Distribution Channel Management
When the manufacturer produces the product, there are several businesses in the line before the products get to the consumers. This channel of middlemen is the distribution channel. When the manufacturer is done with manufacturing, there quite some options for its distribution; it could be that the products will be directly delivered to the final consumer. Some manufacturers have become so established that they handle their national and international distribution themselves. It could also be that the manufacturer has arrangement to go straight to the retailer. And it could also be that the distribution will be to the distributor. The distributor has the capability to ensure extensive distribution to several outlets in a short time.
Thedistribution channel can be through retailers, distributors, wholesalers, and even the internet. The internet has proven to be the most profitable retail outlet because of the ease it gives the average consumer.
The types of distribution channels are discussed below.
The first channel
When the manufacturer produces in large units, there is majorly the problem of warehousing. Thus, the manufacturer supplies the wholesaler who has the required logistic facilities to store the products and distribute it to retailers. This distribution line can be very beneficial for the manufacturer as the payment for the product is promptly made and more room is created for production. It can be a big problem for the manufacturer if there is no distributor to get the manufactured products in bulk. Thus, manufacturers ensure that they sign agreements with distributors that will keep them secured for future production.
The second channel
Here, what plays out is that there is distribution straight to the retailer from the manufacturer who in turn sells to retailers. This happens with groceries majorly, especially when it concerns agricultural produce that can wait long in the supply chain. The products are transported from the farm to the groceries stores and this helps them to stay fresh. This can be fairly cost effective as there are reduced middlemen handling in the supply chain.
The third channel
This is the direct sale to the customer via platforms like the internet. With this, the manufacturer opens a website where the products are advertised and option to buy or order is given. Ads can be used to lead potential customers to landing pages and ultimately converting them into buyers. Ads can be Facebook ads or Google Ads. These ads have shown to be highly effective in creating needed traffic for landing pages and conversions have resulted. The website features a payment platform and the manufacturer ultimately processes the order and does the shipping. The direct distribution channel is cost effective as there are no middlemen to add to the cost of the products. Research has shown that middlemen handling in indirect distribution add up to 30% increment to the price of the products.
It should be noted that each product has its own peculiarity and thus, distribution requirements cannot be the same. Distribution has to be tailored to the product.