Retail Distribution: Definition, Types, and Factors to Consider While Opting for a Retail Distribution Strategy in 2024

Rahul Kumar

By Rahul Kumar

July 21, 2022

Inventory is the biggest asset for an eCommerce seller but it is not easy to order and store. There are several things to be taken care of before and after ordering products. To remain competitive in the long run, a seller will need to adopt new strategies and broaden their perspective in order to be competitive. By streamlining all their retail logistics activities and having effective distribution management, they can increase the effectiveness of their supply chain processes. As a result, for better efficiency and cost savings, you will require an optimized retail distribution plan.

Today we will learn about retail distribution including the types and considerations while choosing the right retail distribution strategy through third-party logistics.

Table Of Contents
  1. What is Retail Distribution?
  2. 3 Types of Retail Distribution
  3. 4 Factors to Consider While Choosing the Right Retail Distribution Strategy in 2024
  4. Conclusion: Optimize Retail Distribution With WareIQ
  5. Retail Distribution: FAQs

What is Retail Distribution?

A retail distribution strategy is the process of getting goods from manufacturers to sellers or direct to customers (D2C) through a fulfillment channel. Throughout this journey, products move through many intermediaries such as wholesalers, vendors and retailers or in the case of dropshipping, directly to buyers from the manufacturers themselves without passing through a store or selling platforms.

Manufacturers, wholesalers, retailers, agents, etc. are mainly included. Choosing the correct retail distribution plan is the secret to a successful distribution process, higher revenue and long-lasting client loyalty.

WareIQ – Amazon-prime Like Logistics for Modern Brands in India

WareIQ, an eCommerce fulfillment company, empowers online brands with a superior-tech platform to compete with Amazon like service levels by bringing their average delivery timelines from 5-10 days to 1-2 days.

"With WareIQ, UTH is able to consolidate common inventory for all platforms and get much closer to the customer through access to WareIQ’s strong nationwide network of fulfilment centres, and last mile & hyper-local courier partners. We are excited about being able to offer same day delivery in several pin codes due to WareIQ."
- Samit Mehta, Founder, UTH Beverages

3 Types of Retail Distribution

Intensive Retail Distribution

Companies use this retail distribution technique to widely disseminate the availability of their items so they can access the market as much as possible. Brands can accomplish this goal by distributing their goods to as many eCommerce retailers and outlets as they can. Retailers of convenience goods are particularly prone to intensive retail distribution.

For example, you can easily find glucose packets in almost all types of stores and malls.

Advantages

  • Boosts product awareness
  • Encourage impulse buying
  • Enhances revenue

Selective Retail Distribution

Selective retail distribution falls between intensive and exclusive retail distribution. With this retail distribution approach, products are distributed to numerous places. However, it is used much less compared to intensive retail distribution.

For example, a premium watch brand like Tag Heuer may choose to sell its product to its own branded stores or other selected stores. But places like DMart or Reliance Retail cannot be seen selling Tag Heuer. The reason behind this is that such brands need to imply and maintain a high-end brand image and exclusive messaging.

Advantages

  • Ensures good market coverage
  • Offers more control
  • Boosts customer satisfaction

Exclusive Retail Distribution

Exclusive retail distribution is distinct from intensive retail distribution. This form of retail distribution employs certain distributors who are told to sell products only in predetermined locations. Exclusive distribution is frequently used by companies that sell expensive, high-end goods. This method and a brand’s prestige image are therefore related. It aims to reach a certain niche market that is well-defined and capable of buying the product.

For example, IKEA malls usually consist of 1 or 2 locations in a city which is also on the exterior of the main town. 

Advantages

  • Keeps the firm focused
  • Secures the manufacturer’s finances
  • Facilitates localization

4 Factors to Consider While Choosing the Right Retail Distribution Strategy in 2024

Product Type

Routine, limited, and extended products are the three main categories of purchases for retail distribution. Products that are inexpensive and that consumers do not give much thought about while making purchases are considered routine purchases. When a certain brand’s product is out of stock, buyers tend to move to another one rather than visiting other places to purchase the same product, making them highly replaceable. Toothpaste and batteries are a few examples. An elaborate retail distribution strategy is advised for these commodities. Customers aren’t always loyal to particular brands, so having the products widely available and simple to get enhances the likelihood that they will be purchased.

Between routine and extensive purchases are limited purchases. The prices of these goods are often fair. Compared to a typical purchase, consumers take more time to research and compare various products. Mobile phones, washing machines and refrigerators are examples of limited purchase products. Customers consider the pricing and usefulness more carefully before making these purchases. And for these types of goods, either a selective or an intensive retail distribution strategy works best.

Extensive purchases include high-risk items like homes, auto insurance and schooling. The intensity of the buying choice also increases as an item’s price rises. For certain goods, an exclusive distribution strategy works well since it helps clients see the value in the good or service. To raise the price of each item, some brands even make fewer of these expensive goods.

Customer Demand Based on Location

Having your inventory close to your customers is an efficient approach to streamlining distribution and fulfillment, regardless of the retail distribution strategy you are already utilizing. Based on previous demand, this would include strategically distributing your product throughout various distribution hubs.

