Distribution

Distribution business models, or distribution channels, refer to how products are distributed from the manufacturer to the consumer. There are several types of distribution business models, they are:.

Direct distribution from manufacturer to consumer can be viewed as the simplest form of distribution because it does not rely on intermediaries between a company and its end customer. E-commerce and third-party logistics are enabling technologies for direct-to-consumer distribution strategies.

1. Manufacturer direct to consumer
2. Manufacturer to distributor to consumer
3. Manufacturer to distributor to retailer to consumer
4. Manufacturer to distributor to retailer to agent to customer

An example of direct-to-consumer business is the online mattress market (consisting of companies like Casper, 8Sleep, and others).

Distribution models which rely on retailers are a form of indirect distribution, because the manufacturer is not selling goods directly to the end customer. Retailers can be brick-and-mortar stores or e-commerce businesses.

Traditional car dealerships are an example of retailers which purchase inventory directly from the manufacturer

Distribution models which rely on wholesalers and retailers are even more indirect, and is typically seen in the trade for commodity goods. Wholesalers purchase goods from the manufacturer for the cost of production plus a profit margin for the manufacturer. Retailers in turn purchase goods from wholesalers at the wholesale price (which includes a profit margin for the wholesaler), and the retailer marks up the goods to the final retail price suggested by the manufacturer (MSRP).

Certain product categories or types of business may require transactions to be brokered by an agent or representative of a wholesale distributor. Agents may be required if purchase patterns are irregular or if delivery of the goods may require special logistics arrangements. Part of the job of agents, which typically are paid a commission or brokerage fee for their services, is to manage relationships with their clients.

An example of such an wholesaler-agent-customer relationship is the alcoholic beverage industry's relationship with restaurants, which typically order new inventory through sales representatives at wholesale distributors.

• Efficiency. Just-in-time distribution requires that all parts of the supply chain and distribution network work together in concert. SoftwareSoftware can provide a coordination layer for these operations. Maintaining a record of the chain of custody can be achieved by using various traceability methods and technologies like bar codes, QR codes, and inventory tracking software.

The process of making a product available for purchase in a market. The distribution process involves the transportation, packaging, and delivery of products. A distributor is an entity purchasing, storing, and selling products. Distributors are usually working in supply chainssupply chains handling products after they are manufactured and before they reach retailers and/or consumers.

Just-in-time (JIT) distribution refers to a distribution strategy which delivers goods or materials to the customer when the customer needs it. It's a distribution strategy which can result in lower carrying costs and reduced inventory overhead, but it is predicated on predictability of supply and demand, and reliability of supply chain and logistics infrastructure.

Just-in-time distribution often involves goods or materials with short shelf-life (such as fresh flowers or live seafood) or viable usage windows (such as certain chemicals or goods which require storage at very cold temperatures). Drop shipping is a form of just-in-time distribution.

In order to facilitate just-in-time distribution, all components of the supply chain – from manufacturing to warehousing to logistics – must be fast, accurate, and efficient.

• Speed. Rapid turnaround of goods leads to higher overall throughput in a distribution system.
• Accuracy. In order to facilitate just-in-time distribution, the distributor must be able to effectively estimate demand and quantify the amount of time spent on each part of the distribution process. This includes developing a comprehensive understanding of lead times, time spent transitioning goods between facilities, and the time it takes to transport and deliver the goods or materials to the end customer.
• Efficiency. Just-in-time distribution requires that all parts of the supply chain and distribution network work together in concert. Software can provide a coordination layer for these operations. Maintaining a record of the chain of custody can be achieved by using various traceability methods and technologies like bar codes, QR codes, and inventory tracking software.