In the business world, distribution is the art of getting products to their destination quickly, efficiently and in perfect condition, which requires a highly precise distribution strategy. Logistics is the beating heart that connects supply with demand and ultimately makes business activity possible. In other words, if the supply chain fails, the end result will suffer and reputational crises will ensue. This is why, behind every successful product, there lies a strategy of smart and efficient distribution.
In this a journey of invisible yet vital connections, companies are charting their own paths to market, devising ingenious strategies to offer a distribution service that sets them apart; after all, in the world of e-commerce in particular, a one-day difference in delivery times can mean that the customer ends up abandoning their basket and switching to a competitor.
In this post, discover the fascinating world of logistics and its distribution strategies: from traditional channels to the most innovative and disruptive ones that are challenging the current commercial landscape.
An Introduction to Distribution Strategies: What Do They Involve and Why Are They Key to Business Operations?
As a customer or user, you have no doubt already seen for yourself just how important it is for your orders to arrive in good condition and within the stipulated timeframe; this is the result of a sound distribution strategy, which is simply the design of a comprehensive plan to get your products or services from the place of production or storage to the end consumer. This strategy involves key decisions regarding the distribution channels to be used (such as retailers, wholesalers and online sales, amongst others), the logistics involved in the transport and storage of products, stock management, the location of points of sale, and customer service at the various touchpoints. The main objective of a distribution strategy is to ensure that products are availableand are accessible for consumers in an efficient and cost-effective manner.
Key factors that define a good distribution strategy
‘Efficiency’ is the concept that best defines a good logistics strategy; when it comes to the transport of goods, customers and intermediaries expect the greatest possible speed, high-quality service and the greatest possible savings in both financial and energy costs.
Here are the 5 most important tips for the supply chain
- Market knowledge: Understanding the needs, preferences and behaviours of the target audience is essential for choosing the most appropriate distribution channels.
- Selecting suitable channels: to identify and utilise the optimal distribution channels, whether physical (retail outlets, wholesalers) or digital (e-commerce, social media), depending on the type of product or service and consumer behaviour.
- Efficient logistics: to ensure a smooth and efficient supply chain in order to minimise costs and delivery times, whilst ensuring that products are always available at points of sale.
- Pricing strategy: coordinate the distribution strategy with pricing to maintain profitability and competitiveness across the various channels.
- Customer service: to provide an effective and satisfactory after-sales service in order to build customer loyalty and trust.
What are the new distribution channels like?
Distribution channels are a key element in ensuring that logistics operate smoothly and without disruption. Nowadays, thanks to the application of new technologies in this field – such as automation, robotics and the use of big data in various areas, including stock storage – the most effective and efficient distribution channels have been significantly improved. So, if you’re thinking of setting up your own business and find yourself having to choose a distribution channel, bear these tips in mind:
Omnichannel: The pandemic has accelerated the use of multiple purchasing channels. Wholesalers and the distribution sector as a whole are focusing on opening up new sales channels and optimising existing ones.
Access for end customers: although the wholesale sector has traditionally focused on business customers, there is an increasing trend towards reaching out to end customers.
Digitisation: Companies are using technology to connect directly to their business operations from anywhere. The possibilities offered by cloud computing and the convenience of pay-as-you-go models are driving this digital transformation.
Assessment of distribution channels: Companies are assessing new distribution channels, taking into account criteria such as the ability to comply with global and country-specific regulations, and the infrastructure required to support transparency in financial reporting, as well as data collection, collation, processing and analysis.
Technology in electricity distribution: the use of new technologies and tools for monitoring and data collection provides a better understanding of the network and enables the implementation of artificial intelligence-based solutions for its optimal and efficient management.
Discover some of the latest types of distribution systems that are revolutionising logistics
- Automated self-supporting warehouses: Hayat Kimya, one of the leading manufacturers in the Eurasian consumer goods market, has built one of the largest automated racking warehouses in Europe. This distribution system is particularly useful in areas with a high risk of earthquakes.
- Radial, ring, mesh, selective primary, selective secondary and mixed systems: these systems offer a range of options that can be tailored to the specific needs of the electricity infrastructure.
- Intensive, selective, exclusive, direct and indirect distribution strategies: these distribution strategies are used in line with the specific needs of each company.
- Logistics innovation: Companies are innovating in logistics to ensure the best possible customer service and reduce operating costs. This involves constantly updating processes, sometimes through technology, and at other times through logistics strategies.
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