A new venture starts by pointing out a window of opportunity and a business idea. Then the entrepreneurs make a business plan, check its feasibility, invest, and launch their products or services in the market. They are also aware of their target audience and copyrights. However, there is one crucial faucet often neglected--how to connect with the target audience and sell products. You might be one of those entrepreneurs worried about promoting their products and finding potential customers.
The answer to this confusion is that you need some distribution channels for marketing your business and reaching potential customers. You need a distribution channel to promote your business, whether a shoe manufacturer or an automobile garage owner. The digitalization of the world has revolutionized the methods of targeting audiences and converting them into potential clients.
Nationwide lockdown during COVID has further aggravated the situation and led to the transfer of local businesses to online platforms. In addition to business owners, end users prefer to pick and choose products via e-commerce websites. That's why the concept of distribution channels has changed. Let's get down to the basics to know what are channels of distribution.
What are distribution channels?
Distribution means delivering the product or service from the seller or manufacturer to the consumers. The pathway from the seller to the consumer is the channel. The distribution of products can be carried out indirectly by wholesalers or intermediaries or directly from manufacturer or seller to consumer. The answer to the question, “what are distribution channels?” is that the pathways followed in distributing products/services from the manufacturer or sellers to the end users are known as the distribution channels.
The channel will be shorter if the end users buy the products directly from the manufacturer. However, this pathway will become longer if the manufacturers get help from wholesalers, retailers, and distributors. There could be different channels of distribution for your business marketing.
As we all know, the 4Ps of marketing are:
1. Product
2. Price
3. Place
4. Promotion
The place is one of the essential aspects of the marketing mix, and it figures out where the product will be available for the customers. In short, the third P of the marketing mix refers to the method of distribution; Should the customers visit an outlet to buy a particular product or scroll down an online website?
Digitalization and the scattering of potential customers over different online platforms have dramatically affected the product placement and distribution channels. Entrepreneurs need to look for multiple channels to reach their customers. Although the significance of physical distribution channels has not decreased, online hooking audiences seek more attention because these are more cost-effective for manufacturers and consumers. Thanks to a boatload of free website builders, sellers can distribute their products directly to their customers.
Image taken from Strikingly.
What are direct and indirect channels of distribution?
Direct Distribution Channel
When a customer purchases the products directly from the e-commerce store of the manufacturers or catalog of the manufacturer, this is the direct distribution channel. For example, the sellers of digital products like audio/video courses, e-books, and services mainly connect with customers directly through their websites.
As there is no involvement of any third party, the products will not be costly. You don't need to keep the prices of products high to create a profit margin for the retailers. Last but not least, it will also maximize your profit because there is no shipping cost to the resellers. However, online businesses selling digital products may need investment for their website hosting, but different website builders offer reasonable pricing plans for website creation.
Image taken from Strikingly.
Direct channels are profitable in many ways, but you must take care of your customer services and inventory.
Indirect Distribution Channel
In such channels, the customers buy products from wholesalers or retailers. Examples of distribution channels indirectly working include mortar shops or beverage manufacturers. In such cases, the manufacturers sell their products to ultimate customers by getting the services of several go-betweens like:
1. Distributor
2. Retailers
3. Suppliers
4. Dealers
5. Manufacturer representatives
As the products pass through multiple hands, the price of the products ultimately becomes higher. The number of intermediaries in the indirect channels varies from one to many. Having multiple go-betweens is not a bad thing in itself. It only demands you plan more strategically.
Selecting a suitable marketing distribution channel depends on your company's size and target audience. You better use an indirect method if you run a large company and want to commercialize your product in different marketplaces. However, if you are an online store owner, you should keep things simple. It also depends if the customers have a very tight budget, you should approach them directly via an online store to keep the prices low. Moreover, direct distribution would be your best go-to option if you target a group with an online presence, like video gamers and social media users.
What are the different types of distribution channels?
There are multiple means of distribution of goods among customers. Here are a few types:
1. Direct Sales
The manufacturers sell their products directly to the customers without intermediaries. The channels of distribution example working this way are bakers.
2. Retailers
These distribution channels use third-party stores to sell their products to customers.
3. Intensive Distribution
In this method, the manufacturers distribute the products in multiple stores to reach the maximum audience. However, the technique becomes costly in inventory control, supply chain, and marketing and follows a complex pathway.
4. Selective Distribution
All the companies do not want to sell their products to the entire population. They are very selective in their distribution and target a very particular audience. In this method of distribution, the products are available only at a few stores. Different websites showcase their products in separate sections to hook the related audiences.
Image taken from Strikingly user’s website
5. Exclusive Distribution
The customers buy the products from the wholesalers in this type of distribution method. However, the manufacturer deals with only one wholesaler in a specific market. It helps them improve the customers' in-store experiences and control their brand representation.
6. Dual Distribution
Many companies opt for direct and indirect distribution channels. They sell their products through wholesalers, retailers, and distributors and directly connect with the target customers. Smartphones and games accessories stores are the distribution channels examples selling their products to retailers. But they also build online stores to sell and communicate with customers directly.
7. Wholesalers
Wholesalers also serve as the third-party connection between the customers and the manufacturers. The only difference is due to the target audience and supply scale. In wholesale, the manufacturers supply a massive amount of their products in one move to the wholesalers. The wholesalers get a discount on prices for buying the large amount. Then, they directly sell the products to the customers or the retailers.
8. Value-added resellers
Distribution channels do not sell their products directly to consumers. They distribute their products to channel partners and ask them to repackage and sell the products. This way, the value-added resellers target their customers and sell the products.
What are the considerations for choosing appropriate distribution channels?
There are considerable different factors for choosing suitable distribution channels because it will affect your start-up's progress. Here are a few things to decide on the way you should go:
1. Does your target audience demand personalized customer service?
2. Are you selling a luxury product that will become more expensive if channelized indirectly?
3. Is the product tangible, and will the customers prefer to test it physically?
4. What are the market trends regarding selling products in your industry?
5. Are you selling a digital product?
6. Is there any national or regional restriction regarding the distribution channels?
The Digital World and Distribution Channels
As marketing trends have revolutionized, whether you are a shoe manufacturer or a digital product seller, a digital presence and online brand website are a must-have for every business. Online brand recognition will maximize sales if you favor direct distribution channels or prefer selling through wholesalers or retailers.
Creating an eCommerce website or online store with Strikingly is just a piece of cake. You can offer your customers personalized service with remarkable Strikingly features and earn a good reputation online.
Here is a quick overview of how Strikingly can add value to your business:
- No worries if you don't know how to handle a website. Strikingly comes with an easy-to-use interface that keeps all the things manageable.
- Budgets are usually tight at the beginning of a start-up. That's why Strikingly has offered a free plan to accommodate new entrepreneurs. You can shift to the VIP or pro plan in the future to use maximum features.
Image taken from Strikingly.
- Elegant Templates of Strikingly enable you to customize your website according to your needs and styles.
The Bottom Line
You cannot deny the dramatic change in marketing trends. Building a brand reputation and credibility takes several years, and it takes a second to destroy it. To keep pace in this digital world, you must bring innovation to your marketing strategies.
It doesn't mean that you don't follow the channels of distribution. Don't forget that marketing fundamentals are the same. You only need to choose the most appropriate distribution channel according to your needs. Customers are the top priority of every business. You need to make the product distribution process seamless, and online websites or e-commerce stores could be a great helping hand in this. Take your first step in creating a website with Strikingly.
