How to Reduce Distribution Cost in Distribution Channel by Research?

Distribution channels play a crucial role in the success of a business. This chain comprises distributors, wholesalers, and retailers who come together to manufacture and supply a product to the end customer. However, this chain also incurs various costs such as transportation, warehousing, and product packaging. In this context, reducing distribution costs can help businesses improve their bottom line. In this article, we’ll discuss how research can help reduce distribution costs. 

What is a Distribution Channel? 

The Distribution Channel is a chain between the manufacturer and the consumer. In this chain, the distributor, wholesaler and retailer come together to manufacture and supply the product to the end customer. 

Types of Distribution Channels: 

• Direct Channel

It is a distribution channel where customers buy directly from the manufacturer. For example, Pantaloons is an e-commerce website where customers directly purchase products from the website itself. 

• Indirect Channel

It is another type of distribution channel where customers directly purchase products from the retailer or wholesaler. For example, buying products from Pantaloons store. 

Note: There would be companies who would prefer both online and offline modes.  

How to Reduce Distribution Cost? 

At the distribution channel, many costs have been such as the cost involved in the warehouse, product packaging, transportation, tool tax and more to distribute the product. 

Ways to reduce cost: 

1. Avoid Small Shipments rather than send big shipments. 
2. Reduce sales return- It can improve through customer feedback. 
3. Use of technology and automation such as decrease in loss and theft. 
4. Don’t depend on a single logistic provider.
5. Comparative analysis of demand and supply. 

Answer The Questions While Research on Distribution Channel: 

• Is an intermediary necessary for the business? 
• How long does packaging harm the product? 
• What are the flaws in transportation? 

Conclusion: 

Reducing distribution costs is key to improving a business’s profitability. By following some simple strategies, businesses can reduce costs and improve their bottom line. Research can help businesses identify areas where they can optimize their distribution channels and reduce costs. By avoiding small shipments, reducing sales returns, using technology and automation, not depending on a single logistic provider, and performing a comparative analysis of demand and supply, businesses can reduce their distribution costs and improve their profit margins.