The Saturday Morning Post By Richard, October 5, 2013
Distribution is the second feasibility element of a startup. A general description for distribution is the space between the company back door to the consumer front door or for an intangible product such as Apps, services or software products, from the service provider to the user.
The three segments of distribution are channels, sectors and logistics. Channels are who is selling the product. Sectors are the markets or type of users you’re selling to. Logistics is the transportation and warehousing of product.
Sector decisions are best decided first making your channel selection easier and obvious. For example you have a product that you want to sell into the stationary market; the traditional method would be to select stationary manufacture representatives. If it is a food product the traditional sales channel would be a food broker. With a software product you might consider partnering with Microsoft etc., a game program, Electronic Arts or an App with a major brand or celebrity.
The major traditional types of sales channels are a direct sales force, retail stores, online company site, E commerce (Amazon and eBay store), software partners and App stores. Sometimes sales channels are exclusive or mixed which is another consideration.
Logistics depending on your product can be a huge consideration. Briefly point of origin, weight and size, fragility and cost are the key determining factors for hard products. You either have the answers to this element, or you don’t. Simply put if you don’t, I highly recommend you get an expert in this field.
Catching the Big Wave!
If you are thinking of traditional sectors and channels the decision is simple because it has been predetermined for you. However if this new product is similar to a competitive product already established in the marketplace, you will find attracting the attention of a powerhouse representative or broker is very difficult to achieve and can be very expensive. Switching channels and sectors is extremely destructive to your business and very expensive!! To make these changes requires a manager of change; this is not just flipping switches! So now is the time to consider alternative or new sectors and channels!
A competitive product, a disruptive technology or a disruptive innovation?
An Uphill fight!
Competitive Product channel and sector decisions are key factors for the success of a new product or business entry. Second, third or fourth positions are always an uphill battle which is expensive and usually requires at least a 20% price advantage to be successful. A strong brand partner, ongoing combo promotion or an OEM private label relationship should be strongly considered.
Disruptive Technology is a new technology competing and displacing existing technology and competitors. New markets usually develop as well, because of the price and feature improvements. Although this is a great rollout position to be in, be aware everybody else will be simulating your advancement and trying to leap frog it. Additionally you can be assured they will be using their entire financial, brand and established distribution advantages to counter or remove you from the market.
The Big Wave!
Disruptive Innovation is the development of new technology, new products and markets which usually displace existing products or markets. Being the first into the marketplace makes you the default leader! The first one to get to market has all of the mindshare; attention and the premier position with no competition or counterpoint! Usually slow to start but with a strong finish!
My best counsel to you is to stop and think this one out! This is not a flip decision and is one of the most important business decisions you’re going to make. It determines your destiny and how quickly you get there! The wrong choice will be a major drag on your business, so make your decisions carefully and thoughtfully.
For an additional conversation or more information I can be reached at: email@example.com
Or also please consider,Umar Hameed at Phone: 443-650-8627
Good luck and success,