Product distribution is a process that takes up time as well as infrastructure and it is essential to make your customers more satisfied with your business. As a business provider, you will have to get to know different methods of product distribution like self-distribution and distribution via distributors and wholesalers, to figure out which of the options suits the growth of your business.
Self-distribution is a type of distribution that is been widely opted for local sales. You will be able to distribute your products through your own means of transportation and personnel. Self-distribution saves you from paying to middlemen like distributors and wholesalers. The cost of self-distribution will be less when compared to distribution through agents and dealers. However, it can vary depending on the volume of products you intend to sell.
Distribution through Wholesalers and Distributors
Distributing products through wholesale distributors helps you to deliver the products to a specific location, thereby cutting the need for you to show up at individual stores. Wholesalers do the basic work of everything – from getting the products from every place and invoicing the customers. Distributors are mostly involved in sales and the side that is been connected to the marketing of your products, thereby placing a higher markup on the products that are been given to them.
You will have to find out your strategies to do the marketing of your products if you are planning to work with a wholesaler. This mainly involves the task of convincing retailers to buy products from the wholesaler you are collaborating with and then convincing customers to buy the products from the retailer.
Finding the Best Option
A business is likely to create projections that are based on the current and expected sales volume to finally know which of the available distribution options work for the business. For instance, you are likely to come up with a markup of twenty percentages, if you are selling products worth $1,000 that costs you $200 in labor and vehicle expenses. Since the expense of your insurances remains the same, the actual vehicle cost won’t be increasing in proportion with your deliveries. The labor cost for each delivery hour will be decreasing as you add deliveries since you will be stopping in more concentrated areas while delivering the products locally.
Self-distribution is the best option if you plan to grow your business to a certain weekly sales, whereas wholesale distribution is the best if you want to cover wide geographical areas.