While stepping into the market, top CBD brands know that staying on top demands so much more than a marketing strategy. How can you stay on top without engaging in each step of the process?
Having that said, a distribution strategy is one such step that often goes overlooked. Your distribution strategy i.e. channel of sale, product availability, and ease of access defines the success of your business.
In this article, you will get to know about the importance of distribution strategy for CBD, available channels, and tips to devise the right distribution for your business. Let’s move ahead to know more about it!
Why Is It Important For the CBD Business?
A distribution strategy paves the way for how your products would be channeled and reach the customers. Thus, the distribution strategy is vital for the success of the CBD business.
Some other potential advantages of formulating the right strategy are as follows:
- An effective distribution strategy ensures a loyal and satisfied consumer base.
- The more cost-effective your strategy would be, the more people would reach out for your brand thus, and you would be able to grow.
- A well-devised distribution strategy also saves up your time and makes product accessibility more convenient for the audience.
- In a high-risk business like CBD, a distribution strategy allows you to share the risks among other channels so you can avoid facing challenges all on your own.
- Distribution strategy entails all pre-sale and post-sale services such as assembling, storage and disseminating which makes it easier for you to coordinate an entire CBD startup.
- It can facilitate in reducing supply chain problems and logistics costs as well.
What Are Available Distribution Channels For CBD Products?
- Level 1: Manufacturer to Consumer
This is the most initial and simple channel in the distribution strategy which works without any intermediary. This level works by relying on direct sales from manufacturer to consumer.
Since there are no middlemen involved, thus the process is simple and suitable for a small-scale startup.
- Level 2: Intermediary Between Producer and Consumer
This stage is secondary to the previous level and thereby involves a mediator between manufacturer and consumer. This channel distributes products with the help of a middleman between producer and consumer.
A common example of this type of distribution channel is a retailer that takes products from the producer and then sells it to the customers.
- Level 3: Two Middlemen Get Involved
When it comes to levels, you can remember them well by associating each level with an increase in the number of intermediaries.
Having that said, this level comes with two middlemen in the transmission of products to consumers. A common example of it involves the wholesaler selling to the retailer which then sells to the customers.
- Level 4: Agents Work on Behalf of a Company
As the name suggests, this is the most advanced channel in the distribution strategy. At this level, an agent works on behalf of the company and manages the supply chain. It involves three middlemen, such that an agent dealing with the wholesaler and retailer before the product reaches the customers.
Types of Distribution Strategies
The selection of distribution strategy depends on the type of CBD product being sold. The trick to a successful company is knowing which distribution strategy to use for higher growth.
There are basic four ways in which manufacturers decide to disperse their products and determine their accessibility. Keep reading ahead to know about top strategies!
- Direct Distribution
As discussed above direct distribution is a method by which a manufacturer sells directly to customers. Now the question arises, what are the ways to practice this type of distribution?
Some businesses opt for a modern approach and utilize e-commerce to sell their products to customers. This type of strategy applies to the audience which is moderately aware of the technology.
Another way to execute such distribution is through catalogs and phone calls. This mostly works well on an audience that has been known to you and is accustomed to placing orders at your brands. With respect to finances, this strategy demands a lot of investment as the manufacturer has to pay for warehouses, delivery trucks, etc. for the smooth running of the business.
- Indirect Distribution
As the name suggests, this type of distribution involves middlemen alone. While many of us associate this with a bad reputation, it's not true! However, middlemen can be helpful in the smooth supply of your products to the customers. They can help regulate matters associated with logistics and product placements so they can swiftly reach the customers.
This type of distribution suits routine purchases quite well. Putting your routine CBD products in bulk at retail can work quite well under this strategy.
- Intensive Distribution
When products are put at several retail locations, this type of strategy is known as an intensive distribution strategy. The strategy works quite well for items that don't involve informed decisions in purchases. However, people purchase such items without extensive research.
Thus, CBD products which are routine products can be effectively sold under this distribution strategy.
- Selective Distribution
In selective distribution, products are sold at more than one location, but not as many as in intensive distribution. For instance: if you wish to sell your CBD products at your store and only a few renowned stores in your locality, you would be doing so via a selective strategy.
