Product distribution

What is product distribution?

You’ve finalized your product design, you’ve set a price and you’ve decided where you will sell. But how will you ensure your customers receive the product(s) they’re buying? Thats where product distribution comes into play. Product distribution is the action or process businesses take to supply goods to consumers.


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How do you select a product distribution strategy for your business?

The way a product reaches a customer typically happens through direct distribution or through indirect distribution.

  • Direct distribution: Business owners sells directly to the consume. Typically you’ll use your business website, door-to-door sales, mail, and physical store locations, etc. Example: a florist. You’ll have total control over how the product is marketed and sold and it eliminates the complications of a “middle man”. But, you may have limited market coverage.

  • Indirect distribution: Business owners use a middle party who helps you sell and deliver your products. Typically you’ll sell through a retailer like Target, through an ecommerce platform like Amazon, sell through an offshore sales team, telemarketing, etc. You’ll have a lot more marketing opportunities but will compete with other products and you’ll share your profits with distributors.

Deciding on a distribution model is a sticky decision and determining the best method for getting your product to the consumer depends on what you’re selling and how much you’re willing to invest in distribution. Choose a method fits your business needs, and stick with it while the business grows. To select the best option for you, start by thinking through the following:

  • Competition: What channels are your direct competitors using and which ones would fit with your own business?

  • Cost: What is the most cost-effective channel?

  • Availability: Can they handle the order size? Can they handle the shipment size? Can they deliver to your entire sales region?

  • Speed: Can they provide typical delivery time frames or estimates? Can they provide faster shipping if customers request it?

  • Reliability: How do they handle missing packaged? How do they handle late packages? Is the distribution method trustworthy? Can it get deliveries to the customer on time without damages or fraud?

Overview and tips for getting products to customers

  1. Share your shipping rates and methods with customers

    • Are you going to pass the full cost of shipping on to your customers?

    • Will you offer free or flat-rate shipping to absorb some or all of the cost?

  2. Streamline your fulfillment and reduce the amount of in-house time it takes to get orders to customers

  3. Invest in address software. An address validation program will standardize your address label formatting so that labels are machine readable, and some will also check your addresses against postal databases to catch errors and complete post codes.

  4. Make sure that items are clearly labeled, this is a huge part of branding the product and making it stand out for customers.

  5. Get the right product delivered to minimize returns

  6. Package items well '

  7. Surprise your customer with something extra in each parcel like a discount-voucher or personalized thank-you note

  8. Communicate with your customer

    • Before delivery to provide a specific time window for package delivery

    • After every delivery to verify they received the package

    • If you’re running late. Despite your very best intentions, you sometimes slip up and fall behind a project’s deadline. Talk with your customer and offer your apologies, with the promise that you will complete the delivery as soon as possible and consider providing something for free, like an extra coupon or free expedited delivery on their next purchase.

  9. Update your inventory for items sold and RETURNED

Why is product distribution important?

Delivering products on time and efficiently is not always easy, but if done properly, it can help a business stand out from the competition. Your distribution methods, whether direct or indirect will determine how you market and to whom.

Pro Tip

You should invest in or build a central depository of information on customers and prospective customers. This will help you to easily update their information.