The 3 key distribution strategy questions for SMBs


The 3 key distribution strategy questions for SMBs

The market, or retail landscape, is like a living organism—it continues to grow, change, and transform. Understanding the market or category small and medium-sized businesses (SMBs) operate in and staying agile enough to adapt to those changes is critical to any brand’s survival. The tall and short of it is that the retailer will keep selling the product that sells well and delist the ones that don’t. They’re entirely indifferent to what brand is on the package. So, how can you ensure your brand isn’t left behind? 

Key questions to ask 

There are three key questions SMBs need to keep checking back on periodically to best position your brand for retail success:  

  • Is my product optimized from a distribution perspective to reach the largest portion of my target audience? 
  • Is my distribution strategy delivering the best ROI possible? 
  • Are there other products in my category that are at risk of being de-listed and present an opportunity for mine? 

To help you further understand the importance of these questions, let’s define some key terms. 

What is distribution?  

Distribution is the estimated percentage of stores selling a product. This numeric distribution tells us how widely available a product is. Distribution can also be calculated for various items, such as a particular brand. In this case, distribution tells us the estimated percentage of stores that sell any item from the range of products.  

Note: Distribution should never be added across markets or periods to avoid double counting or unsuitable comparisons.  

What is weighted distribution? 

Because the size and sales volumes of stores in your market matter, we weigh stores selling a product by their total sales. To put it simply, stores that sell more matter more. This is called All Commodity Value (ACV) weighted distribution.  

Stores are also weighted according to sales of your category or product class to capture the unique market accurately, and this is called Product Class Value (PCV) weighted distribution.  

Spotting the opportunities for your product 

Distribution covers one of the key P’s: Place. Where your product actually is makes the final push to get your potential customer to become an actual customer.  

You can’t be everywhere. Even if you could, it’s not necessarily profitable to be everywhere. So, if resources are limited, where should you place your product?   

That’s where the weighted distribution figures come to help. It brings to your attention which stores contribute the most revenue generation on both the category and item level. From there you have several courses of action that you might take:  

  • Target to be on shelf in the top stores that sell in your category (if you’re not there already) 
  • Figure out which stores are bringing you the smallest of your shares in sales and consider re-directing the product elsewhere 
  • Compare market shares versus your competitors in relation to those top stores and figure out where you stand in the market 

Understand what’s happening with competing products 

Through analyzing certain data you can spot when a delisting of a product is in progress. Essentially, when looking at item-level data, you can determine which products are being distributed in a downward trajectory with certain shops.  

There could be several reasons behind this trend—one of which could be a possible de-listing of that product. What that in turn means is that there is an opportunity for more shelf space for your product; prime time for a category review session with that retailer.  

Fuel your growth  

Contact our dedicated SMB team to see how your business can access market, category, and channel data.