Choosing the Right Distribution Channel

About this episode

In this solo masterclass episode of The eCom Show, host Shan A Salam explains the critical role distribution plays in building and scaling a successful brand. While developing a good product is essential, ensuring it is easily accessible where target customers prefer to shop determines commercial survival. Shan breaks down the different distribution avenues available to entrepreneurs: online channels such as direct-to-consumer websites, marketplaces, and quick-commerce platforms; offline channels including general trade, modern trade hypermarkets, and exclusive brand outlets; and alternative channels like corporate gifting, flea markets, and business-to-business sales. He discusses why direct-to-consumer channels offer an easy entry point with direct customer feedback but often yield lower profitability compared to offline channels. Using real-world examples, he illustrates how young brands can validate products online before scaling into physical retail, where higher transaction volumes drive manufacturing costs down, improve negotiation leverage with retailers, and substantially boost net profit margins per unit.

Key takeaways

1. 1A product must be visible and easily accessible where target customers feel most comfortable shopping, rather than forcing them to adapt to unfamiliar channels.
2. 2Online channels like direct-to-consumer websites are easy to start and great for customer feedback, but they often carry lower profitability than offline retail.
3. 3Offline retail channels like general trade and modern trade have high entry barriers, but they typically deliver greater long-term profitability.
4. 4New brands should generally adopt a product-first approach by proving demand online before expanding into offline distribution networks.
5. 5Established brands with widespread retail penetration can employ a distribution-first strategy to roll out new products rapidly through existing stockists.
6. 6Brand loyalty is frequently overestimated by founders, as consumers will readily buy competing brands if their preferred product is not physically available.
7. 7Expanding distribution volume lowers manufacturing and logistics unit costs, which enhances retailer negotiation leverage and widens operating margins.