How To Distribute Products Efficiently

Rakesh Kumar Dhar

No matter how good your company is or how competitive a product you have, it

has to reach your potential buyer quickly without the addition of any cost to

it.

How would you as a manufacturer, reach to over one billion people, spread

across two and half dozen states? It is a fact that users would grab anything

that’s a little cheaper and readily available than waiting for your product to

arrive. As a manufacturer you have to not only minimize the end-product cost but

also maximize its reach.

A company may have very good products. But to ensure that these products

reach targeted customers/audience across every nook and corner of the country,

the organization should have an efficient and vast channel network.

In the current business scenario where market conditions are getting tougher,

margins are getting thinner day by day. Given these circumstances, it is not

feasible for any company to open offices in all potential business areas. This

would result in high overheads, which would make a heavy dent on company’s

profits.

To overcome these problems, companies should invest in increasing their

market reach by appointing a sturdy channel network. The channel will then act

as the company's representative while also distributing its products and

services.

Channel relationship

A channel partnership is always a mutually beneficial tie-up between a

manufacturer and a seller/vendor/dealer. Channel partners are people who have

local-marketing expertise with a brick and mortar infrastructure. They could

either be individuals, small/big computer dealers (some dealing exclusively in

hardware or software or both), OEM vendors or systems integrators.

These entities are in constant touch with the market as well as with

end-users, with a good customer base. Some of these partners have their own

small network of resellers through whom they sell their products by offering

handsome margins.

A company can utilize their strengths like market reach, goodwill and

infrastructure to promote and sell its products without having to make heavy

investments in real estate and manpower.

Benefits of having a channel

The channel is a godsend to a company that can harness its capabilities. They

can act as the eyes and ears for the company, reporting constantly on the

dynamic market situation. At the same time they can also double as the hands of

the company, helping in the actual delivery of goods.

The channel offers various other benefits to an organization. These are, 1.

Utilization of channel infrastructure at no cost to the company; 2. Providing

support and service through the channel to customers/end-users; 3. Use of

channel network for greater penetration of products in the market; 4. Helping

companies through monthly, quarterly, yearly sales analysis and budget planning;

5. Creating better brand awareness among customers; 6. Competitive product

information/market information and feedback from channel partners; 7. Makes

products available at any given point of time to end-users; and, 8. Helps

companies in identifying need for newer products. The most priceless benefit, of

course, is getting the access to a ready customer base.

All these benefits shows how profitable it is for companies to offer their

products/services through a channel network. This move is imperative for any

company which wants to compete, thrive and stay ahead in the current market

conditions.

Strengthening channels

Merely setting up a channel network is not enough. To have a truly efficient

channel that can deliver, every vendor has to work towards strengthening the

channel. Here are some easy ways to do it:

• Offer high quality products
• Provide good after-sales support to end-users
• Follow good and ethical business practices
• Provide strong support system to channel partners
• Offer attractive margins/discount policies
• Introduce special bonus schemes periodically

In addition to this it is also important to establish an efficient channel

management system. This would include:

a. Good communication network

b. Appointing dedicated persons at various locations who can address

queries/problems of channel partners

c. Maintain an accounting system for the business generated, outstandings

(stock/credit) or any other account-related issue

d. Maintain and encourage mass communication/advertising activities

e. Update partners constantly on the latest trends in technology

Mininimizing costs

To generate more revenues by minimizing costs (today’s buzzword), companies

should recast their business in line with the above changes and redefine their

reach as per the market needs.

They should integrate the entire organizational statistics, covering not only

products but also service, support and logistics (product upgrades and new

versions in case of software companies).

Additionally, organizations should also consider cross-functional supply

chain optimization and execution of distribution rules and regulations as and

when they are set.

Rakesh Kumar Dhar is Country

Manager of Pune-based Vsoft Services.