How to Choose the Right Distribution Channel for Your Business

Your Distribution Channel Determines Whether or Not Your Product Sells

Workers processing boxes on conveyor belt in distribution warehouse
Hoxton/Ryan Lees/Hoxton

Choosing a distribution channel is a pivotal decision for your business. What you choose determines how your products are handled and the speed in which they are delivered.

Several factors affect your decision, including:

  • Type of product: If your product is perishable or is unstable, you will need a much faster, direct distribution method.
  • Market: If your market is consumers, retailers are an essential distribution method whereas business markets made need another approach.
  • Middlemen: Depending on your needs and demands on your time, a middleman can help distribute products quickly and efficiently.

Marketing comes after you’ve made this decision; it’s the strategy you use to reach your distribution channel. That’s why identifying a distribution channel is so essential. Much of your wholesale business will depend heavily on which method you ultimately decide on to reach your customers.

For example, if you decide to use a sales force as your primary means, then much of your focus will be on training and equipping your sales force to position your product or service effectively. You will need to hire staff, coach them and provide key messages. On the other hand, if you choose direct mail, then you’ll focus heavily on obtaining reliable contact lists and having effective call-centers.

To find out what distribution channel will work best for your business, consider the following:

Look At Your Competitors

What methods are your competitors primarily using? More importantly, why? Is there a real advantage over other channels, or is it simply the way the industry has always operated? If there is a distribution channel your competitors have overlooked, you may gain an edge by taking advantage of it.

For example, if your competitors are mainly distributed via big box retailers, taking advantage of direct sales through the internet can give you a unique angle.

Examine Costs and Benefits

While this may seem like an involved process, it’s time well spent. After deciding on a method of distribution, creating all the supporting systems to go with it and orienting your entire company in a certain direction, it will be very difficult to reverse your decision. Building an infrastructure to support the selected distribution channel is expensive and time consuming. It’s best to carefully weigh the costs and benefits associated with each of your options before committing your resources to it.

Rank Your Options

After examining the different methods you have available, rank them by order of preference. While you may begin with pursuing one distribution channel, that doesn’t preclude you from adding additional channels as you acquire more capital. You may even find some methods are complementary, allowing you to take advantage of the synergy between them.

The main idea is to carefully consider your options instead of simply taking a direction for granted, whether because it’s the industry standard or the most convenient for your business.

Question the reason behind accepting or rejecting a specific channel to discover if you’ve overlooked any unique advantages or drawbacks. The more time you invest in the beginning, the less surprises you’ll have in the process.