Has your consumer product business changed product distribution strategies in an effort to drive down manufacturing costs? Are you investigating new strategies that shift the way you do business with consumer products and shift the emphasis to packaging? Here are five distribution methods for consumer products makers to consider – some fresh, some traditional, and some perhaps a little too traditional. Let’s look at them in turn and see what you might gain or lose in your current distribution strategy.
Distribution Strategies
Traditional product distribution strategies involve buying in bulk, distributing by weight, or hiring distribution companies who will do the work for you. But there is one problem with these old-school strategies, and that is they do not allow you to adjust as the market changes. Today, the market is global, as well as horizontal. It is very difficult to work out distribution networks that adjust to either local or seasonal demand. Also, the sheer size of the global markets means that you must be able to cope with all of the shifts in customer demands, or you could find yourself facing serious problems and interruptions in your current processing network.
Target Market
The most important thing about product distribution strategies is to determine what your target market is, and how quickly you can make delivery of your goods into the hands of your customers. This is the same concept needed to be used when you are marketing to a target audience, where using methods to buy TikTok likes won’t work if your audience is of the older generation.
In essence, you want to make sure that you make your sales. But do you have enough hands-on employees, storage areas, and delivery vehicles to handle the volumes of product you need to process through your distribution channels? Remember, it costs money to produce a single item, so if you have too many workers and materials on hand, your overall production cost will rise. If you’re simply trying to keep up with the ever-changing distribution needs of your customers, this process will take you forever and leave you with over-producing and under-supplying products.
The Three Primary Distribution Strategies
There are three primary product distribution strategies that manufacturers use today.
- First, they can ship directly to retailers. Many large manufacturers and retailers have their own dropshipping services where they warehouse and ship products to retailers who have signed contracts with them. This strategy often results in very high over-supply because the manufacturer sends its excess materials to retailers who will then put the products on the retail shelves. For this reason, it is usually not a good idea for these large manufacturers and retailers to warehouse their own inventories.
- Second, there are what I call the OEMs or the Original Equipment Manufacturers; these companies usually control their own distribution strategy. They set their own product characteristics, quality standards, and price. Because they have years of experience in designing and developing products, they have a deep understanding of what consumers in their own industry want and expect, which is why they can offer such a diverse array of product distribution strategies and can have very low-cost structures.
- Finally, there are what I call the downstream or retailer product distribution strategies manufacturers to use. These strategies allow manufacturers to enter into contract manufacturing with specific markets to manufacture goods that will be sold to retailers. The products may not be available to consumers in the customer’s local market but will still meet the demands of the retailers and their customers in other markets. The benefit to the manufacturer is the opportunity to reach hundreds of retailers at once and tens of thousands of retailers worldwide.
Summary
Each manufacturer has its own unique product distribution strategies. Some use the OEM model, some use contract manufacturers, and others still use direct contract manufacturing. In my opinion, the best strategy that every manufacturer should have is an eCommerce orders program. This is because it enables manufacturers to take advantage of all of the opportunities an online market provides, without having to warehouse inventory that the company needs to store in its factory. The manufacturer can also monitor all of the activity on the web.
There are many product distribution strategies available, but the one intensive distribution strategy I believe every manufacturer should have is an eCommerce orders program. This strategy provides you with a way to reach all of the potential customers and retailers that you need to be successful. It does this without having to warehouse inventory and it doesn’t require you to pay extra for retail space. If you do not have an eCommerce orders program in place, perhaps you should consider it today!
