Potential Benefits Of An Indirect Distribution Channel To Producers

For a producer, the capability of selling more goods depends partly on the distribution channel you embrace. Should it be a direct distribution channel? Alternatively, should you utilize an established, indirect one to reach out to more prospective buyers? Both are good options, with advantages and disadvantages. Before we talk about the pros of selling goods through a business distribution channel, let us take a look at what indirect distribution and direct distribution are.

Direct Versus Indirect Distribution

As the name implies, in direct product distribution, the maker sells their goods directly to customers. Here are some examples of direct distribution.

  • Producers selling goods through their outlets
  • Artists selling their work through eBay or Etsy
  • An agriculturalist selling their fresh produce to customers at a farmer’s market

Conversely, in an indirect product distribution channel, there are middlemen for your goods to arrive at the customer. Three examples of this form of distribution are as follows.

  • A household goods maker turns to a big-name retail corporation’s outlets to sell products to his or her target audience.
  • Insurers paying sales representatives and pay agents a commission for the returns these professionals produce.
  • A web-based course builder utilizing affiliate websites, learning marketplaces or reseller programs as part of selling their goods.

There is no such thing as the best distribution channel of the two; it depends on what you are selling and trying to achieve.

Indirect Product Distribution Channel Options

Do you wish to utilize third-party product distribution channels for your goods? If yes, then some of your options are retail outlets, wholesalers/distributors, ecommerce websites and international dealers.

The Advantages

The following are only a few of the benefits of the distribution network from the producer’s point of view. This distribution method also comes with disadvantages, but the perks far outweigh the cons.

They Will Likely Have Reduced Expenses

Including a fresh location in your product distribution map entails much time and money, plus several human resources. However, utilizing an existing channel will possibly expand your business’s reach faster, more easily than when you perform everything by yourself.

Retailers keep a stock of your goods and customers visit stores to buy these products, so you are unlike to incur further stocking expenses and delivery costs.

They Will Potentially Have More Focus On Core Competencies

In order to effectively expand in unknown territory, you require local expertise – in-depth knowledge of what individuals there need and desire. For a small-scale business, performing this may necessitate that you recruit personnel so that your present staff can pay attention to doing the things they should be.

Dealers, retailers, and wholesalers perform the most significant aspects of distribution, which are mentioned below.

  • Order and stock management;
  • The management of both customer and retailer relationships;
  • Initiatives for customer service before and after sale; and,
  • Product delivery to a wide range of places.

Their Marketing Can Be More Effective

To increase the worth of your marketing spends, work with other producers and perform joint marketing campaigns for further footfall at the retail stores selling your goods. Thus, you will not have to bear the whole advertising expense.

They Can Have Broader Customer Reach

Through distribution networks, it is possible to spread your goods in big places. This is another benefit of utilizing distribution channels. Established distributors will be able to tap into a group of other distributors and retailers to help you achieve more market coverage.

So, you will not need to bother about spending the cost and time, plus taking the effort to build a relationship with those parties. Besides, you can escape the hassles of establishing your own distribution channel where you are expanding.

They Can Get Logistic Support

Both retailers and distributors should handle their inventory in an efficient way, and they are usually skilled in this. They can meet orders each day and know at what time to request big shipments from producers. In the event of an order fulfillment mistake, the retail chain or distributor would deal with resolving the underlying issues.

They Can Receive Feedback More Easily

Retailers know which goods sell well at the particular areas they cover. The feedback from them can turn out to be invaluable in creating an item that more people would want.

They Can Grow More Quickly

Do you plan on introducing your goods to an international customer base? If yes, you would be glad to know that there are agents specialized in distributing goods in many different parts of the globe. If you are a small-scale manufacturer, you can utilize their skills to get your goods to an audience you would not tap into by yourself. The agents can even aid in making your product better, and more attractive to an international audience.

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