Running any company is complex from the beginning, even if it’s completely stable. As a logistics company, you must consider that the various strategies you implement to improve the logistics quality must remain unchanged.
In some cases, the tools we want and must implement in our company involve many factors. Obviously, there are many systems designed to benefit your company through their visibility. However, in this article, we’ll discuss the distribution strategies that companies like yours can benefit from immediately.
You must be aware that if the distribution of goods in your business is not carried out in the right way, it may have a negative impact on the rest of the development. Therefore, it’s necessary to pay special attention to implementing this phase in an appropriate manner.
What is a distribution strategy?
If you don't know, a distribution strategy is a series of decisions that a company must consider to provide quality services. These are related to the channels, systems and distribution types used to reach a large number of customers. With this system, you’ll be able to evaluate the type of distribution your company conducts. In addition, you’ll be able to determine which one is best for your business.
Many companies put customer service first, so this is where they often pay the most attention. The same is true of logistics companies, which must ensure that distribution is as effective as possible. Many customers will be positively or negatively affected by the service you provide.
Defining key points that your company and customers are very interested in will help you determine which systems and distribution strategies are most suitable for your business. In addition to this, you’ll know how to determine which type of shipping and transportation is most beneficial for your customers and their products.
Before looking for an ideal logistics platform to provide you with the right distribution strategy, you need to understand the distribution types. It’s important to emphasize that the goals of both types are the same and benefit your company. However, they have different development methods. There are two types of distribution: direct and indirect.
This is a type of distribution in which, in most cases, the same manufacturer is responsible for distributing its products. In other words, it doesn’t need a logistic business, because the manufacturer will be able to contact the final destination and customer. Generally speaking, this is a distribution without so many processes and has higher value. However, it’s usually the least implemented by companies.
In contrast to direct distribution, indirect distribution is through intermediaries. That is, the manufacturer transfers the product to an intermediary responsible for distributing it to a specific destination. The value of this service will be agreed upon between the intermediary and the manufacturer, usually as a fee, depending on the type of transport required and the destination.
Distribution Strategy Type
Since it’s already clear what different types of distribution exist in a logistics business, it’s important to understand what the various strategies consist of. This will make it easier for your company to understand and implement the strategy that best suits its services.
Intensive distribution strategy
Generally, this is considered the most suitable for products destined for a large number of people. And that will also be located at different points of sale. In other words, this distribution strategy will benefit companies that provide services to a wider audience.
According to the requirements of large-scale distribution, indirect distribution is the most recommended. In other words, various intermediaries are needed to achieve effective and efficient product transfer. Customer service, after-sales service and many other technologies will appear in such strategies. In most cases, this distribution strategy is implemented with customers who produce or own food, cosmetics or drugs.
Selective allocation strategy
Unlike the former, the latter has a somewhat limited distribution. However, it also has different product sales points. The product shall not be sold on a large scale or distributed to places without the authorization or responsibility of the manufacturer.
Technologies such as alliances with selected stores and intermediaries will make distribution more personalized. Products such as clothing, footwear or fashion accessories usually require the logistics business to have a selective strategy.
Exclusive distribution strategy
Finally, among all the strategies, we find the exclusive distribution strategy. This is usually done directly between the manufacturer and some specific customers. The distribution of products is very limited, and we can even find that the products can only be sold in the stores of the brand itself.
Importance of implementing distribution strategies
The purpose of implementing a distribution strategy is to fully meet the needs of your customers. Also, you’ll be able to better understand the types of services you’ll provide. This is why it’s necessary to identify the policies that you’ll implement in your business.
By giving customers an excellent experience, your logistics company will stand out from the competition. Now that you know a little about these strategies, what strategies do you want to implement in your company?