Factors to be considered before choosing a particular channel of distribution board. - SS1 Commerce Lesson Note

Before choosing a particular channel of distribution, several factors need to be considered to ensure effective product delivery and reach the target market.

·         Target market: Understanding the characteristics and preferences of the target market is essential. Factors like geographic location, demographics, buying habits, and accessibility influence the choice of distribution channels. For example, if the target market is predominantly online-savvy, an e-commerce channel might be more suitable.

·         Product characteristics: The nature of the product itself plays a significant role. Consider factors like product perishability, fragility, size, weight, and specialized storage requirements. For instance, perishable goods might require a distribution channel with fast delivery times to maintain freshness.

·         Competitive landscape: Analyze the competition within the industry. Evaluate the distribution channels they are using and determine if there are gaps or opportunities for differentiation. Assessing competitors' strategies can help identify potential advantages or challenges in choosing a particular channel.

·         Cost considerations: Evaluate the financial implications of different distribution channels. Factors like transportation costs, inventory holding costs, fees or commissions associated with intermediaries, and marketing expenses should be considered. It's important to find a balance between cost-effectiveness and the ability to reach the target market efficiently.

·         Resources and capabilities: Assess your company's internal resources and capabilities. Consider factors like infrastructure, personnel, expertise, and technology. Determine if your organization has the necessary resources to manage a particular distribution channel effectively or if it would be more practical to rely on external partners or intermediaries.

·         Control and customer experience: Consider the level of control you want to have over the distribution process and the customer experience. Direct distribution channels provide greater control, allowing you to shape the entire customer journey. Indirect channels may involve relinquishing some control but provide access to established distribution networks and expertise.

·         Scalability and growth potential: Evaluate the scalability and growth potential of different distribution channels. Consider whether the chosen channel can accommodate future expansion, both in terms of geographic reach and product range. It's important to select a channel that aligns with your long-term growth objectives.

·         Legal and regulatory considerations: Be aware of any legal or regulatory requirements specific to the industry or target market. Certain products or distribution methods may have specific restrictions or licensing requirements that need to be taken into account.