Understanding Selective Distribution

In retail, extensive distribution aims to place products across numerous outlets for maximum exposure. Conversely, selective distribution focuses on select retailers who comply with set pricing and promotional strategies. This approach, characterized by strategically distributing sellers geographically, empowers brands to manage their market presence more effectively and enhance profitability by retaining tighter control over where and how their products are sold.

Extensive vs Selective Distribution Illustrated

The debate between selective versus extensive distribution is nuanced. While extensive distribution increases visibility, it can also lead to intensified price competition, potentially eroding profitability. Consider a scenario with a popular sneaker brand available in every retail store in a mall. Shoppers can easily compare prices across stores, prompting retailers to reduce prices competitively to attract sales. This race to the lowest price diminishes profit margins significantly for all sellers involved, showcasing how extensive distribution might not always lead to greater profitability due to increased price competition.

‍

This example illustrates how extensive distribution, although beneficial for visibility, might not always result in higher overall profits due to the competitive pressure on pricing.

The Pitfalls of Extensive Online Distribution

Extensive distribution online poses challenges due to total price visibility on e-commerce sites. Consumers frequently compare prices before purchasing, prompting sellers to engage in price competition. This can trigger a cascade of price reductions, similar to the hypothetical example with a car brand, emphasizing the importance of price as the main competitive factor. To circumvent this, adopting a selective distribution strategy is crucial for maintaining price stability and preventing sales loss across digital marketplaces like Amazon.

Secure the E-commerce Sales with Selective Distribution

In the retail landscape, an extensive approach is common, but online marketplaces like Amazon, favor optimizing for a singular seller. This is achieved through Amazon's prioritization in the Buy Box, which is awarded based on a mix of factors including price, consumer feedback, and customer service excellence. Supply Flow collaborates with brands to develop and implement a selective retail strategy on Amazon and other e-commerce platforms, helping brands manage competition among sellers and pinpoint the main seller poised to secure the Buy Box.