Challenges faced by Distribution Channels during Pandemic

What are distribution channels?

Simply put, a distribution channel is how a product travels from the manufacturing or production facility to the final consumer or buyer. It is a means that companies use to bring their products to the end-user.

While distribution channels sound straightforward as a concept, in reality, they are pretty complex. There are several independent agencies involved that make the product journey from production to sale possible. Efficient distribution channels are crucial for companies as they can directly impact product cost and subsequently on profits.

Types of distribution channels.

Distribution channels are essentially the links between consumers of the product and their producers. Distribution channels can be direct – short chains or indirect – long chains with multiple intermediaries such as wholesalers and retails involved in various stages. Direct distribution channels tend to be cheaper and more cost-effective due to fewer intermediaries engaged in the process. Indirect distribution channels, on the other hand, are usually costly.

Ideally, distribution channels must be as short as possible. The fewer stops that a product needs to make before reaching its final destination, the better. This works in two ways. It reduces the logistical and transportation cost borne by the manufacturer and two, and it prevents the shelf life wasting, i.e., the product reaches the end-user early in its shelf life.

When it comes to choosing the proper distribution channels, there is no one right answer. Different kinds of products have different distribution requirements; ensuring the correct distribution flow for each product proves pivotal in the success of the said products.

Challenges faced by distribution channels vis-à-vis the pandemic.

Efficient management of distribution channels can be a challenging task that all businesses must pay attention to. Especially during the pandemic, with all the movement restrictions enforced by the government to flatten the curve and prevent the spread of Coronavirus.

Movement restrictions also lead to a dip in demand for the products. As the end-users spent all their time being holed up in their houses and the retail stores remained shut, intermediaries at each stage of the distribution channel suffered.

As things begin to slowly open and go back to normal, several initiatives aimed at improving the distribution channels with financial impetus shine as a beacon of hope for the organisations involved in distribution management.

Financial impetus can boost efficiency.

Efficient distribution channel management entails utilising the transportation and logistical aspects of distributing the products to the maximum capacity at the lowest possible cost. Managing placement or distribution channels efficiently can be difficult for even the most successful organisations.

This is mainly because many variables are involved in the process – even more so in today’s difficult time. Here’s how financial impetus can help distribution channels:

1. It compensates for the dip in demand:

The lockdown restrictions seriously impaired the sales of various products due to one primary reason – a dip in demand. With people confined to the four walls of their homes for the better part of the last year, demand for several consumer goods nosedived. While most bigger companies have contingency plans and funds in place, smaller businesses were caught off guard. The sudden dip in demand for their products made it impossible for them to keep up with the billing cycles – causing all the intermediaries involved in the distribution process to suffer too. In such as scenario, financial assistance can prove to be a boon for the revival of distribution channels in India.

1. It distributes the negative impact:

The losses suffered by the distribution channels are quite monumental. Even with the financial aids to their rescue, it will prove to be a gargantuan task for the intermediaries to cut their losses and start afresh. However, with significant help in financial assistance from various initiatives, the negative impact on the distribution channels can be mitigated. Although not entirely – to a large extent. It can provide some buffer, a breathing space to smaller intermediaries that heavily depend upon the smooth functioning of the billing cycles.

Conclusion:

The financial impetus to distribution channels is a much-needed respite for all the stakeholders of the distribution channel systems. Running a business in today’s day and age is complicated and risky as is – add to it the uncertainty of a global pandemic and the situation becomes a lot more complicated.

This can be prevented, and the distribution channels can be made more effective and well-managed with financial assistance. It can help the manufacturers, wholesalers, and retailers bring their businesses back on track while also streamlining the distribution process. With one less aspect of doing business in these times to worry about, they can focus their time and resources on other important factors.