service?
Look at the product itself.
Does it need to reach the customer quickly? Does it need to be bundled with other products in order to be useful or attractive? If you’re selling fresh vegetables from a small farm, your best distribution channel might be direct, selling at a local farmers’ market. If you’re selling a specific piece of computer hardware, you might be better off working with a VAR or major retailer of computer products that complement your product.
Consider your sales goals.
Are you trying to target a very specific, international population of enthusiasts, such as gamers? Then maybe a direct channel of distribution via the Internet geared towards connecting with influencers in the community focused on your type of video games may work better than using a wholesaler and their retail partners. But there might already be a retailer that has created a meaningful relationship with that community and has expertise in this area – in which case, an indirect distribution channel might be a better bet. Are you trying to achieve the widest possible audience for your product? Then, perhaps the bigger wholesalers and retailers are the perfect intermediaries within an indirect distribution channel.
Considerations When Developing a Distribution Strategy
Mastering distribution channels is about more than isolated choices – you need to develop a distribution strategy and monitor its effectiveness through analytics and KPIs (Key Performance Indicators) in order to make sound decisions.
Here are some tips for an effective distribution strategy:
- Think about the needs of your customers. How do they access your products and services? Are there customers you’re not reaching that you might be able to reach through a different distribution channel? Imagine the process of finding and purchasing your product from their perspective. Base your decisions on sound data and CRM!
- Beware of channel conflict if you choose to use multiple distribution channels for the same product. This occurs when your efforts, say, in direct selling via eCommerce, get in the way of the same customers purchasing your product or service through an intermediary like a retailer. Otherwise known as disintermediating, or kicking distribution partners out of the distribution channel, this can be avoided if you strategise about the customer groups you are likely to reach through different distribution channels, focusing on market segmentation.
- Include your distribution channel partners in your company’s marketing strategy. Channel marketing is a strategy that directs marketing efforts not just to end consumers, but also to distribution partners. After all, intermediaries aren’t just a means to an end: they’re B2B customers! Just as with end users, marketing to B2B buyers is also increasingly a social, content-based game.