Different distribution options for your start-up
Tue 29 March 2016 - 11:42 amIndustry | Retail | Retail | Sales | Small Business | Starting | Startup | Strategy | Tips | Advice
Product distribution resides at the heart of getting your products into the hands of consumers. Any startup business, no matter where they operate from, must overcome the basic problems of distribution in order to generate meaningful profits. The more avenues through which your startup can move product, the more potential income streams you will have in place that operate simultaneously. For this reason, it is important to understand the differences between various product distribution avenues available to your company and how to leverage them for best results.
One of the most common approaches startups use to promote product distribution is by getting their products into retail stores. The advantage of retail distribution avenues is that established businesses typically possess access to a lot of foot traffic. Another advantage is that retail stores buy in bulk. Often this is done to ensure adequate stock remains in house to meet expected demand for a given product. One disadvantage to direct from manufacturer retail distribution is that poor demand for your company’s product may create a problem with obtaining repeat orders from retail vendors.
Wholesalers And Drop Shippers
To take your retail distribution efforts to the next level, your startup will want to work with a wholesale distributor. Wholesale distributors are tasked with the job of taking your product and making sure it gets into the hands of other retail outlets or drop shipped directly to customers. The advantage of working with a wholesale distributor is that these distributors already have firmly established relationships and agreements with the retailers with which they work. Since these relationships can take months or even years to establish, this saves your startup the trouble of having to waste time gaining access to these retail entities. In this capacity, the wholesale distributor acts as a middleman on your company’s behalf. An immediate problem to be aware of with this scenario is that if your wholesale distributor severs their relationship with your company, for any reason, you are back to square one and in need of building relationships with other wholesale distributors, drop shippers and retail stores to get the ball rolling again. To avoid this problem from having a negative impact on your revenue, it is best to work with multiple wholesale distribution entities at the same time. This way your business is not instantly jeopardised if one of these relationships goes south.
Another great way to distribute product is by offering it for sale direct from your company warehouse on your company website. Some advantages to doing this is that you can offer your products at a huge discount to online consumers. You can also entice customers with other direct website-related advertisements, such as instant coupons and the buy one get one free style of offers. A major disadvantage to online stores is that your company is in direct competition with literally millions of other online stores doing the same thing. This means your online marketing costs can get expensive, if your approach is not truly innovative. Secondly, generating online traffic gets difficult, since online consumers tend to tune out online ads as a matter of habit. Then there is the hassle of having to keep up with the latest SEO techniques for obtaining high website rankings in organic web searches. Search engines, like google, push to make it difficult to maintain solid website rankings, so they are constantly changing the SEO rules on businesses. This is done in an effort to force businesses to pay the search engines for prefered ad space, rather than making it easy for businesses to generate massive web traffic through organic searches.
A common business practice, which startup companies use to generate sales and distribute more product, is to start network-based affiliate programs. Affiliate programs invite visitors to your website to sign up to be a promoter of your company’s products (example here). Since an affiliate marketer is promoting your products for you, they generally expect some type of compensation for all their hard marketing efforts. Generally, this compensation is paid out as a percentage of the sales volume the affiliate marketer generates for the products your company is selling. The benefit of having a large affiliate marketing sales force is that you are not paying any of these marketers an hourly wage. In fact, you are reducing costs by only paying them when their marketing efforts generate sales. The downside to network-based affiliate programs is that many hard working affiliate marketers have been seriously burned by other companies in the past. These experiences have caused many affiliate marketers to suspect that online affiliate and network affiliate programs do not always report their sales volume accurately. As a result, many affiliate marketers will only work for companies with an established reputation for paying their affiliates. Consequently, it can be difficult to attract affiliates to join your network. For this reason, it is critical to ensure that your affiliates and network members maintain the impression that accurate affiliate ID-related sales volume reporting and compensations are on the level.
The key to product distribution is working with multiple avenues to ensure a regular flow of products from your warehouse to the customer’s hand. As your products become available through more avenues, customers will be exposed more and more to your company’s brand. This exposure will not only improve product sales, but it will also help your company’s brand to become a household name.
About the Author:
Philip Piletic is a writer and blogger with a love for business, finance and technology. His goal is to give useful advice and help people adapt to ever evolving world of today.