A key component for the majority of modern businesses, having a thorough, well researched and carefully considered distribution strategy in place is a must. However, depending on industry and the types of product your company produces – such as perishable food items – distribution requirements can vary greatly.
In this area, there is no one-size solution and the most effective and appropriate distribution strategy will vary depending on industry, product and customer. This means finding the right distribution channel for your business can be challenging. As such, whether you own a startup and are designing your first strategy, or creating a new product and revising your current channels, this article contains tips to help you distribute your products efficiently.
As mentioned, the type of product your company produces will greatly influence the type of distribution strategy you choose. For example, perishable goods such as food stuffs, flowers or live animals will require specialist, fast, heat and climate-controlled environments. On the other hand, long life items can typically be stored for extended periods or utilise longer, more diverse methods.
Is your product bespoke? Does it address a need? Or is it more of a luxury item? Answering these questions could help you select the right distribution channel. To illustrate, a handmade item or marketing leaflet may need to be delivered directly to your customer. While products that resolve an instant need, such as food items or medicines, may be better placed in a store where consumers can access them as required.
The way a business distributes their products can directly reflect a company’s branding. For example, a customer would expect a high-value item to be delivered quickly and efficiently, using a premium service. While consumers would not expect to find a high-end item in a bargain shop. This is where understanding your market can impact decisions regarding distribution and ensure you select the most appropriate option.
Knowing your customer is vital in all areas of your business, from product innovation to marketing strategy. The same is true for distribution, as understanding customer behaviour can help to determine the most suitable channel. For example, how often your product will be purchased, as well as the geographical location and distance of your customers, can influence whether you choose a shorter or longer channel.
Just like customer characteristics, thorough and ongoing competitor analysis is crucial. Do you know which channels your competitors are using? Are you up-to-date with the latest industry trends? Answering these questions could alter your distribution strategy, either by adopting tried and tested methods, or selecting alternative channels to stand out from the competition.
Effectively managing cash flow is an essential element for businesses of all sizes, from startups and SMEs to large multinational corporations, both for company survival and growth. As such, when selecting your distribution channels, consider cost. This can include a range of factors such as insurances and warehouse storage, all of which can eat into your company’s bottom line and impact profit margin.
Designing your company’s distribution channel requires thorough research and analysis. Hopefully this article has helped to answer some of your questions and assist with the creation of your strategy.