Alternate Channels of Distribution in Marketing | GroCurv
A young brand presented in an offline store is like a sapling. Given light and oxygen, it will grow. Cramped with 50 other brands, its chances of reaching a consumer are low. Alternate channels of distribution are a ‘nursery’ giving your young brand the space it needs to catch the consumer’s eye.
Where it all began. At the Bazaar: While commerce began as a system of bartering before moving to a market place, transactions have historically always happened in ‘bazaars’. That small plot where traders came together to exchange or sell their wares.
This concept has evolved little, and if you go to Tier 2. Tier 3 India, you will see this phenomenon very clearly. In fact the Amazons and Flipkarts have simply moved ‘bazaars’ online. But that’s another story altogether.
Lets stay with the evolution of the bazaar. Bazaars are efficient because all sellers and all buyers congregate on the same place at the same time. Multiple sellers means prices are completive, and multiple buyers means demand is always available.
But Bazaars are equally inefficient because they are not an ‘on demand’ phenomenon. A seller is forced to wait for his day of the week as is the buyer. Then there is the issue of capacity and reach. How many bazaars can a seller go to and how much can he produce if he cannot stock his production.
The rise of the middle man: A distributor (retailer) solved this problem of availability and reach by stocking goods on behalf of the seller, and for the service of the buyer. For a fee (margin), the retailer allowed several traders to be present when the customer needed the product. Overtime, retailers got specialized and this allowed more liquidity into the trading system. Facilitating more transactions.
But at the core of this model of distribution is that consumers always knew where to go. Their ‘bazaar’ simply became a 24/7 service, but they still went to a bazaar. While technology has solved for that through ‘home delivery’ models, a new problem has come up.
Survival of the fittest when there are too many fish in the same pond: Since access to a consumer is a matter of 7-8% margins, many many sellers have embraced this model. To the extent now that a medium sized retailer has over 200 brands stocked in his shop. While this may imply choice to the consumer, it also implies confusion on what to buy. And for the brand, the problem of standing out among the clutter. Trade marketing, efficient sales teams, strong distributors all add up to become significant. Customer acquisition costs at the retail is getting prohibitive. Suddenly its no longer easy for brands to enter, leave alone win, in the offline distribution space.
Enter Alternate Brand Channels of Distribution: (ABCD)
The concept of ABCD comes from our experience working with emerging brands that need customer acquisition at breakneck speed, while maintaining a tight control on the cost of Offline distribution. This is distribution strategy 2.0. The whole idea that unique and alternate distribution is a strategic advantage for new brands.
Alternate channels deliver three key promises to a young brand-
- A non competitive environment in which to thrive
- Direct access to consumers and the ability to tell the brand story
- Clear ROI and measurable in a controlled environment.
We recommend the following steps to succeeding at ABCD:
- Begin with the assumption that the offline retail channel no longer exists. So your customers are not coming to a shop anymore. You have to rethink your distribution strategy with this assumption.
The implication is that you have to think of where else they are available for you to meet them.
- These alternate points of contact do not have any experience of retailing to consumers.
So the brand has an open slate to create a playbook. Define the acquisition cost model. For example, if a hospital is open to accepting new products or sell real estate within its premises, this is incremental revenue, which can be priced lower than high street rates a kilometer away.
- Consumers are unlikely to be facing competitive brands here.
Share more information, create an offline dialogue. These new options of retail channels require new effort, but can deliver disproportionate returns.
The converts are lining up! Over the past few years, we have been able to exploit Alternate Channels of Distribution in powerful ways for our clients. Brands with limited budgets have found the ROI from new channels of sales.
A manufacturer of healthy snacks found traction at a chain of hospitals where we negotiated space for small kiosks. The acquired customers repeated their purchase through other online channels.
Similarly was a story of food supplements. The client having tried his hand at retail stores and disappointed with the ROI, allowed a pilot at gyms. With spectacularly different results,
Another client found access to his customers for his subscription service through shops at corporate hubs and campuses. A completely new distribution approach to the category.
So if you’re looking for a pilot to see how to put all this together, write to us at firstname.lastname@example.org. Let one of our experts talk to you about the options for your brand, and deliver a new exciting way for you to break the clutter. And accelerate revenue. Fast.