Distribution is a fundamental component of retail sales, and a distributor can be described as a person who procures product, store them and then sell the products through distribution channels. The distributor is the middle man between the manufacturer and retail consumers. There are direct and indirect channels in product distribution. In a direct distribution, the manufacturer distributes products directly to retail consumers. In the indirect distribution method, there are intermediaries along with the line distribution.
The Levels of Distribution Channels in Retail Distribution
There are five levels of channels in retail distribution, these are;
- Level 0
- Level 1
- Level 2
- Level 3
The zero levels of distribution are normally the simplest and it involves the direct sale of products from the manufacturers to consumers without any intermediary. The level one distribution channel has one intermediary between the manufacturer and retail consumers. The retailer, for instance, is a level 1 channel between manufacturer and consumer.
With level 2 distribution channels, there are two intermediaries, these are the wholesalers that sell to the retailers who in turn sell to the consumers. The level 3 distribution involves an agent or broker, who works on behalf of the product manufacturer and deal with wholesalers that sell to the retailers, who then sell to the consumers.
The Types of Retail Consumer Distribution
The distribution strategies used for retail consumption will depend on the type of product being sold. It is important for retailers to understand the proper type of distribution channels to achieve the desired goals and objectives.
There are basically 3 types of retail distribution and manufacturer choose any of these distribution types to determine how their goods are dispersed in the market to the final consumers. The three types of retail distribution are;
- Intensive distribution
- The Selective distribution, and
- Exclusive distribution
The intensive distribution type is an arrangement where there are as many distribution outlets as possible. The main goal of the intensive distribution is to penetrate as many markets as possible. The ultimate belief here is that the more distribution channels or outlets available the more popular the products become which mean the higher the volume of sales and profit. Most retail consumer distributors prefer intensive distribution option to market a new product to as many people as possible until such products become household names.
Selective distribution is a situation where distributors select specific locations to market and distribute products. The goods must fit within the selected store and geographical location. With this type of distribution, manufacturers will be able to pick the price point that will target specific consumers. The goal of selective distribution is to provide a customized shopping experience to the consumers. There is always a cap to the number of distribution outlets under selective distribution.
The exclusive distribution type involves limited outlets. This type of distribution is designed for luxury brands, that are exclusive to some special collections that are available in specific stores and locations. This method of distribution will help a brand maintain its image as well as product exclusivity. Automobile makers like Ferrari and Fashion brands like Chanel are typical examples of manufacturers that use exclusive distribution channels.
How to Succeed Working with Distributors as a Retailer
It is the duty of brand manufacturers to oversee the procedures of distribution to prevent retail execution problems such as distribution voids and out-of-stock issues. There must be set lines of communication setup between the sales teams, managers, and distributors in order to ensure that information is passed as clear and as quick as possible. with strong communication between those involved in the distribution channels, brands will form a better relationship with retail consumers.
Emails and Texts are not effective communication method for efficient distribution especially when there is an emergency out-of-stock product issue. Though emails and texts can resolve out-of-stock issues if there are occasional out-of-stock issues, when the issue becomes a regular occurrence, and it becomes difficult to forecast future demands for a product, you may have to find a better communication method with distributors. In this case, you may use a data analyzing tool in addition to a more efficient communication method.
Getting the Most from Retail Distribution
As a retailer, you must always be ready for the market even before you approach wholesale distributors, in order to ensure that the products will always be ready on demand. You need to be aware of the price point of the products, how to package it, even the best type of Storage containers to use. You must be ready to work with distributors in order to supply the product efficiently even if the demand sky-rockets.
It is important that you also choose a distributor that will contribute to your marketing strategies. Consumers will likely switch from retailers when they are always disappointed that their preferred products are always out of stock. It is important that you choose a distributor that contributes in one way or the other to market your business to consumers. Some distributors restrict their distribution channels to retailers they can trust, it will be of great importance if you can find such a distributor who is solely dedicated to supplying you with great value products.
The importance of a strong distributor and retail consumer partnership in retail logistics, cannot be over-emphasized. It is a partnership that can either make or destroy a business, depending on how it is handled. It is important that retailers communicate their marketing and sales goals and objectives to distributors who will evaluate such goals to ensure that they work towards helping the retails to achieve them. One of the key areas retailers and distributors must critical handle with care is the demand and supply of products.
When a product is constantly out of stuck, it simply shows there is a breakdown in communication between the distributor and manufacturer on one hand, and between the distributor and retail on the other hand. When there is a constant shortfall between demand and supply, the sales of products and the reputation of the retail will drastically go down, which means consumers will find alternatives.