Footwear Distribution Channels &Decisions

In today’s fast paced world, distribution by Company can be an enormous competitive advantage to the company. Most companies target their customers far and wide. Because of the rising costs, companies are trying to expand in various markets so that they have a higher turnover and hence a higher margin.

To reach far and wide, you need the right distribution strategies in place.

It cant go without notice New age Domestic footwear brands dotting the Online space with there Digital First strategy . Many Have survived and able to Create an visibility in the Niche i.e. subcategory of footwear they are Catering to.

Add to this Established Domestic Brands Have also carved their Direct marketing presence especially after Corona Pandemic.

Resources are Scarce ,So where to start? Which is the sales channel you need to be?

to understand this we need to Go to basics Asses our Industry /Product & Our Financial strength & Target consumers to choose the channel which ever falls into our zone of operations.

Although it may seem simple, The business’s niche and current industry trends can affect Their ability to acquire new customers for the very reason we have seen lately Many of New Age Brand Being Out of Business' or Pivoting To Different Sales Channel .

Below Data showing Clearly Traditional Footwear Retail Dominating with 70% Market share & E-commerce at 16% And Brick& Mortar at 14.50% in the Organized Indian footwear market space.

That’s why having an effective Indirect more so wholesale marketing strategy is so crucial to your business’s success. Often, the term “marketing” can seem less effective when compared to fast sales tactics .

However, investing in a Indirect Such as wholesale marketing strategy will help you to attract customers in the long-term. This will lead to more consistent sales overtime. When you start a wholesale marketing plan, you should focus on several smaller tactics that, together, create a continual, profitable flow. By creating a succinct strategy, you can get desired results without pushing potential patrons away.

When you're building a strategy to bring on new channel partners, Prioritize the targets utilizing a decision Matrix that scores each channel partner by size, market leadership, target customers, target geographies, partner value-add, economics, and other important attributes. The key is to ensure there is strategic alignment with new channel partners to maximize the value of limited resources and to build brand equity in the market.

At The Same time

The wholesale distribution industry faces a true inflection point similar to decisive moments that other industries—such as retail, health care, and automotive—have faced. A wave of disruptive forces—amplified and accelerated by digital technologies—are poised to transform an industry unaccustomed to rapid, unpredictable changes.

After years of being insulated from the disruptive forces reshaping other industries, wholesale distribution is now feeling the seismic impact. As a case in point, Big Players Like Reliance Getting into the game having the Financial Backing they have to Disrupt the whole sale footwear Ecosystem.

Wholesale distributors may need to think more broadly about their competitive positioning and develop strategies to navigate the increasingly dynamic landscape. Winning at the inflection point will likely require distributors to make choices about where to play and how to win, with an emphasis on sharpening value propositions and business models, embracing innovation, and gaining scale in targeted segments..

Traditional forces

The traditional forces impacting wholesale distribution are primarily macroeconomic and include consumer and wholesale inflation, individual commodity price trends, labor costs, interest rates, and changes in the regulatory environment.

What these diverse forces share is that they’re familiar to wholesale distributors: There are numerous existing sources of information, data, and forecasts for these forces, and their impact on individual lines of trade and companies is reasonably well understood.

HYBRID - ALMOST THE BEST OF BOTH WORLDS

Many companies have a hybrid distribution model, utilizing both 3rd party and direct channels to sell and fulfill their value Proposition. With hybrid distribution, companies get the broad distribution of indirect channels, while owning the customer experience and expanding margin through their direct channels.

Nike has a hybrid distribution model. Nike sells in tens of thousands of 3rd party stores and retailers across the world. Nike also has direct channels, including Nike.com, and more than 1000 flagship and outlet stores accounted for 28% of Nike's total sales in 2017 versus 10% in 2010. Nike is differentiating their direct channels with personalized Nike ID shoes, exclusive styles, and the broadest selection. Nike is heavily investing in their direct channels because they own the customer experience and make 2-3X in gross margin on each pair of shoes they sell directly versus indirectly. Nike sells a pair of shoes that cost $20 to the manufacturer to a retailer for $40, and the retailer marks it up to $80 to the customer. In this example, Nike would make $20 on the shoes, but if they sell them on Nike.com for $80, then they would make $60 in margin on the shoes. This margin expansion is a big reason why more companies are going direct.

The one longer-term potential disadvantage of a hybrid model is that a direct distribution model could come in and structurally undercut the pricing of the industry.