Are Multiple Channels Better? Understanding Distribution Channels
You’ve worked hard on your product, marketing, and are even doing product integration to boost brand awareness. You’re making sales and growing.
But could your business benefit from using multiple distribution channels?
Some businesses find success in using more than one way in getting their product into consumers’ hands. Read on to see if adding a channel or changing your strategy might benefit your business.
Types of Distribution Channels
A distribution channel refers to the path a product takes to get from the producer to the end consumer. There are two kinds of distribution channels.
Indirect channels involve at least one intermediary between the producer and the customer. Direct channels allow the customer to get the product straight from the manufacturer.
In an indirect channel, a manufacturer sends the product to a “middle man.” This could be a wholesaler that takes bulk quantities and resells them. The other intermediary could be a retailer, who either purchases from a wholesaler or from the manufacturer directly.
Brokers and distributors are other types of intermediaries that might be involved in product distribution.
A hybrid channel uses both indirect and direct methods of distribution. They may have an authorized distributor but the producer still directly interacts with customers.
Selecting the Right Channel
Distribution channel selection factors are based on your customer needs and the product nature. Selling direct-to-consumer can help keep your product price low. Using an indirect channel might increase product prices, but it could result in more widespread brand awareness, leading to more sales.
You’ll also need to consider how much control you want over distribution. Your business will have more control with a direct channel than with an indirect one.
The size of your business also factors in. It makes more sense for a large soft drink corporation to use indirect distribution due to production size and consumer demand. A handmade clothing business will likely find it more feasible to sell directly to customers.
Other businesses find success in using multiple channels. A craft brewing company can open a restaurant or retail outlet to sell directly to consumers. They may also choose to sell to a distributor so their drink can be sold in stores far from their physical location.
Using multiple channels helps diversify your product distribution. Having several ways to distribute means that you’ll spread out your risks and increase your profits.
If something causes slowdowns in one channel, you’ll have another one to fall back on. You’ll also have a wider reach, with more customers finding your product.
Growing your business doesn’t simply mean getting more customers to you. It also means reaching out to more customers, and expanding your distribution helps.
Strategy Helps With Growth
Using two or more distribution channels may help your business grow. Take a look at your current distribution channel strategy and evaluate whether it’s time to add another one.
Need some help with strategic planning or marketing? Let us find ways to grow your business.