Any product or service makes its way to the end consumers after passing through a series of mediums, and that is known as the distribution channel. A distribution channel can be a small one or a long one depending on a lot of conditions.
If a product passes through a longer distribution channel, the price of the product is likely to get higher for the end consumers when compared to a shorter distribution channel. This is one of the most important aspects of any business, and an efficient management strategy to handle the distribution channel can make or break the business.
Monitoring a distributing channel is not as simple as it sounds because of the number of parties involved in the process. There is the involvement of manufacturers, wholesalers, logistics, and retailers. Unless it’s a direct channel in which case the consumers can directly purchase the products from the manufacturer.
Challenges Faced in a Distribution Channel
Logistics is unidimensional. It is not just about the manufacturing of goods, but it is also about identifying the perfect distribution channels in terms of intermediaries and arranging transactional parties while keeping it cost-effective.
No matter the type of distribution you choose, the generic problems involved in the process are similar. One of the main challenges is identifying the gaps in the distribution channel. When you know you are not receiving the profits, you intended to, that’s when you will have to identify these gaps and find a solution for them.
How to Fill the Gaps
If you have multiple distribution channels, you will have to mend each of them individually to get the best results and increase the efficiency of your business output. Let’s get ahead and take a look at how you should be doing what’s necessary.
1. Adaptive Distribution Channels
One of the fundamental flaws in the distribution channel, as identified by Harvard, is the inability to switch between multiple platforms. That’s why the term adaptive distribution channels have been coined.
Customer requirements need to be fulfilled as and when required, but more often than not, the customer is left disappointed because just when they need something, it might not be available. That’s not just a loss of revenue but a lost opportunity, and until it is resolved, the same problem will arise regularly.
2. Co-operative Partnership
Collaboration here is cited as a possible solution to the problem. If there’s a routine requirement that cannot be fulfilled by you, then you can coordinate with other members in the distribution channel and pave the way for smooth transitioning to enable the customer of what they need.
Sharing capabilities within the distribution channel will empower each member of the channel and offer cost-saving, which can otherwise be not dreamt of. The cost benefits can be around 15-20%, thus offering some of the respites to end consumers as well in the form of lower prices.
Sometimes a customer can have unusual demands, and you might not be in a position to fulfill it, but someone might be. If that someone happens to be on your team, it’s a win-win for everyone.
3. Logistic Management
One of the biggest delays occurs during the transportation stage in the distribution channel. A lot can happen in transit, and you do not want to fall prey to that. Technology has been shaping the logistics industry in a very positive manner and offers a solution to all the problems.
Vehicle fleet management software is a great starting point if it isn’t already present. Managing a fleet is a mammoth task, and when there are such great tools available, why take the pain of manually laying everything out. Moreover, technology is much faster and error-free, for most of the part.
4. Data to the Rescue
Data is going to be your best friend here. The insights you can get from data and all the previous records will help you set things straight. It’ll help you identify areas that strongly need to be improved. For instance, if there’s a sharp delay in a particular route and it has been consistent for some time, then there is something not right.
A trucker dash cam can be quite a good idea to help you show what exactly is causing the delay on the way. Whatever the reason, you can then appropriately find a solution for it. Moreover, an effective real-time monitoring system along with a dash cam will help you better understand the complexities involved.
You need to find ways to shorten the time it takes to complete the process. For example, if you are using an Electric Vehicle, you can use a tool to monitor how long the vehicle can travel until it drains out and plans your route accordingly to avoid any unnecessary stops and calamities.
For a very long time, B2C was not possible without the help of intermediaries, but with the introduction of e-commerce platforms, the dynamics are changing. When Intel, despite being a B2B company, started making advertisements for the end consumers, they brought about a revolution in the landscape.
E-commerce platforms today are taking a similar step. By eliminating intermediaries and directly docking manufacturers onboard the platform, they are shortening the distribution channel, and that’s the reason they are able to offer competitive prices and, at the same time, keep up to the customer’s expectations.
It has become easier for a manufacturer to now catch on to new customers or target a specific demographic. With e-commerce offering such huge datasets about consumer behavior, designing consumer-specific products with features that they will entice them, is the key to fulfilling their wishes.
The gaps in distribution channels have existed for a long time to come. We have only realized its inefficiencies now because we today have the tools and technologies to close that gap. Traditional methods might work well on a very small scale, but on a large scale, it is almost unimaginable.
Once you close the existing gaps, you are bound to find more in the future. The best thing would be to close them as they come and become better each time you do so. This is the theory of evolution, and businesses need to be on board the same pattern because only the fittest will survive at the end.