What is Distribution Process?
There are many ways of selling a product.
Intensive distribution involves adding as many channels as possible to reach a wide audience.
Selective distribution focuses on exclusive distribution, creating a high-end brand image.
In this article, we’ll examine some of the options.
Intensive and selective distribution are both methods, but they are used for different purposes.
If you’re a direct-seller, you will likely be focusing on the latter.
The direct selling distribution process involves inviting customers to a party where a sales representative will discuss the product in enough detail to convince the customers to buy.
After the party, supporting resources are handed out to the guests, and the salesperson takes orders.
There are two types of party plans.
The first is a traditional party plan where the salesperson invites the customer in for a product demonstration.
The second is a network marketing style where the salesperson recruits other sellers to sell their products and earn a share of the sales revenue.
The main difference between direct selling and indirect sales is that the latter occurs in non-retail environments, such as the internet.
Although the term “direct sales” is associated with multi-level marketing (MLM) companies, many other types of businesses use this model to sell products.
In fact, direct selling is even common in the B2B industry.
According to the International Business Journal, there are more than 118 million representatives worldwide in the direct sales industry, with over 80% of these sales occurring in North America, 26% in Asia, and 12% in Europe.
Another form of direct selling is the zero-level channel.
With this channel, manufacturers sell directly to consumers without intermediaries.
Most direct distribution companies process and sell their products directly, cutting out the need for expensive wholesalers.
The benefits of direct selling include saving money on marketing expenses and promoting their products through their own website or store flyers.
The primary disadvantage to direct selling is that it is difficult for customers to find the products they need.
Wholesalers are the people who make products and services available to retailers and consumers.
They don’t sell directly to end consumers, but they are still important.
Manufacturers are often difficult to reach, as they only cater to wholesalers.
Some may even be located overseas, and shipping costs can be prohibitive.
To avoid such hassles, wholesalers invest heavily in product research.
The wholesalers study consumer behavior and market growth to better understand how to make the products more appealing to end consumers.
These studies are often used by manufacturers to make product and production processes better.
While the wholesale distribution business model can be advantageous to new entrepreneurs, it does carry risks.
Wholesalers pay for the transportation and storage of products between the manufacturer and retailer.
Fuel prices and transportation costs can also disrupt cash flow and budgeting.
Therefore, distributors need to invest in storage space as well as office space.
This space is essential for the wholesale business.
It is also a good idea to invest in computers and office furniture.
Besides the role of distributors, wholesalers are also a crucial part of the retail supply chain.
Wholesalers buy in bulk and resell them to retailers.
In this way, wholesalers can make adjustments to suit the needs of retailers.
Moreover, wholesalers have no other role other than fulfilling orders from retailers.
These wholesalers can help save money in the long run by improving the efficiency of the process and cutting costs.
In order to succeed in the distribution business, wholesalers should know the different types of marketing and sales strategies.
Direct mail, telemarketing, and e-commerce are two types of direct marketing.
Direct mail requires a lot of work, but the latter involves a high volume of telephone solicitation.
Distributors can also use e-commerce to reach out to niche markets.
These distribution channels are the most effective for a business, but they do require a special skill set.
Wholesalers are a key part of modern retail and manufacturing industries.
They purchase products from manufacturers and resell them to retailers and end-users.
Their role is crucial in the modern retail and manufacturing industries, as manufacturers are dependent on wholesalers to move their goods into commerce.
They also perform assembly work, finance risk-bearing, and communicate market information.
For example, a wholesaler may buy products for resale or sell them under their own brand.
Distribution happens in three stages: the distributor delivers the product to the retail outlet, the retailer sells it to the consumer, and the customer consumes it.
Often, costs related to marketing and sales are split between these three parties.
This means that products usually have a higher price than if they were sold directly to the customer.
In some cases, retailers have to offer discounts to make their products more appealing to consumers.
The role of distribution is essential to the overall business.
Without it, companies cannot offer the highest level of service.
When there are bottlenecks, deliveries fall short, which makes everyone upset, from retailers to consumers.
When these situations happen, a company must continually improve its distribution process.
To do this, it must create a feedback loop between suppliers, retailers, and consumers.
Whether the process is working as it should, everyone needs to be happy with the outcome.
In many cases, producers prefer to deal with channel members than directly with customers.
But some producers prefer to work with giant retailers because they are more efficient than their own distribution departments.
In other cases, producers simply want to concentrate on production, and they feel that they cannot compete against giant retailers.
Moreover, they believe that they can not compete with such retailers, which offer huge sales opportunities.
In addition to direct selling, retailers also sort out items into similar stocks.
For example, designer dresses are sorted according to size, while the economy and moderate dresses are sorted by brand.
The retail distribution process can also be considered a chain.
The process involves several intermediaries between the manufacturer and the consumer.
Some intermediaries, like wholesalers, are needed in this chain, while others are not.
Whether or not a product is distributed through retail outlets will ultimately depend on the business model and the type of company.
While the retailer may be an intermediary, the retailer’s goal is to provide high customer service.
As the traditional retail model has been undercut by the internet, the direct-to-consumer distribution process has evolved to become a powerful business model for companies of all sizes.
This method was once thought to have a high barrier to entry, but today it is widely used by big brands who see its potential to increase their revenue.
And with technology making it easier than ever to conduct business online, the direct-to-consumer model is more popular than ever.
The Direct-to-consumer distribution process eliminates the middleman.
A consumer goods company can expand its reach to a larger audience, test new products, and gain first-party data.
A leading bicycle maker recently opened its D2C channel and discovered that gender-differentiated bicycle sizes were unnecessary.
As a result, they ceased to produce bikes tailored for men and women.
This allowed the brand to focus on creating products that are more likely to resonate with its target market.
The D2C model involves many different types of sales.
Direct sales can take place at a farmer’s market, through a computer, or by mail.
But it must involve direct contact between the consumer and the producer.
Without this direct contact, consumers may not be satisfied with the product they’ve purchased.
Moreover, if a consumer is frustrated with an order, they can complain publicly and switch to another brand.
Another direct-to-consumer process is pop-up stores.
Many famous brands, including Levi’s, have used this approach.
Their pop-up stores are located in high-traffic retail locations to raise brand awareness.
This way, they can physically review the products and make an informed purchase online.
This way, the customer can be assured that the product is of the highest quality.
The company also has the advantage of faster delivery and less hassle.
Direct-to-consumer models also offer many other benefits.
In addition to cutting out the middleman, direct-to-consumer distribution allows brands to bring new products to the market faster, with greater control over their distribution.
The freedom to act enables companies to better understand their customers.
They can also develop direct feedback loops with consumers, which allows them to identify market trends and strengthen their relationships with customers.
The direct-to-consumer model allows companies to create a closer relationship with their customers, which ultimately increases their customer lifetime value.