Advantages and Disadvantages of Distribution Business

Product distribution is one of the most lucrative businesses all over. Wholesale distributors are dotting the markets of the world and there is a reason for that. These are the hubs of all commercial activity. Without them, trade and commerce will come to a grinding halt. Product distribution is an attractive business venture also provided you know the ropes. Before you jump onto the bandwagon, you must check and see the advantages and disadvantages of it. No matter who the seller is and whatsoever is the scale of business, it has to come to the doorsteps of the wholesale distributors. Selecting the right distribution channel is as important as having the right advertising campaign for your product or service. Direct distribution is one way of reaching the products directly to them without going via the intermediaries. You, as a manufacturer, sell directly to the end-users. It is believed that cutting the intermediaries will enhance the profit of the businesses.

Advantages of distribution business:

  • Eliminates the cost of intermediary expenses. You eliminate the expenses you incur keeping the middlemen. In a way, you get rid of service costs. The service cost includes shipping costs to the intermediary and the training of personnel.

  • Direct customer contact. You are in touch with the customers directly without any middlemen. Chances of a better bond are possible.

  • More control over how the product will be sold, advertised and displayed. More control over complaint handling. You can provide better support to the customers because you are emotionally closer to them.

Disadvantages of distribution business:

  • You are losing the benefits of other distribution channels. The intermediaries themselves have their distribution channels. These give you an option to reach out to the remotest and back and beyond of the hinterland. It is better for the customers also if they get it nearer home.

  • Your workload increases. Selling goods to intermediaries is one thing and selling them direct is quite another. You take the onus of managing the work of reaching the customer through your channel. It is quite a cumbersome job and takes a lot of time.

  • Increases fulfilment cost. Handling customers directly means you undertake to do the shipping, credit card processing, packaging, handling, taking back the return, handling complaints and so on.

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