Product Distribution System

A distribution system also consists of various essentials such as distributors, transportation, the cost of distribution, etc. Each plays an important role in the success of the business. A distributor is a person who performs the work of taking your product to the market where the consumers of your product can easily buy your product.?

The distributor must have in-depth knowledge about the market, such as where the demand for the product is maximum, how to increase the demand of the product in certain areas, etc. If your distributor is competitive, he will make sure that your product is available in every corner of their geographical area.

The last element of a distribution system is the distribution cost, which indicates how much a company is required to pay to distribute its products in the market. It includes the transportation cost and the wages of your distributors.

The distribution of products is so important that there are people who have established their businesses just for the distribution of products of other companies. These distributors have built their networks and have distributors or C&F agents (Carrying & Forward agent) who perform the work of distribution for various businesses.

Objectives of the distribution system

1. Availability of product in the market

Your company can never grow if your products are readily available for your customers in the market. The main objective of a distribution is to take the products within reach of its consumers so that they can buy whenever they want no matter in which part of the world they live.

2. To Provide convenience to customers

Another essential objective of the distribution system is to provide satisfaction to customers. People buy products based on factors like the quality of products, availability in the market, and the price of products. If your market is not easily available in the market, your customers will settle up for lower quality products of your competitors. Therefore, along with keeping the excellent quality of products, you should also take care of the convenience of your customers to find your product.

3. To reduce the cost

An effective distribution system helps in reducing the overall cost. The cost of your products will also be lowered if you are spending less on transportation and distribution of your products.

4. Distribution of goods

Proper distribution of goods is as important as the production of the goods. There are a few companies that have their outlets in different parts of the world. Whereas some companies prefer to sell their products to retail store owners who sell them further to final consumers. It is important to know the total number of retail stores in a particular area if you are planning to sell through a retailer.?

The benefit of having a business connection with them is that they will choose to sell your products over the products of your competitors. Most importantly, once you have a tie-up with these store owners, it becomes your responsibility to follow up and keep their stock full so that they don’t lose any sales.

5. To maximize sales

More retailers to sell your products means more sales. Therefore, it is important to distribute your products effectively to maximize your sales.

6. To enhance competitiveness

An effective distribution system helps in increasing the competitiveness of your business. Competitors compete with each other based on the quality of the product, the price of the product, and the reachability of the product.

The quality and price of your product will depend on certain factors but can control the distribution of your product. You can give competition to your competitors by distributing your products effectively, even if your product is of lower quality. Because most people settled for convenience over the quality of a product.

7. To control inventory

A proper distribution system helps you in managing the inventory. A manufacturer is not required to keep finished goods in stock if there is an effective distribution team to distribute their products.

8. Promotion of products

A good distribution system will also help in the promotion of your products. Your distributors will meet retailers and make them aware of the existence and the qualities of your product.

Therefore, along with the distribution of products, they will also promote your products for you.

Types of distribution systems

1. Direct Sales

Direct sales can be defined as the sales of products directly from the manufacturer to the buyer without the involvement of any distributor or middleman. This type of distribution system is right for products that are neither too expensive nor too cheap. The price of products falls in the middle range and are not bought by consumers on an everyday basis. For example, a person will purchase an air purifier once in 5 or more years.

2. Wholesalers and Retailers:

This type of distribution system involves selling products to the middlemen, who further sell these products to the final consumer. Selling through wholesalers and retailers is an excellent way to reach a large number of customers.

3. Distributors and brokers:

When you sell your product through distributors and brokers, you give them a certain amount of commission on the total sales that they have made. This method is beneficial to make available your product in remote areas.