Small Business Distribution Strategy
A well thought out small business
distribution strategy provides informed decision making on types of distribution channels, partners and tips
on the most profitable distribution strategy for your small business.
Getting your product or service to market may require your sales effort and/or the physical transfer of your
product with one or more intermediate parties before it reaches the ultimate end-user. The process of getting
products or services from its source to market is referred to as a ‘distribution channel’ or ‘chain.’
There are important reasons to utilize distribution partners and critical questions to get answers on deciding the
appropriate channel of distribution for your business.
Reasons for Using Distribution Channel Partners:
-
Selling - A common reason to expand sales
quickly by employing either directly or indirectly a channel partner to perform the task of selling
your products or services
-
Physical Product
Distribution – Products that are sold in a master pack and
require a cutting, or breaking down the of the master pack to be sold in smaller quantities shares
marketing expenses, provides credit and last mile delivery - in local markets
-
Value Add – Where a
channel partner adds to the value of the product or service sold through providing additional services to
the end-user. Examples of vale add are installation, assembly, and customization of the product or
service.
Types of Distribution Channels:
| |
Distribution Types |
|
Distribution Methods
|
| Company Owned or Provided |
Direct
Sales
- Your Own Sales Force
- Catalogue/Mail Order
- Telephone
- Internet
|
| Outside Sales Agents |
Indirect Sales
Independent firm that only performs the sales function on your
behalf
|
| Distributors/Wholesalers |
Indirect Sales
Independent firm usually carries physical inventory & performs the
physical distribution and sales function on your behalf. Can sell to retailers/dealers or
direct to end-user.
|
| Franchising |
Indirect Sales
An independent reseller that purchases the rights to a distribution or sales
territory of a single product/service brand
|
| Retailers/Dealers |
Indirect Sales
Independent firm that sells to end-users and usually inventories physical
product
|
| Value Added Resellers (VARs) |
Indirect Sales
Independent firm that sells to end-users and adds tangible value to the
product or service being sold
|
Deciding the Right Distribution Channel Strategy for Your Business:
To select the distribution channel appropriate for your business requires assessing a wide number of important
factors about:
1. Your Business
-
the specific
nature of your business
-
the type of product or
service you want to sell
-
the geographic make-up and
location of the markets you serve
-
selling costs verses the
amount of sales process control you
desire
-
the profit margin of your products or
services
2. Your Customers
-
preferred purchasing methods of your
customers
-
-
size, quantity, price, convenience,
variety
-
Importance of Brand
-
required or preferred presale services by
your customer
-
required or preferred after sales services by your
customer
3. Your Distribution
Partners
-
Intensity of distribution partners to your product or
service
-
-
Motivation of distribution partners
-
Ability to manage distribution partners
-
Integration of various types of distribution
partners
-
Cost of distribution partners
Today, many companies use a mix of different distribution channels; as an example, you could augment a direct
sales force, that calls on and services large established accounts, with agents, covering smaller customers and
performing new business prospecting. There are other combinations of distribution channels appropriate for your
business.
A through analysis of all the critical factors to consider will lead to the best decision for your business. For
more information on an analysis and custom distribution strategy for your business, contact us now
1-866-875-2534.
| 
