Distribution

What is distribution?

Distribution is a key process that involves the movement of goods from the manufacturer to the end consumers. Within this process, companies can sell their products either independently or through intermediaries, such as wholesalers or retailers. This aspect of business plays an important role in ensuring the availability of goods to consumers.

Tasks and features of distribution

For a business to operate successfully, it is necessary not only to produce goods but also to distribute them effectively. The main task of distribution is to deliver products to customers quickly and cost-effectively. Distribution allows:

• To organize optimal supplies and delivery routes;
• To ensure a constant flow of orders for intermediaries;
• To create an effective sales network and increase turnover;
• To promote goods in the market.

To achieve these goals, companies need to establish numerous processes, including transportation, storage of goods, creating a database, and developing a communication system among all participants. Well-structured distribution positively impacts the overall efficiency of the company.

Classification of distribution

Distribution can be classified according to various criteria. Here are the main ones:

By the presence of intermediaries

• Direct distribution: Selling goods directly to customers without intermediaries, for example, through online stores or owned shops.
• Indirect distribution: Products are sold through wholesalers and retail stores.

By type of intermediary

• Mass distribution: Products can be sold in a wide range of retail outlets.
• Selective distribution: Intermediaries are selected based on the product niche.
• Exclusive distribution: The right to sell the product is granted to only one intermediary.

By market geography

• Local: Products are distributed within one city or region.
• National: Goods are available in various regions of the country.
• International: Distribution of products abroad.

Distribution channels

Distribution channels are the chains through which goods pass from producers to consumers. Depending on the number of participants, channels can be of the following levels:

• Zero level: Producer — customer (without intermediaries).
• First level: Producer — retailer — customer.
• Second level: Producer — wholesaler — retailer — customer.
• Third level: Producer — large wholesaler — small wholesaler — retailer — customer.

How to choose distribution channels

The choice of the right distribution channels depends on numerous factors:

• Type of product and its functions;
• Expiration date;
• Production volumes;
• Competitor activities;
• Audience segments and geography.

By considering these aspects, companies will be able to optimize their distribution channels and, as a result, enhance the efficiency of their business.