As a manufacturer, two of the most important questions on your mind are:
- Would it be more profitable to sell your products directly to end-users?
- Or would you have more to gain by establishing a distribution network, thus also reaching more potential clients?
Both options come with a myriad of advantages and disadvantages. But which one makes the most sense for your company? Well, it depends on how quickly the option you choose can help you deliver goods to customers in a society where instant gratification has become the go-to marketing strategy. It also depends on your industry, products, and goals.
For example, creating your own distribution network will give you more control over processes. However, considering the large investments and high costs your own distribution network would require, perhaps partnering up with dealers would yield greater profit.
Let's compare both solutions below so that you can make a truly informed decision.
The risks and benefits of creating your own distribution channel
If you want to sell directly to your customers, either online, in stores, or at trade shows, you have to be prepared to invest a lot of time, money, and human resources into this initiative. However, if you already have an existing distribution network, it would be a lot easier to simply extend your company's geographical reach.
The best thing about interacting with your customers directly is that you retain a lot of control over how your products perform. This is because the direct distribution model allows you to collect valuable data on customer buying habits and behaviors.
Gaining such insights into your customers' buying patterns will help you adjust your products to meet the specific needs of your clients. And this will set you apart from your competitors. It will also help you respond to customer feedback more efficiently, thus building stronger relationships with your users.
On top of that, you can have more control over how quickly your consumers receive your products without having to share profits with a third-party distributor or dealer.
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