Product distribution involves the journey of a product from the manufacturer to the customer. Based on the type of product, manufacturers choose different company distribution channels for delivering their products to customers. Sometimes, the product or service will be directly sold by the manufacturer to the customers, but in some other cases, there will be a large number of other distribution channels involved.
Some of the essential components of a distribution channel are manufacturer, wholesaler, distributor, as well as the retailer. Small retailers collect the products from the wholesalers, as they only need products in small quantities, whereas, large warehouse retailers will directly associate with the manufacturers, as they can store the products in higher quantities.
Product Distribution Stages Based On The Product Type
Even though the producer/manufacturer has the option to directly distribute the product to their customers, it may not be always possible. Hence, most manufacturers depend on experienced mediators for selling their products and services.
There are different stages involved in product distribution. The following are some of the important stages of distribution involved according to the type of the product.
Producer To Consumer
This is the shortest distribution channel and it completely avoids middlemen. But it is usually limited to industrial products of high value which have limited producers/manufacturers as well as users. Sometimes, manufacturers with exclusive gourmet might limit their sales to online deliveries for retaining their image, which involves direct manufacturer to customer delivery.
Producers of highly perishable products like fruits and vegetables might also utilize this distribution channel. They might use direct distribution companies or door to door delivery for delivering the products to the customers.
In this channel, the only middleman involved is the retailer. This helps the manufacturers to avoid the burden of storing the products for a long time, as they will be collected by the retailers.
Here, the wholesaler will collect the products from the manufacturer in bulk quantities and will distribute them to retailers based on the quantities they require. Hence, the risk of selling the products will be equally shared between all the elements involved in the distribution channel.
Here, the manufacturer will be completely free from the burden of selling the products. In this structure, the agent will take ownership of the products and distributes them to the wholesaler. The products will then reach the retailers and customers.
Different stages are involved in the distribution of the products based on their nature. Hence, it is important for a manufacturer to choose distribution channels according to the nature of the products they make for efficiently distributing them to the right users.