Whether you’re running a DTC brand or a B2B ecommerce firm, retail distribution is one of the most important features to take into account and prepare for.
The ability to manage distribution improves supply chain efficiency by simplifying end-to-end retail logistics activities. As a consequence, you’ll need a more efficient retail distribution plan in order to achieve greater efficiency and cost savings.
What exactly is retail distribution?
The process of moving items from producers and manufacturers to consumers is known as retail distribution. Goods may go through many intermediaries during this journey, including wholesalers, merchants, and retailers.
In the case of direct-to-consumer (D2C) brands, the road is easier since the company sells its product directly to customers through their ecommerce website or retail outlet.
What is the mechanism of retail distribution?
There are numerous sorts of retail distribution methods. While each of these approaches ultimately results in the delivery of products to consumers, there are variations in the procedure and the number of outlets utilized.
Intensive distribution
This approach entails flooding the market with goods and sending them to nearly every conceivable customer via all viable channels. A wide distribution strategy is usually preferable for items with a lot of rivalry.
Consumers are more likely to choose an alternative if their preferred brand isn’t accessible. As a result, businesses may increase the availability of their items relative to those of their rivals by using a wide distribution network.
Selective distribution
Selective distribution entails a more focused approach to retail distribution and entails utilizing outlets in certain areas. As a result, goods are still readily accessible to interested buyers, but they’re not as random as with an extensive distribution plan.
When your target audience is willing to do some comparison shopping and isn’t interested in a different brand, utilizing a selective distribution approach is the way to go. Some consumers, for example, may be Nike loyalists who would rather search around for the ideal pair of Nikes than purchase another company’s similar design, such as Puma or Adidas.
Exclusive distribution
This is a targeted distribution approach in which one distributor, wholesaler, or shop in a specific location is excluded. This type of distribution is ideal for brands that want to maintain a sense of exclusivity and serve wealthy clients who are prepared to spend more for higher-quality goods or certain brands.
For example, luxury companies like Hermés follow this approach, only allowing specific items such as the Birkin or Kelly bag to be purchased in their brick-and-mortar shops.
How to Choose the Right Retail Distribution Strategy
Each of these various distribution channels offers advantages, making it difficult to determine which is the best option for your firm. That said, picking the correct distribution method is critical since your distribution logistics and retail supply chain are both based on the strategy you select.
Due to the wide market reach it provides, intensive distribution is most effective if:
- You have the infrastructure, funding, production capability, and supply chain efficiency to handle large scale distribution.
- The public is able to purchase the goods.
- You can collaborate with major retailers to distribute your products.
- Your target audience is the same as those who would sell your merchandise.
- You’re just getting started in the industry and want to increase name recognition.
Meanwhile, targeted distribution is very useful if:
- Consumers in other markets will appreciate this offering.
- You’re aiming for a more specific group of people.
- The product is more expensive and less accessible to the general public.
- You have a small manufacturing and distribution capability.
- The product is specialized and appeals to a more niche audience.
- It is popular in the region.
Exclusive distribution would be the better option if:
- The item is considered a luxury good.
- Exclusivity is important to you.
- You’re dealing with items that are considerably more expensive and aren’t appropriate for the general public.
- The brand is well-known and has a long history.
- Your items are appealing to a very specialized group of people.