What is a Typical Product Distribution Cycle ?
April 5, 2020
5 minute Read
CPG manufacturers spend many hours in research and production. After long hours of production, they should have an effective product distribution strategy to bring their products to the target customer.
If a product is unavailable at the right store and at the right time, it will affect a brand drastically. It may lead to their customers’ distraction to a rival brand, or it may affect the other SKUs of the brand. So, when, where, and how you distribute your product plays a vital role in the entire retail execution process.
In a typical distribution cycle, starting from the manufacturing unit to the end-user, there are many people involved before your product finally reaches your end user.
Manufacturers Distributors Wholesalers Retailers Consumers
They produce, manufacture, and pack the products for distribution. A CPG brand owns them.
There are different types of distributors. Some distributors get the packed products, ready for distribution in a target location. However, some also act as manufacturers for a CPG brand, where they receive raw materials, and complete configuration before distributing the product. In quite a few cases, distributors also act as wholesalers to deliver the product to retailers.
The main job of a wholesaler is procuring the product from a manufacturer or a distributor in large quantities and then sell it to the retailers.
Be it Big Box retailers or Kirana retailers, they both play a significant role in getting the manufactured product to the consumers. We could say they are the last destination before it reaches a brand’s target audience. A mutually beneficial collaboration between brands and retailers is critical for success.
All the trouble a product manufacturer goes through is to get their product to the shoppers and consumers. At that end, shopper experience has been on an upward trend as brands, retailers, and eCommerce giants are finding new ways to appeal to their target shoppers.
In multiple situations, agents get involved wherever additional distribution, out-of-stock replenishment, or order delivery is required. Though this process seems simple and straightforward in writing, in reality, it is the most challenging part of the retail business.
Should Product Distribution Happen the Typical Way?
Most definitely not! In our last article about Kirana, we discussed how big-box retailers and eCommerce giants such as Amazon take advantage of smaller retailers for product procurement and distribution. The retail game is changing drastically, and there is no one set of rules to keep the momentum going.
However, a brand should know where to implement intensive distribution, selective distribution, and exclusive distribution of its SKUs. For example, Jam & Jellies may sell more at store A, whereas Chocolate & Candy sell more in store B. In this situation, both stores should have the necessary stock replenished on time for the continued satisfaction and retention of your consumers.
If store A starts getting more Chocolate & Candy, whereas store B gets more Jam & Jellies, then it will prove to be a poor distribution strategy.
Applying Technology to Distribution
When we say technology, we are not referring to texts, emails, and phone calls. From processing orders to logistics, a lot of steps get involved before the product reaches the eventual destination. There should be a platform where all stakeholders can communicate about out of stock (OOS), replenishment, and continued distribution.
Not only do they need a unified communication platform, but they should also be able to monitor track, and file reports about the distribution orders. To accomplish this task, a retail execution solution that addresses every aspect of communication as well as includes analytics to check performance is necessary. As more and more brick & mortar stores face closure, it is time to adopt a distribution methodology that assures future-proof. A failure to do so will result in more losses.
Product distribution strategy is pivotal to successful retail execution. Investing enough resources in creating a plan that will ensure continued success. As mentioned earlier, this process may seem simple, but it is the most challenging part of the retail business.
The need for communication and insights demands a solution that enables communication, as well as help, in making informed decisions.