If you build it, they won’t just come.
Your small business needs a product distribution strategy if you want to make sales. This is so important, in fact, that one of the 4 P’s of marketing is “place” as in “the place where people can buy your products.”
But how does a small business owner go about creating a product distribution strategy? Should you sell on your Shopify storefront and hope to pull people in through Google? Should you call your local Walmart and ask to speak with the purchasing manager? The answers aren’t clear, and even if they were, they wouldn’t exactly be one-size-fits-all!
To help you understand how product distribution works, I’ve broken this post into the following sections:
- What is product distribution?
- The 3 eternal product distribution strategies
- Basic distribution models
- Picking the right distribution strategy
- Some practical distribution tips
What is product distribution?
Distribution, broadly speaking, is how you make your business’s products or services available to potential customers. In the simplest possible distribution model, you sell your products directly to the customer. There are no stores, no middlemen, no warehouses, and so on.
For a more complex setup, though, distribution involves setting up multiple channels, some of which are managed by intermediaries. You could, for example, set up a RangeMe profile to get your products listed in TJ Maxx. In this scenario, your distribution model would look more like:
Producer (you) ➡ Broker (RangeMe) ➡ Retailer (TJ Maxx)
Product distribution, then, is the process of making your products available to your customers, however complex or simple it may be.
The 3 eternal product distribution strategies
Now if this sounds a bit abstract at the moment, it might help to narrow down product distribution into three discrete strategies. Luckily, Wikipedia defines three basic categories into which product distribution strategies can fall.
1. Mass distribution
The goal with mass distribution is to get your products in front of as many people as possible. That might mean getting stocked in superstores, gas stations, vending machines, and other common places. If you get your products into a store as big as Target, for example, then you’ve succeeded in mass distribution.
2. Selective distribution
Sometimes, it doesn’t make sense to get your products in the maximum amount of stores, though. Other times, you may want to choose to have your products stocked in a specific type of store. One common example is that fancy cosmetics companies like Estee Lauder only sell their wares in specific stores because they want their staff to be well-trained beauticians.
Similarly, if you’re selling lumber, you’re not going to get that stocked in Circle K. You need your lumber going directly to places like Home Depot or Lowe’s. That’s where people go to find your products anyway!
3. Exclusive distribution
Lastly, exclusive distribution involves finding a single store or group of stores in which to stock goods. Apple goods for example, are only sold in very specific stores. This helps create a sense of scarcity, which if that fits in with your brand strategy, can make a lot of sense.
A note on push vs pull
Another important thing to keep in mind is that there are two broad strategies you can use to win over distributors like retailers and wholesalers. Push stratgies involve reaching out to retailers and distirubtors with advertising or incentives. Pull strategies involve driving sales by pushing a product directly to consumers, which makes stores want a piece of the action.
If you’re running a small business, odds are good that you’ll be using more a of a push strategy to secure retail distribution. That means you will want to focus on trade shows, exhibitions, and sales calls rather than TV, radio, and magazines.
(And, of course, eCommerce adds further complexity to choosing a strategy, and I’ll talk about that in a moment.)
Basic distribution models
Now that you understand the basic distribution strategies, it’s time to talk about some of the basic distribution models as well.
Wholesale
When you sell products wholesale, you’re essentially giving them to an intermediary who sells to retailers on your behalf. They buy really large quantities at a low price which retailers later mark up. Wholesalers don’t deal with the public directly.
Brick-and-mortar retail
Retail stores, unlike wholesalers, sell directly to public customers. If you distribute via retail, that means that your products are sold in public retail stores. You can coordinate this by selling to retailers directly or, in many cases such as with larger retailers, via wholesalers.
Ecommerce
Ecommerce means online shopping. In 2020, partly because of the pandemic, as much as 14% of total retail sales were conducted online. For comparison, online shopping was 7% in 2015.
Ecommerce distribution means getting your products listed on one or more online marketplaces. This could range from setting up your own Shopify store to having your goods stocked in Amazon warehouses, listed on their website, and shipped out via Amazon Prime.
Direct-to-consumer
We touched on this earlier, but you don’t have to go through wholesalers, retailers, or online marketplaces. You can set up your own shop – online or offline – and sell to your consumers with no intermediaries. This is called direct-to-consumer (D2C).
Dropshipping
Lastly, within the last few years, an entirely new distribution model has become possible: dropshipping. The idea with dropshipping is that you can have goods manufactured right after a customer places an order. The goods are then shipped right from the manufacturer to the consumer.
Picking the right distribution strategy
So how do you know which distribution strategy is right for your business? Ultimately, it comes down to a number of factors that are unique to you and your business.
First, think about your audience. Consider the following questions:
- Where does my audience shop?
- How do they find out about new products?
- Where would my audience expect my products to be available?
The answers to those questions will help steer you in the right direction when it comes to picking distributors. After all, distribution is one more piece in the marketing puzzle, all of which hinges upon your customers’ preferences!
Some practical distribution tips
At this point, you probably have at least a fuzzy idea of what kind of distribution strategy would work for your business. In order to further assist you on your journey, I’d like to provide a few practical tips that you can apply in your business today to help secure distribution channels.
How to get in a chain store
Getting into a chain store is not easy. While major ones like Walmart are talked about in many online guides, I’d like to give you one specific tip that can be used for a variety of stores.
Look into RangeMe. RangeMe is a product discovery platform that connects retailers and suppliers. The service is used by companies like Target, CVS, Ulta, GNC, Petco, and many others.
To use RangeMe, you sign up and create a profile for your company as well as for your products. These profiles are then reviewed by buyers who use RangeMe. It’s a very neat way to get your products seen by a number of purchasing managers all at once.
How to get in a local store
Local stores, thankfully, are a good deal easier to get into than mass chain stores. One technique that I’ve found helpful is simply calling the main number and asking for the person who handles purchasing. If you’re friendly, you can often make very good in-roads by doing this.
Just make sure you have a well-rehearsed pitch in the event that you get a purchasing manager on the phone! Needless to say, if you’re reaching out to locals, you should visit their stores and see if your product would fit in well on their shelves.
How to set up an online store
Setting up an online store is easier than ever before, especially when you have platforms like Shopify and WooCommerce. If you’re looking to get started with a minimum of hassle, I recommend Shopify. In particular, I recommend following this guide called How to Set Up Your Shopify Store for the First Time.
How to get on Amazon or other popular marketplaces online
The top three online marketplaces are Amazon, eBay, and Etsy. Therefore, I’ll leave you with guides on how to get listed on each:
How to set up dropshipping
Setting up a dropshipping store is not unlike setting up an online store. However, it requires a few extra steps. Start by setting up Shopify, and install the Oberlo app as well. Oberlo will help you to find products which can be dropshipped.
Final Thoughts
By thinking carefully about how to get your product in front of consumers, you can reach many more people than you otherwise would! Product distribution strategy is a powerful lever to pull when it comes to building a business.
Whether you’re selling through brick-and-mortar stores, online marketplaces, or your own shop, it’s worth taking the time to consider how to best get your product in people’s hands.
