The Ins and Outs of the Whole Distribution Business

Distribution is one of the most misunderstood aspects of the wholesale business. What is the distribution business, exactly? What do distributors do? Often confused with manufacturers, distributors are technically known as the ‘middleman,’ if you will, of the business world. A distributor is sandwiched between the manufacturer and retailer. Most of the time, the wholesale distribution business works something like this: the manufacturing firm will make the product, and then the product is shipped to the distributor. The distributor is then responsible for selling the product to retailers.

For years, the distribution business has been viewed mostly in terms of logistics. That is, the whole distribution business has traditionally been seen as having to do with how to get products to retailers, and of course, the customers. When viewed through this lens, the distribution business answers many relevant questions that have to do with moving products between several channels. For instance, the whole distribution process has been concerned with answering the question of whether products should be sold through a retailer, or if they should only be distributed wholesale. The distribution process often deals with the physical distribution of products. The process has to do with how to move products between different channels, and dealing with any logistical issues that may arise during this process.

The distribution business may extend into several other channels of the business world. For instance, the distribution business may be involved in selling directly to customers. Distributors may even choose to sell their products via mail order, on the World Wide Web, or even through telephone sales. Many times, however, the distribution business works hand-in-hand with an agent who helps distribute products to other vendors and retailers.

Sometimes, when we refer to the distribution business, most distribution channels operate as a purely physical process wherein products are moved from one location to another. The distribution business often consists of a physical moving service. The distributor, for instance, may be responsible for moving products from producer to consumer. Distribution services may be responsible for shipping products and physically moving them from the manufacturer to the retail outlet or business. However, the distribution business may not simply refer to the physical movement between business channels.

Distributors may also refer to the movement of service from the producer to the consumer in certain business sectors. For instance, let’s take hotels for an example. The hotel in this example can be referred to as the manufacturer. They provide the rooms, amenities and service to the consumer. The distributor in this model is the travel agent, airline, tourist board service, hotel centralized reservation system, or online reservation service. Although the distributor is not technically moving the product physically, it is facilitating the movement of the product (in this case the hotel room) to the consumer (the hotel guest).

The distribution business is constantly under revision and innovation. There are frequently new types of distribution services that help extend the definition of what the distribution model looks like. For instance, there are several types of distribution services that are constantly popping up that give a new idea of what distribution means, or what it can do. Innovations such as service integration, especially in sectors such as tourism and travel, have expanded the view of what we think distributors can do. Whether it is car rental services or hotel reservation systems, the distribution business is taking on a whole new identity.

However, the traditional view of the distribution business is still very much with us. Distributors are still generally thought of as an important part of the movement of products between manufacturers and consumers.

 

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