Overview

Distribution bridges the gap between producers and customers. Channel design selects intermediaries—wholesalers, retailers, agents—while logistics moves goods efficiently through the supply chain. Superior distribution boosts customer experience and competitive advantage.

Key Concepts

• Channel Levels: Direct (0-level), one‑level, two‑level, hybrid systems.
• Intermediary Functions: Bulk breaking, assortment, financing, risk bearing, information.
• Channel Intensity: Intensive, selective, exclusive distribution.
• Vertical Marketing Systems (VMS): Corporate, contractual (franchises), administered (power-driven).
• Logistics Activities: Order processing, warehousing, inventory management, transportation, materials handling.
• Incoterms & Last‑Mile: FOB, CIF for international; gig‑economy couriers for last-mile delivery.
• Supply‑Chain Metrics: Fill rate, inventory turnover, on‑time in‑full (OTIF), logistics cost as % of sales.
• Sustainability: Reverse logistics, carbon‑efficient routing, reusable packaging.

Step-by-Step Example

Scenario: FreshCrate, a DTC meal‑kit brand, seeks grocery‑store presence.

Step 1 — Channel Selection: Choose a one‑level channel by partnering with regional supermarket chain instead of adding multiple wholesalers.

Step 2 — Intensity: Selective distribution in 120 high‑income ZIP‑code stores keeps brand premium.

Step 3 — Logistics: Use cross‑docking at 2 refrigerated DCs; set OTIF target 98 %.

Step 4 — Contract: Negotiate slotting fee waiver in exchange for in‑store demos; implement scan‑based trading to reduce grocer inventory risk.

Answer: A selective, one‑level channel with cold‑chain logistics balances reach, freshness, and brand positioning for FreshCrate.

Quick Tip