Before considering how to find distributors for the product you want to export, you have to decide the distribution strategy. Leaving aside sales by catalog and online, there are two large groups in which this type of strategy can be classified: horizontal and vertical. Understanding the difference and knowing how to approach them is key to operating a successful multinational retail business and Randall Castillo Ortega, an import/export specialist, discusses how to choose the right ones.
Choosing the distribution channels to use is one of the decisions to make when thinking about how to export. This decision is quantitative and qualitative, as both must be addressed when it comes to choosing the type and number of outlets at which the exported goods will be available. The number of intermediaries through which the product passes until reaching the end customer in the destination country must also be considered in the traditional distribution. Of course, it may be the case that the distribution channel chosen is completely different, as is the case for online and catalog sales.
The choice of distribution and logistics channels directly influences the satisfaction of your customers and the reputation of your business, hence its importance. Asserts Castillo, “Whether you’re at the launch stage of your new product or entering other markets, distribution is key to ensuring your timely sourcing. Choosing distribution channels is not a decision that is made lightly, because their efficiency and timeliness depends on the presence of your products before your target audience and, in the end, even the reputation of your brand.” In simple terms, the distribution channel includes storage, transport and delivery.
Digging deeper there are different types of distribution channels. Horizontal distribution emphasizes the quality and quantity of the points of sale where the exported product will be distributed. An exclusive channel is the most selective alternative that seeks exclusivity and recognition, relying on the prestige and good name of the various establishments where the good will be put up for sale. Selective distribution chooses points of sale by alluding to differentiating criteria that are intended to make a distance from the competition based on values related to brand image and company culture.
There is also vertical distribution, but the actual options of choosing the distribution mode based on this type of strategy in the markets are not so many. This is because the number of intermediaries on the path that travels through the product passes to the final consumer depends a lot on the type of good in question. “Long channels are generally used, where at least two intermediaries are involved in the product path,” explains Castillo. “The alternatives to this option are the short channel, where only one and the direct channel exist, where the product can be made available directly to the customer.”
Chosen channels, distribution policies remain to be implemented based on the choices that have been made, the type of product and the framework of the defined internationalization strategy. The decisions that are made will have a direct impact on the brand image and the evolution and positioning of the company in the target market.
Channels are the flow routes of goods between the manufacturer and the consumer. They can be direct or indirect depending on whether or not there are intermediaries in the process. In this sense, we can talk about different levels of distribution, from zero or direct, where the manufacturer takes his product directly to the consumer, to the numbered ones, depending on the number of intermediaries involved.
Concludes Castillo, “Choose your distribution channel before designing a marketing strategy, as it depends on the actions you need to take to promote your brand to your end customers. Consider your options, analyze the market and your competition and you will surely make the best decision.”