If the demand for your goods is high in one area and low in another, you might need to send out fresh orders from the distribution center that experiences less demand and has spare inventory on hand if you run out of stock in a high-demand location.

So, products need to travel for longer distances all the way to the high-demand area. Long shipping routes are required to deliver goods to the region with the high demand. This slows down the supply chain and increases shipping costs.

Instead of spending time and money delivering the products to your customers, you might be able to save time and money by strategically moving your inventory to the high-demand distribution hub. Similarly, you should provide retailers who have done really well at selling your goods with a greater amount of inventory to avoid stockouts or losing out on sales.

Inefficiencies of Distribution Strategies

Retail distribution has a lot of moving items and thus, it seems inevitable that your retail operations will have some inefficiencies. It is critical to routinely review your distribution strategy for any ineffective procedures that need to be improved upon or eliminated.

You can have a number of partners who are in charge of different aspects of your distribution process. Suppose, you have three partners. One partner manages a retail warehouse, another partner handles fulfillment and a third partner handles last-mile delivery. The rest of the supply chain encounters a delay if any one of these partners experiences an interruption to their regular business operations, which could have a substantially negative impact on your bottom line.

Instead of depending on a single partner who is capable of managing all the processes, different people might assist you in streamlining and simplifying the procedure. You should do an audit to search for ways to cut costs as well. Find the most expensive distribution steps and determine if there are any less expensive alternatives.

Since products must pass through several shipping zones before they finally reach the buyer, quick distribution of goods from a single central hub can become very expensive. Instead of using local distribution, fulfillment services can speed up deliveries while drastically reducing freight expenses. Even obstacles in your distribution process may be discovered by a thorough audit process. Suppose a warehouse is poorly organized, pickers may have a harder time finding what they need, which would slow down distribution and fulfillment procedures. You may determine what needs to be improved and how to address those bottlenecks by recognizing these problems.

Cost While Partnering With a 3PL

Every retail distribution plan has advantages and disadvantages with the associated cost. Knowing the costs can help you choose the best retail distribution strategy for your retail company and guarantee that your firm’s finances can cover the costs and any potential losses.

Extensive retail distribution strategy planning entails product availability in as many markets and retail locations as possible. It should therefore come as no surprise that raising product awareness is expensive, particularly if a company wants to sell its goods in every store. The location of the retailer may affect the prices. As a result, if you intend to use an intense distribution strategy for your retail firm, this is a crucial issue to take into account.

While it appears that selective retail distribution is less expensive than the intensive option, disagreements with distributors can result in significant losses. Because of the nature of such a retail distribution strategy, this could be costly. Companies must make sure there is enough effective communication when problems arise in order to address them all right away.

Conclusion: Optimize Retail Distribution With WareIQ

Retail distribution is an essential aspect of eCommerce fulfillment as it enables goods to be transported from the manufacturer to the seller’s fulfillment centers and eventually to their customers. To accomplish all of your retail distribution goals, you can consider partnering with WareIQ. 

retail distribution_WareIQ services

Using WareIQ, you can strategically split up your goods and store them in multiple fulfillment centers, located across the country. By keeping inventory closer to your customers, you can speed up delivery while saving money on freight.

We also take care of the entire range of fulfillment processes from handling the picking and packing of goods to transporting it to your customers. Orders are automatically received, processed and forwarded to the fulfillment queue in our warehouses, where the picking and packaging procedures are started. In order to keep shipping costs down, WareIQ ships your products on your behalf through well-known shipping carriers and always assigns the fastest and cheapest option for every order.

Additionally, automation through our custom Warehouse Management System streamlines and improves the efficiency of the entire B2B order fulfillment process by bringing order data and updating inventory levels in real-time, directly into the WareIQ dashboard, where it can then be analyzed and tracked.

Retail Distribution: FAQs

Supercharge your fulfilment with WareIQ now, contact our team.

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Rahul Kumar
Author

Rahul Kumar

Rahul Kumar worked as a content marketing analyst at WareIQ contributing to blog posts related to eCommerce operations, fulfillment and shipping along with a few topics around tips and tricks for eCommerce sellers. He has more than 3 years of content writing experience across industries like logistics & supply chain, media etc.

