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Ever felt like a competitor is beating you simply because they appear everywhere? From wholesalers to big-name department stores, those brands have nailed their retail distribution network.<\/p>\n
It might seem that replicating their strategy would work for your business, too. Instead of overextending yourself and delivering a subpar experience to more shoppers, however, you should refine your own distribution strategy. Uncover how your customers buy, and where your products should be relevant, rather than losing too much of your profit trying to distribute through every channel.<\/p>\n
This guide explains how retail distribution works, and suggests several channels and strategies to consider, along with tips on how to decide which is best for your store.\u00a0<\/p>\n
What is retail distribution?<\/h2>\n
Retail distribution is the strategy a business uses to source products from a manufacturer and sell it to the end customer.<\/strong> A business can have multiple distribution channels, including wholesale and direct to consumers.\u00a0<\/p>\n Retailers can sell directly to the end consumer and cut out the middlemen. Also known as direct distribution, DTC brands source products from suppliers and sell them directly to the end user, either through an owned online channel (such as an ecommerce website) or a brick-and-mortar store.<\/p>\n This retail distribution strategy is popular since it gives brands greater control over the entire supply chain, which impacts customer experience and brand image.<\/p>\n A reseller is an intermediary who buys a company\u2019s product and resells it either to the end customer or to another business. Let\u2019s break down the three major types of resellers you might encounter as you expand retail distribution.<\/p>\n Lean on other retail stores as a way to sell your product. If you sell coffee beans through your own store, for example, increase your brand footprint and sell to other coffee shops in your area.<\/p>\n The key is to build strong relationships with stores that sell your product. Think of them as an extension of your team. Customers visiting those stores want the same world-class experience they\u2019d have if they bought directly from you.<\/p>\n Manage inventory from one back office<\/p>\n Shopify POS comes with tools to help you manage warehouse and store inventory in one place. Forecast demand, set low stock alerts, create purchase orders, know which items are selling or sitting on shelves, count inventory, and more.<\/p>\n<\/div>\n Wholesalers source products from retailers at a low cost, and sell them to other retailers at a markup.\u00a0<\/p>\n Costco is one of the largest wholesalers in the US, with over 118.9 million cardholders. It buys products from businesses at a lower-than-wholesale price per unit. Those cost savings are passed onto Costco\u2019s own customers, who pay less than the recommended retail price (RRP) for items they can sell via their own business.<\/p>\n An independent distributor is authorized to sell your business\u2019s products to another wholesaler or retailer. Think of them as an added layer in the supply chain process. Instead of selling directly to the wholesaler yourself, an independent distributor manages the process for you.\u00a0<\/p>\n The intensive distribution strategy happens when a store uses all available retail channels to flood the market. Instead of selling exclusively through a handful of carefully selected channels, the aim is to get the product everywhere a customer wants to buy.\u00a0<\/p>\n It\u2019s a type of distribution strategy worth considering if your product appeals to a wide range of people. If it\u2019s a niche product that only a specific type of customer would buy, however, it\u2019s not the best option.<\/p>\n Pros:\u00a0<\/strong><\/p>\n Cons:\u00a0<\/strong><\/p>\n A selective distribution strategy is what it says it is. Instead of pushing your product into any channel you can find, you only make it available through a small assortment of distributors.<\/p>\n This distribution model works well if you\u2019re targeting a certain demographic. If you\u2019re selling skincare products, for example, you could be selective and distribute via service-based stores such as hairdressers, barbers, or acne clinics in your local area.\u00a0<\/p>\n Pros:\u00a0<\/strong><\/p>\n Cons:\u00a0<\/strong><\/p>\n The exclusive distribution strategy happens when retailers have a very specific approach to choosing the channels they want to sell through. It\u2019s also known as the \u201cinch wide, mile deep\u201d strategy.\u00a0<\/p>\n Most often, the aim is to maintain a sense of exclusivity\u2014people can only get your products via a small selection of distribution channels. Brands in the luxury sector are a prime example. You\u2019ll only see luxury brands like Chanel stocked at exclusive, high-end department stores.<\/p>\n Pros:\u00a0<\/strong><\/p>\n Cons:\u00a0<\/strong><\/p>\n A big key to our success has been a really disciplined approach to distribution. <\/p>\n Target was a dream retail partner for us so we went all in with them and we\u2019re doing amazing retail marketing together – endcaps, sampling, ACV wins, circulars. #inchwidemiledeep<\/a> pic.twitter.com\/GPxzLoElps<\/a><\/p>\nRetail distribution channels<\/h2>\n
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Direct to consumer (DTC)<\/h3>\n
Resellers<\/h3>\n
Retailers<\/h3>\n
Wholesalers<\/h3>\n
Independent distributors<\/h3>\n
Types of retail distribution strategies<\/h2>\n
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Intensive distribution<\/h3>\n
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Selective distribution<\/h3>\n
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Exclusive distribution<\/h3>\n
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