What Is Retail Distribution, and What Does It Mean for Your Business? Strategy & Best Practices

Distribution is one of the most crucial elements to consider and plan for, whether you’re running a DTC brand or a B2B ecommerce company.

Distribution management improves supply chain efficiency by centralizing distribution operations and eliminating bottlenecks. As a consequence, for greater efficiency and cost savings, you’ll need an optimized retail distribution plan.

What is retail distribution?

The process of moving products from manufacturers and producers to customers is known as retail distribution. Goods might go through a number of intermediaries during this journey, including wholesalers, vendors, and retailers.

The distance between brand management and fulfillment is shorter in the case of direct-to-consumer (D2C or DTC) companies, as the firm sells its goods directly to consumers online or in a physical store.

How does retail distribution work?

There are many different sorts of retail distribution techniques. While each of these methods leads to the delivery of products to consumers, there are variations in the procedure and the number of outlets utilized.

Intensive distribution

Using all available outlets to flood the market and sell items to almost every conceivable customer is known as a market saturation approach. High-competition goods require an intensive distribution approach.

Because consumers have so many alternatives to select from, they are more likely to pick an alternative if their favorite brand isn’t accessible. As a result, businesses may make their items more available than their competitors by using a broad distribution network.

Selective distribution

Selective distribution is one in which a more focused approach to retail distribution is employed. As a consequence, goods are still accessible to interested customers, but not as widely as with an intensive distribution plan.

When your target audience is willing to shop about and isn’t interested in another brand, a selective distribution method works well. Some customers, for example, may be Nike loyalists who would rather search for the ideal pair of Nikes than purchase a comparable style from other companies like Puma or Adidas.

Exclusive distribution

This is a highly targeted distribution technique in which a single distributor, wholesaler, or shop in a specific area is permitted to sell the product. This style of distribution is ideal for brands looking to maintain a sense of distinction and cater to wealthy consumers who are prepared to pay more for higher-quality goods.

In addition, certain high-end brands, such as Hermés, utilize this technique by restricting sales of select goods like the Birkin or Kelly bag to their physical locations.

Which retail distribution strategy is best for you?

With so many options available, it might be difficult to determine which is the best approach for your firm. That being said, making the correct selection is critical since the distribution method and retail supply chain are dependent on it.

Intensive distribution works best if:

  • To manage large volumes, you have the infrastructure, budget, production capabilities, and supply chain efficiency.
  • The product is available to the general public.
  • You may work with major merchants to distribute your product.
  • Your target audience is likely to be the same as, or similar to, the target customers of merchants who will distribute your product.
  • You’re just getting started in the marketing world and want to improve brand recognition.

Meanwhile, selective distribution is ideal if:

  • Regional appeal is present in the product.
  • You’re aiming for a more targeted audience.
  • Consumers are more price conscious and demand a higher quality of service. This is reflected in the product’s higher price tag and limited availability to the general public.
  • You have a restricted manufacturing and distribution capability.
  • The product is more specialized and has a narrower appeal.
  • The product is popular in the region.

Exclusive distribution would be the best choice if:

  • The item is a luxury product.
  • You want to keep your relationship with your spouse private.
  • You’re dealing with items that are significantly more expensive and aren’t suitable for the general public.
  • The business is well-known and has a long history.
  • You cater to a very special group of consumers.