Direct Model:
Manufacturer/producer (you)
-->
Retailer
-->
Consumer
Manufacturer/producer (you) --> Consumer
There are two ways you can implement a direct
distribution model:
Option #1:
As a producer/manufacturer of a product you can
establish your distribution channel by marketing your
product directly to retailers who will in turn sell your
product in their stores to consumers. To use this
model you will not utilize the service of a Distributor.
You will perform the role of a Distributor. You will
get the item manufactured and distributed to a warehouse
where you will manage the distribution of the item to the
retail stores.
Get
Into Major Retail Chains
Option #2:
Another
approach would be to directly sell your
product to consumers by establishing your own retail outlet
or through a website such as your own website,
eBay or
amazon.com.
However, this may limit
your ability to reach your potential customers and achieve
the greatest amount of sales.
You should be mindful that many retailers
don't like to purchase the product from you outright if they
are not very certain that it will sell, instead they
prefer to use the consignment method. Consighment is
where the retailer agree to let you place your products in
their store and maintain a certain level of stockage in
return for sharing a percentage of the retail price with the
retailer whenever an item is sold. The retailer will
process the payment from customers and give you your portion
of the proceeds. This minimizes the risk and upfront
cost to the retailer and it helps you to get your items in
the store. Once the item sells well you can change the
arrangement with the retailer and have the retailer pay for
the items upfront and sell it to customers at a profit.
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