The choice of your distribution channels is far from meaningless. It stems from your brand strategy and serves your objectives in terms of sales, costs and positioning. Direct distribution or with intermediaries? Short or long circuit? Here are my tips for choosing the most relevant distribution channels for your brand.
Becoming familiar with the different distribution channels
What are the options for your brand in terms of distribution channels? There are three main models:
• Direct distribution
As its name suggests, direct distribution allows you to sell your products directly to your customers, without any intermediaries. As a craftsman-creator, this is the solution to be favored initially as you can sell your creations in limited quantities and on your own.
Direct distribution is also more advantageous financially because you don’t have to pay an intermediary and can thus make more profits. However, do know that without an intermediary, you must manage the sale and promotion of your products all by yourself: you cannot rely on the strong influence of a network to reach a wider clientele.
Examples of direct channels: online sales on a website, an Etsy or Shopify store, your own physical store, social networks…
- You are in direct contact with your customers and can offer them a true customer experience.
- You reduce distribution and logistics costs and generate more profit for you.
- Your approach is more sustainable because you don’t use different means of transportation and you deliver your packages directly to the customer.
- Your reach is limited and you don’t have the visibility or brand exposure of other outlets: it(s up to you to develop your communication and marketing.
- It is also your responsibility to manage the reception, storage and delivery of your products or items.
• The short distribution channel
The short distribution channel involves an intermediary between your brand and the customer: a distributor or retailer.
One of the main advantages of a short distribution channel is that you can rely on the distributor’s reputation to reach more people and sell more.
Setting up a short distribution channel requires more management and offers less flexibility than a direct distribution since it will have to be arranged with the retailer. But if a genuine relationship of trust is formed and the partnership lasts in the long run, the benefits are tremendous!
Examples of distribution channels in a short circuit: local shops (restaurants, independent stores…), marketplaces…
- You increase the visibility of your brand
- You build strong relationships with partners
- You can train retailers to sell your products
- Your costs increase because you have to pay a third party: the retailer
- This requires some organization in terms of logistics, delivery and transportation
• The long distribution channel
Long distribution involves many intermediaries: in addition to the retailer/distributor, there is the wholesaler who delivers directly to the retailer.
This distribution is to be considered when your brand develops enough to produce very large quantities.
Examples: supermarkets, department stores…
- You can sell more quantities
- You rely on a system with greater logistical resources
- You reduce your margin due to the high compensation of all intermediaries
- Contact with your customers is rare
- You lose control over the delivery of your products
Important: even before weighing the pros and cons of each distribution channel, it’s essential to define your brand objectives.
What results are you hoping for? What do you want to accomplish in the coming weeks and months?
Depending on your goals, your preferred distribution channels will differ: if your goal is to increase your revenue, it’s time to increase the number of your physical and digital outlets. If you wish to reduce your costs, you’ll have to opt for a more direct distribution without any intermediaries.
Choosing the most relevant distribution channels for your brand
There are other things to consider when choosing your distribution channels.
#Your product. Depending on the nature of your product, you will not have the same distribution possibilities.
#Your customer. Depending on your customer’s purchasing habits, you’ll not develop the same distribution channels. Does your customer buy online or in person? Do they buy from a big retailer or a small local shop?
#Your brand image. You must also pay attention to the coherence between your distribution channel and your brand image. If your positioning is rather high-end, a presence in a supermarket isn’t necessarily the best choice.
#Your quantity of products. Here again, if you are a craftsman-creator, your number of pieces is quite limited and doesn’t require a long distribution chain with multiple intermediaries and logistics with great means.
#The cost. The more intermediaries you have, the more you double your costs and reduce your profits. This is an important factor to take into consideration before embarking on multiple distribution channels.