Distribution is an endless race for profit

The product does not reach the final consumer at once, it goes a certain way. The process of passing this distance is called "distribution" (or distribution, both options are considered correct). The Latin word distributio literally translates as distribution. But to say that distribution is just a distribution of goods, it could be about twenty-five years ago.

Now this process is more complex, multi-stage. Moreover, the distribution of products should be so that it does not lie on the trading shelf dead weight. Since then, when people abandoned the natural exchange and switched to commodity-money relations, mankind is being perfected in art, called "distribution of goods." In the system of these relations, each has its own specialization. The factory produced, made an extra charge sufficient for the resumption of the production cycle, payment of all costs and further development. Then I passed it to the next link. They made a trading margin and sent it on. So up to the end user.

If the manufacturer does not want to share, it will have to create its own distribution network, nobody has tried to sell it from the assembly line. And the creation of their outlets is a considerable expense, so it is better for everyone to do their own business.

Distribution is a process that is impossible without distribution channels.

Their levels:

• The producer is the consumer. For this, as already mentioned, you need to create your distribution network. Exception - fast food: fried a sausage, here he sold.
• Manufacturer - retailer - consumer. A level suitable for small and medium-sized producers.
• Manufacturer - wholesaler - retailer - consumer. So we get the bulk of goods.
• Manufacturer - wholesaler - small seller - retailer - consumer. This is the level of multinational companies. On it, for example, we get cigarettes, household appliances, mobile phones.

With the current level of competition, distribution is a process that is equally important for all participants. No matter how good the product, if the distribution channels work poorly, competitors will occupy a place on the shelf. Therefore, before signing a distribution contract, a manufacturer (having a well-known brand name) studies a potential partner for a long time. We consider its delivery and warehouse logistics, coverage of the territory, the level of training of sales personnel, financial opportunities.

On the wholesale seller, the contract imposes a lot of obligations. But the benefits it promises serious (if it comes to a well-known brand). For him, distribution is the obligation to pump through the sales channels the minimum agreed quantity of the goods being distributed, to have unavoidable balances in the warehouse (say, in the amount of the monthly sales volume), strictly to withstand the payment terms, to ensure merchandising of the retail network, to carry out promotions and so on.

But for this he receives the minimum incoming price in the territory of distribution, the exclusive right of wholesale trade in its territory (that is, in this territory he is the only representative of the manufacturer).

Illustration of the benefits of a direct contract is the distribution of drinks of the concern "BBH" (beer and drinks "Baltika"). Exclusive right to the territory and direct deliveries from the manufacturer make it possible in a short time from a small wholesaler to turn into a serious market participant.