Distribution channels are the pathways that companies use to sell their products to end-users. Deciding how to distribute your products can be a hard nut to crack. There are a number of ways that your organisation can distribute its products and services and these will depend on your offering, and the resources that are at your disposal and how creative you and your marketing team is at meeting your customers’ needs.
Direct/sales team: You employ one or more direct sales people to sale your products of services. You may use multiple teams that specialize in different products or customer segments.
Direct/internet: Selling through your own e-commerce website is becoming the most profitable channel for many companies in the developed and the developing world.
Direct/catalogue: Selling through your own catalogue enables customers to find product on a catalogue and place orders either by phone , on- line or in person.
Wholesaler/distributor: These are typically companies that buys products in bulk from many manufacturers and then re-sells smaller volumes to resellers or retailers.
Value-added reseller (VAR): A VAR works with end-users to provide custom solutions that may include multiple products and services from different manufacturers.
Consultant: A consultant develops relationships with companies and provides either specific or very broad services; they may recommend a manufacturer’s product or simply purchase it to deliver a solution for the customer.
Dealer: A company or person who buys inventory from either a manufacturer or distributor, then resells to an end-user.
Retail: Retailers sell directly to end-users via a physical store, website or catalogue.
Sales agent/manufacturer’s rep: You can outsource your sales function to a company that sells different manufacturers’ products to a group of similar customers in a specific territory.
To create a good distribution program, focus on the needs of your end-users.
- If they need personalized service, you can utilize a local dealer network or reseller program to provide that service.
- Customers in many parts of the world where there is easy internet access and on-line transaction security now prefer to buy online.
- Companies in developing countries also need to take advantage of technology by creating e-commerce websites and selling direct to customers;
- Many manufactures and indeed retailers use affiliate marketing systems , to sell to other online retailers and distributors who in turn offer your product on their own websites sites through affiliate programs .
- Many businesses build specialized sales team to prospect and close deals directly with customers. These channels now include telemarketing teams in call centres , that sell directly to customers over the phone. Many banks , mobile phone and TV companies use this channel.
- Many customers prefer to come directly into a store and therefore they will not respond well to on-line stores. In this case many stores are also operating multi- channel distribution systems..
The Changing nature of Distribution Channels: ARGOS Case study
Argos is one of the most well know UK retailers that is using a multi- channel distribution system for the more that 20 000 products found in their stores. This systems comprises of a physical retail store, a product catalogue, on-line stores and door to door deliveries.
In terms of convenience, Argos has always been ahead in the ‘multi-channel’ race. The retailer knows that customers often find that more ways to shop can mean more convenience – in particular the chance to do the hard work of choosing in the comfort of their own home or workplace with a catalogue or the internet, and then completing their shopping in store or having it delivered direct to them. It’s been many years since Argos started to offer home delivery across all its products, and it’s also been over 10 years since they put all their products on the internet. In every year since, the retailer has relentlessly improved its multi-channel offer and the convenience it provides to customers. Argos internet orders have reached in excess of £2bn or more that 40% of its total sales.
Argos has also added other features to its on-line shopping experience. Customers shopping on the internet can view the real-time stock availability of the stores nearest to them. When customers reserve products online, they can provide their mobile phone number in order to receive a handy text message of their reservation number as well as a reminder text on the day their reservation runs out.
Check & Reserve is another feature of Argos, and covers every store and every product the retailer stocks in a store (that’s up to 20,000 products per store) . This great facility makes your chosen product immediately available for you from the second you hit reserve. The Argos distribution system makes it one of the most popular retailers in the UK.
Where do you go from here?
You can evaluate your distribution channel and improve your channel marketing management at any time. It’s especially important to think about distribution when you are going after a new customer segment, releasing a new product, or looking for ways to aggressively grow your business.
Evaluate how your end-users need and prefer to buy. Then do better
Your current distribution strategy should deliver the information and service your prospects need. For each customer segment, consider:
- How , when and where they prefer to buy
- Whether they need personalized education and training
- Whether they need additional products or services to be used alongside yours
- Whether your product needs to be customized or installed
- Whether your product needs to be serviced
Match end-user needs to a distribution strategy
- If your end-users need a great deal of information and service, your company can deliver it directly through a sales force, qualified resellers, consultants or resellers. The size of the market and your price will dictate which scenario is best.
- If the buying process is fairly straightforward, you can sell direct via a website/catalogue or perhaps through a wholesale/retail structure.
Growing your Distribution channel through partnerships
If you’re setting up a distribution channel with one or more partners, treat it as a sales process:
Approach the potential channel partner and “sell” the value of the partnership
- Establish goals, service requirements and reporting requirements
- Deliver inventory (if necessary) and sales/support materials
- Train the partner
- Run promotions and programs to support the partner and help them increase sales
- Service your channel partners as you’d service your best customers and work with them to drive revenue.
For African regional marketing and public relations consulting to grow your business in the region, contact Chipo on firstname.lastname@example.org