Existing Retail Channels

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Overview

This distribution method involves the sale of products through existing retailers of other consumer goods in the target distribution area, such as grocery and department stores. Generally, the enterprise works through a single wholesale distributor who resells to retailers in a given area. Some enterprises, such as ToughStuff, work through retailers in a number of countries, with support offices at country level supplying to wholesalers.

Pros

Often, the product being distributed is low-cost enough not to require financing and low-maintenance enough not to need training or high-touch sales approach. Additionally, scaling can be rapid since the enterprise only needs to deliver products rather than set up its own infrastructure or train partners.

Cons

This method only works with certain types of products. These are generally small and simple. This method does not work well for customized items or large, complex systems. Furthermore, retailers and wholesalers add to the supply chain and price of product.

Case Study

VidaGas sells liquified petroleum gas (LPG) through retailers who resell in grocery stores in Northern Mozambique.

Household users put down a deposit at a retailer to take home a tank of LPG, which they use until it is empty and then exchange for a full one. While the initial deposit can be expensive for some customers, refills are cheaper than the charcoal they would otherwise be buying. VidaGas gains access to retailers’ existing customers and retailers gain customers who will have to return every month to fill their tanks and potentially buy other products.

Enterprises