The Right Distribution Model for Your Business

The Right Distribution Model for Your Business

Several distribution models exist in today’s market, but experts suggest the best option for small businesses is the three-level one. This consists of the producer, the wholesaler and the retailer.

While other systems can indeed be less expensive, going for an attractive alternative may not be advisable. Should you decide at a later date you will require an intermediary such as a wholesaler or retailer, that opportunity may no longer exist.

The Traditional Model

The best reason to start out with a three-level model is simply because tweaking distribution and sales options is far more difficult than revising marketing tactics such as packaging and pricing.

A range distribution channels exist. From a small business perspective, though, these are the preferable options:

  • The company sales team
  • Retailers
  • Wholesalers, distributors
  • Agent, who works for the producer
  • Jobber, who purchases from manufacturers or distributors to resell
  • Direct mail
  • Online marketing
  • Television

Two-Level Models

Direct distribution is the most common two-level model. For example, companies such as Amway, Tupperware and Petals manufacture, sell and deliver their products to customers via their own salespersons and from their own warehouses.

If you are a manufacturer, you can opt to sell directly to online or bricks-and-mortar retailers, entirely skipping over wholesalers. As a retailer, you can purchase directly from the producers.

Although these models do eliminate the middleman, some experts believe this is not necessarily a benefit. Costs may run less, but market expansion can suffer. That said, any distribution model you employ will set the direction of your overall marketing plan.