Selecting the right distribution channels for your business is very important, as it can have a direct impact on your sales and income. A distribution channel is the pathway through which a product reaches the customers from its manufacturers. Hence, it is significant to choose an efficient path that can deliver products to the right customers at the right time and at the right place and in the right quantity.
A company can select one or more distribution channels for their business based on the nature of their product and the market they are targeting. The common company distribution channels that are largely utilized by a lot of people include retailers, wholesalers, mediators, etc. Now a lot of businesses are utilizing ecommerce sites and other online shopping platforms as their distribution channels.
When selecting a distribution channel for your business, you have to consider a large number of factors. These factors are very important, as they can decide the success of your business. Hence, we include a list of things you have to consider when you are selecting a distribution channel for your business.
The Nature Of Your Product
Your products are the prime factor that you have to consider when choosing your distribution channels. There are different things you have to consider when it comes to the nature of your products. They include:
Perishability: If the products are perishable in nature, then it is better to employ direct distribution companies that can deliver products to your customers without delay. The quality of such products will deteriorate if there is a delay in distribution. However, longer distribution channels will suit products that are not easily perishable.
Size and weight of the product: Products that are heavy and bulky will be difficult to transport and will involve high transportation costs. For example, food grains, coal, etc. will require heavy transportation costs. Hence, it is better to choose short and direct distribution channels for them.
Unit value of a product: Products that have lesser unit value as well as high turnover are usually distributed with the help of longer channels. Products like cloth, cosmetics, utensils, etc. take more time to reach customers. But products like jewelry that have high value will be sold to the customers directly by the jeweler.
The Nature Of Your Intended Market
Another factor that can influence your channel of distribution is the nature of your market. The following are some of the important things you have to consider in this regard.
Consumer of industrial markets: When industrial markets are considered, the number of buyers will be less. Hence, it is better to adopt shorter channels, as the buyers will buy the products directly from the manufacturers. So there won’t be any need for marketing intermediaries.
But in the case of consumer markets, where the number of buyers is large, it is wise to choose longer channels that include wholesalers and retailers.
Number of expected buyers: It there is a large number of buyers, then such products will need longer channels. But if the buyers are less, then the companies can directly sell the products to the customers by employing a salesperson.
Size of the orders: If the order placed by the customer is likely to be huge, then the manufacturer can directly deliver it to the customers. But when the size of the order places is small, then it might need the help of middlemen to distribute the products.
Buying habits of the customer: It includes the preferences, likes, and tastes of the customers. They expect certain services such as after-sales support, credit, etc. It can also influence the selection of channels of distribution.
Geographic concentration of the customers: If the customers are concentrated on a particular geographic area, then the manufacturer can directly sell the products to the customers by opening a shop there. However, if customers are scattered, it will be difficult for the manufacturers to establish a direct link between them. Hence, the service of wholesalers and retailers will be necessary.
Nature Of The Middlemen
Marketing intermediaries can also influence your choice of distribution channels. Factors that can influence the selection of intermediaries include:
Cost of distribution: When selecting the distribution channels for your business, it is important to choose the most economical option. When the cost of distribution increases, the cost of the product will also increase. If your products cost a larger amount than your competitors, then the customers will not buy them. Hence, you have to choose an option that is affordable for you.
Availability of the middlemen: It is important to make sure that enough middlemen are available for marketing and selling your products. Otherwise, you will have to take alternative measures for compensating the lack of middlemen.
Choosing the right distribution channels for your products is a complex task. You will have to consider a large number of factors before choosing a channel that is suitable for you. If you succeed in selecting the right company distribution channels, then it will help you to increase your sales and income.