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Online Tracking through DGFT Portal The Directorate General of Foreign Trade (DGFT) provides an online facility for IEC code tracking on its official website. This service enables applicants to check the status of their IEC application after submission. 2. Application Reference Number To track the status of an IEC application, the applicant needs the application reference number, which is provided at the time of submitting the IEC application. This reference number is crucial for accessing the application's status. 3. Status Update Upon entering the application reference number on the DGFT portal, the system displays the IEC application's current status. This may include stages such as "Under Process," "Approved," "Rejected," or "Requires Additional Information." This real-time update allows applicants to take necessary actions if there are any issues or delays in the processing of their applications. 4. 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It underscores the evolving dynamics of global trade practices, emphasising the criticality of embracing digital advancements and adhering to regulatory frameworks to foster a conducive environment for trade and commerce. As businesses and individuals continue to leverage these tools and processes, the pathway to global market participation becomes increasingly accessible, underscoring the profound impact of the IEC in the broader narrative of international commerce. Frequently Asked Questions About IEC Code How long does it take to obtain an IEC Code?The processing time for obtaining an IEC Code can vary. Still, typically, the Directorate General of Foreign Trade (DGFT) issues the IEC within 3 to 7 working days after receiving a correctly filled application, provided there are no discrepancies or additional information required.Can an individual apply for an IEC Code, or is it only for businesses?Both individuals and businesses can apply for an IEC Code as long as they intend to engage in import or export activities. Freelancers and sole proprietors involved in international trade also need to secure an IEC.Is there an expiry date for the IEC Code?No, the IEC Code does not have an expiry date. Once obtained, it is valid for the lifetime of the entity unless revoked or surrendered. 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Primarily, it is utilised for the paperless submission of all key import and export documents, significantly reducing the time required for customs clearance. By enabling stakeholders to upload documents electronically prior to the arrival of goods, e-SANCHIT ensures faster processing at customs, thereby accelerating the overall supply chain flow. Furthermore, e-SANCHIT acts as a centralised digital repository for trade documents. This feature not only facilitates easy access and retrieval of documents for compliance and verification purposes but also minimises the risks associated with the loss of physical paperwork. The platform enhances transparency in the customs clearance process, allowing traders to track the status of their document submissions and receive timely updates on any required actions, which aids in the more effective planning and execution of logistics operations. Moreover, e-SANCHIT supports the integration with other digital platforms and government initiatives aimed at trade facilitation, creating a cohesive ecosystem for managing international trade transactions. This interconnectedness simplifies compliance with regulatory requirements, streamlines the documentation process, and promotes a more efficient, transparent, and user-friendly approach to customs clearance in India. The Safety of e-SANCHIT in India Concerns regarding the safety and security of digital platforms are paramount, primarily when they handle sensitive trade documentation. In the context of e-SANCHIT in India, the platform is designed with robust security measures to safeguard user data and ensure the integrity of the document submission process. Utilising advanced encryption protocols, e-SANCHIT protects the data exchange between users and the customs database, preventing unauthorised access and data breaches. The platform operates under the oversight of the Indian Customs authorities, adhering to strict data protection regulations and cybersecurity standards. Regular security audits and compliance checks are conducted to identify and mitigate potential vulnerabilities, ensuring that e-SANCHIT remains a secure environment for its users. Moreover, access to e-SANCHIT is restricted to registered users who must undergo a verification process, further enhancing the platform's security framework. Users are also encouraged to adopt best practices in data security, such as using strong passwords and keeping their login information confidential. Related reading: India's National Logistics Policy Conclusion e-SANCHIT stands as a beacon of India's commitment to digitising and streamlining the customs documentation process, significantly impacting how trade operations are conducted within the country. By facilitating the electronic submission of import and export documents, e-SANCHIT not only enhances the efficiency of customs clearances but also propels India towards a more integrated and transparent trade environment. This digital leap forward in the customs domain exemplifies the potential for technology to revolutionise traditional processes, ensuring that businesses can operate more smoothly and with greater compliance. The trading community's adoption of e-SANCHIT and its integration into the broader logistics and supply chain operations underscore its value in fostering a competitive and agile trade ecosystem. As we move further into the digital age, platforms like e-SANCHIT will continue to play a critical role in enhancing the ease of doing business and securing India's position as a key player in the global market. The success of e-SANCHIT paves the way for future innovations in trade facilitation, promising a more efficient, secure, and sustainable trade landscape for India. Related read: What Is an IEC Code and Why Do You Need It? Frequently Asked Questions About e-SANCHIT How do I register for e-SANCHIT?To register for e-SANCHIT, users need to visit the Indian Customs Electronic Gateway (ICEGATE) website and sign up for an account by providing the required business details and documentation. Once the account is verified, users can access e-SANCHIT through their ICEGATE login credentials.Can all types of documents be uploaded to e-SANCHIT?e-SANCHIT is designed to accept a wide range of trade-related documents, including commercial invoices, packing lists, bills of lading, certificates of origin, and more. However, it’s essential to check the latest guidelines on the ICEGATE portal for any document-specific requirements or restrictions.Is there a limit to the number of documents that can be uploaded to e-SANCHIT?While there may be technical limits on file size per upload, e-SANCHIT generally allows for the submission of multiple documents as needed for each shipment. Users should ensure that documents are clear and legible to avoid rejection.What should I do if my document uploads to e-SANCHIT fails?If a document upload fails, users should first check for any technical issues, such as file size or format compatibility. If the problem persists, contacting the ICEGATE helpdesk for assistance and troubleshooting is recommended.How does e-SANCHIT improve the customs clearance process?e-SANCHIT improves the customs clearance process by enabling the advanced electronic submission and verification of documents. This reduces the need for physical paperwork, speeds up the verification process, and allows for quicker clearance of goods at customs.Is training available for new e-SANCHIT users?Yes, the Indian Customs and Central Board of Indirect Taxes and Customs (CBIC) periodically offer training sessions and tutorials for new users. Additionally, resources and user guides are available on the ICEGATE portal to assist with the e-SANCHIT submission process.

April 16, 2024