Distribution

The distribution industry encompasses organizations that move goods and services across sectors through the supply chain, or channels of distribution, from raw materials producers to semi-finished goods or finished goods producers. Your organization’s growth is driven by the product or service that you offer, the price that you offer them at, how you promote them and the place where they can be found. The place where your product or service can be found depends on your distribution strategy. 

Distribution options that may benefit your organization 

Your organization may adopt one of the following three distribution strategies: 

Direct distribution strategy

Your organization sells its products or services directly to its customers using its own distribution channels which include one or more of the following: company website, web app, contact center, sales team, distribution center, office locations, Facebook, Twitter, Instagram. The customers may be businesses or individual consumers.

Indirect distribution strategy is about distributing your products or services through third-party distribution channels including: 

• Retail sales: the manufacturers distribute their products or services through an organization that sells them to consumers.
  
  Some retailers are mono-channel and will sell your products or services only online.
  
  Others are omni-channel retailers and will distribute your products or services through multiple singular and integrated channels that work together to improve customer experience. Customers should be able to browse your products or services, access their shopping cart on any channel or device from anywhere including from your store, get support for a product or service, place an order, get personalized offers based on their past purchases, repurchase a product or service across dozens of touchpoints seamlessly. 
  
  Other retailers adopt a multi-channel approach and use several non- integrated platforms (Facebook, Instagram, Twitter, blog, website, web app) to engage and connect with customers. For instance, a retailer may offer customers to buy online and pick up in store (BOPIS). They may also offer customers to buy online and return in store (BORIS).
• Channel partner or value-added resale: it is a distribution model where the manufacturer sells its product to a third-party organization that will add new features and services to the product and sell it at retail. 
• Intensive distribution: it is a retail sale strategy where the manufacturer’s products or services are distributed through as many markets as possible. 
• Selective distribution: it is a distribution method where the products or services manufacturer is selective on where the organization’s products are displayed and how they are represented. 
• Exclusive distribution: it is a distribution strategy where the manufacturer partners with another organization, a franchisee, a wholesaler, or a retailer, to distribute its products or service in a particular market.
• Wholesale: it is a distribution model where the manufacturer sells its products to organizations that will sell them to retailers.
  

Hybrid distribution strategy

In this dual distribution model, the manufacturer distributes its products or services directly to the consumers while also distributing them through third-party wholesalers and retailers. 

The rise of e-commerce  

Shoppers still prefer to buy in-store. That’s probably why year-over-year in the fourth quarter of 2020, retailers added 4,700 more store locations in the United States. This is the highest quarterly store count number on record. However, more and more sales now take place online. In the business-to-consumer (B2C) distribution sector, on average one quarter of shopping now takes place online. And 81% of shoppers do online research before committing to purchase. They start their research using a search engine and believe that a quality product doesn’t necessarily have to be expensive. The digital transformation of the retail sector is particularly visible during the holiday season as a growing number of consumers frequent online shops to find the perfect holiday gift. They use various devices to browse the web. For example, during the 2020 holiday season shopping, 61% of online orders were placed from a desktop computer, 39% were from a smartphone. 

In the business-to-business (B2B) distribution sector, B2B customers would rather educate themselves about your products and services rather than talk to your sales team. And 59% of them would prefer not to talk to your sales team at all. Three out of four of them prefer to buy online instead of buying through your sales team. 

Some of the key success factors 

We know that the future is bright for distributors that can embrace the following: 

• Digitalization: imagining entirely new distribution models with emphasis on a digital omni-channel approach to sales, content marketing, search engine marketing (SEM), and a revamp of the go-to-market channel strategy. 
• Product innovation. 
• Customer experience with a user-friendly website, enticing in-store merchandising, a compelling brand storytelling.