- Exclusive Distribution
As the name suggests, this distribution involves exclusive accessibility of products. When manufacturers decide to sell their products through a retailer at a specific store alone. This would be termed exclusive distribution.
If you wish to sell your CBD products at your store alone, then this type of distribution strategy would fit quite well.
Tips to Choose the Right Distribution Strategy For Your CBD Business
Choosing the right distribution strategy for your business involves many factors. The following are the things you need to know to make an informed decision about your business. Let's go in-depth about each factor!
1. Be Familiar With Your Niche
Depending on the type of product you are selling and the purchase decision of the consumer, distribution strategy differs. With respect to items, there are three possible purchase decisions such as routine, limited, and extensive.
A routine purchase is relatively pried at lower rates and the consumer pays little to almost no time in making a purchase. The items may include CBD soap or hand sanitizer etc. Thus, an extensive distribution strategy works best for these items.
However, when it comes to limited purchases, these items are moderately priced and consumers spend some time inspecting them before making a purchase. For instance, CBD vapes and other equipment fall under this category. Having that said, selective or intensive distribution strategies work well for such products.
Here comes the final part- the extensive purchase decision involves a product that is higher in price and demands significant research before making a purchase. Thus, an exclusive distribution strategy is perfect for such items.
2. Understand Target Audience
As discussed above, the consumer base also plays an important role in determining a distribution strategy. Long gone are the days when companies used to send product catalogs to the target audience and you used to place an order via phone calls. Nowadays, such direct strategies are not evident.
Instead, e-commerce is a method that is increasing by leaps and bounds. All consumer need is an internet connection and online banking to make a purchase. In essence, based on how well-informed the audience is about technology, the distribution strategy for your business would vary as well.
3. Analyze Investment Availability
Regardless of which distribution strategy you wish to adopt, one needs to be quite clear about investment availability. Analyzing the cost of transportation, shipping, warehouse, and necessary factors, is not something that you should be avoiding.
Thus, to ensure the growth of the business, choose a strategy that fits the investment availability of your CBD brand as well.
4. Research Your Competitor
Researching a competitor is always going to be the most important part of your business. What marketing strategy do they have? Is it rewarding? Is it providing them an edge over others in the market?
By analyzing all these factors, you can fill in the gaps by improving your distribution strategy and surpass others in the field.
5. Identify Cost and Benefit
After you are done deciding on a distribution strategy, make sure to lay out costs and benefits. Instead of impulsively investing, this step can give you the insight to reverse your decision in time.
Before putting in all your resources, carefully weigh if the benefits outweigh the costs of the distribution strategy you wish to choose.
6. Re-Examine Your Options
When you have come to re-examining your decision, lay out the strategies in order of preference. Then re-evaluate the cost and benefits for each.
This will help you in giving a clear idea of which strategy may get you higher revenues while maintaining your resources and investment availability.
7. Aim for Growth
The most important part of choosing the right distribution strategy is to choose among your options rather than considering a direction that everyone is choosing.
Aiming for growth involves the selection of methods that aren't convenient to practice but lead to beautiful destinations.
What Other Factors Facilitate in Sale of CBD Products?
Now that you have substantial information about distribution strategy and ways to choose one for your CBD business, here are some other factors that can help you through!
- Packaging
Packaging is an integral part of building your brand. What the product looks like determines the image more than how the product works. Thus, keeping a strong eye on packaging demand can make facilitate improving your distribution strategy.
- Automation Facility
Automation facilities can further elevate the success of your business. The automation capabilities i.e., how quickly the work gets completed and the product reaches the customer speak a lot about the suitability of the distribution strategy.
- Tracking Facility
The internet has taken all of us by surprise. the availability of a tracking facility enables users to scan the progress of their purchases. Thus, the process not only improves but also helps customers visualize the movement of their purchase.
How Can We Help?
When everything fails to make an impression, packaging can still keep your name alive. Thus, our esteemed designers and professional team know the right ingredients to make it happen. Get in touch to know more about ways to boost your distribution strategy!
Conclusion
You might be clear with the fact that distribution strategy is a multi-stage process. Whatever strategy you wish to adopt, make sure that your customer purchase decisions are accounted for as it may help it develop the finest distribution strategy.
