Small Business Distribution Strategy
A well thought out small business distribution strategy provides informed decision making on types of small business distribution channels, distribution partners and tips on the most profitable small business distribution strategy for you.
There are important reasons to utilize distribution partners and critical questions to get answers on deciding the appropriate channel of distribution for your business.Small Business Distribution Strategy: 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.’
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.
Small Business Distribution Channels:
|Company Owned or Provided||Direct Sales
|Outside Sales Agents||Indirect Sales
Independent firm that only performs the sales function on your behalf
Independent company usually carries physical inventory & performs the physical distribution and sales function on your behalf. Can sell to retailers/dealers or direct to end-user.
An independent reseller that purchases the rights to distribution or sales territory of a single product/service brand
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 Small Business Distribution Channel Strategy:
To select the distribution channel appropriate for your business requires assessing a wide number of important factors about:
1. Your Business
- the precise 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 versus the 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 pre-sale 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
- selective distribution, exclusive distribution, limited product offering, private label
- 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.
Your Bottom Line
A thorough analysis of all the critical factors to consider will lead to the best decision for your business. For more information on an analysis for your company, contact us now at 866-875-2534 or order now custom small business distribution strategy.