Don’t try to be original, just try to be good. “
-Paul Rand
In my article today, I’ll write about one of the most important aspects of starting a business. It is anything that at most we all put aside because we do not believe that it is a priority.
As budding young entrepreneurs, we want to think about a lot of business aspects; how to achieve product/market fit, what features will be included in our pricing proposal, outline our target organization, and the list goes on. . .
So, common sense tells us that we select which topics at most first and leave the rest (the details) for later, after a day has only a limited number of hours, right?And besides, the distribution channel is not in the category. of “sexy” responsibilities of an aspiring entrepreneur. . .
In the following paragraphs, I’ll explain why ignoring this all-important size will jeopardize your startup’s long-term before it’s even commercialized, and how to avoid it.
The answer is very clear. With this medium (distribution channel), the following objectives are expected:
a) Roots in the market; The chosen distribution channel will be the way that allows you to deliver your final product to your end user (customer).
b) Higher PM; It would play an important role in achieving the highest PM (profit margin) imaginable without affecting the quality of the price delivered to your customer.
c) Support its final price proposal; Protect your price proposition by making it easier for your consumers to get instant or quick feedback.
(d) minimize counterparty risk; Eliminating points that will not yet be in your startup can be negative for your startup; (keep your product)
e) Create a scalable startup; The distribution channel is of great importance in this objective.
Therefore, if we do not choose and design our “future products” distribution channel wisely, it will only be to achieve the above objectives and avoid the respective pitfalls that accompany any poor channel decision.
Unfortunately, many aspiring marketers take this decision lightly and when they perceive that their startup “has no legs,” they try to oppose their initial poor decision. I hope it’s not one of them. . .
We are there! In the following paragraphs, I’ll outline the steps you want to take to make your selection and make the right channel resolution for your startup.
That said, it should be noted that there is no silver bullet. Each of us will have to take into account the characteristics and nature of our startup and act accordingly.
However, there are some universal principles that should be taken into account to help us find the right distribution channel.
a) Root to market: this resolution will not be made through you, but will basically be done through your target group. To choose the right channel, you need to follow the method below.
– Research your market: By this I mean that you want to identify how “products” similar to yours are currently shipped. Do existing market players use direct (e. g. , your website) or indirect (e. g. , retailers) distribution channels?Identify if there is a difference between premium features and less expensive product channels.
– Assess your target group’s satisfaction: Are your customers satisfied with this distribution channel?Don’t guess, ask them and read behind the lines. Keep in mind that if something is rarely badly broken, there’s no need to fix it. If not, do some research and find out what a viable option might be (don’t worry yet, in the next few articles I’ll show you how to validate all the assumptions of your business style and one of them is the distribution channel). Ultimately, your consumers will describe how they prefer to buy their specific type of product.
b) High PM: Any channel resolution has a direct effect on the startup’s profit model. Choosing to have a direct channel (e. g. , from your startup’s site) will constantly prevent you from having consistent floor prices with the sale. Conversely, if you decide on the indirect channel (e. g. , distributors), you’ll set up a significant reduction for each sale, but you’ll gain advantages from increased market exposure.
Create a list with other tactics to do this: List all the possible tactics that you can distribute in your product. See what your rivals are doing, but don’t just stick to them. Find out how products from other industries of your nature are shipped and arrive. with them only if they can be used for your specific “product. “
Evaluate characteristics based on the following factors: Cost and execution. In other words, you want to know each option and how they will work for you and your client. After that, rank them based on your understanding keeping in mind those 2 dimensions (load and execution).
c) Support its final price proposal; As we have highlighted above, 2 points must be taken into account; Ease of access and speed of feedback (for data on how to create your price proposal, see this article)
–Ease of access: how much effort this requires from your end user. Provided that the less effort the end user (your customer) has, the higher the perceived price and billing potential. No matter how smart your product is, exclude everything and compare this variable.
For example, I once wanted to order audio materials from the most productive private progression expert, and the available features of his program were only in CD form. After serious consideration, I must give it a try. Do you know what happened?
I had to wait almost 2 weeks to arrive and had to pay more taxes since this product is considered a luxury item in my country. As you can imagine, I will no longer buy from you even if your curtains convince me.
Protect your price proposition by making it easier for your consumers to get instant or quick feedback.
Feedback pace: In any type of startup, you need the fastest speed imaginable to get feedback. So that? To iterate and draw attention to problems as temporarily as possible. The more direct your distribution channel is, the faster the data will arrive. Today, consumers have the advantage; With a single button they can ruin your reputation (social networks) and with a single button they can buy a similar product from your competitor. Try not to give them a chance and eliminate this factor.
(d) minimize the counterparty threat; What Josh Kaufman describes is this: “Relying on another company to deliver your offering to your customers frees up your limited time and energy, but it also increases counterparty risk: the risk that your spouse will make a mistake and diminish your reputation”.
To be honest, I’ve explored any of the features for my startup and after going over the pros and cons of each of the options, I would definitely choose as few channel partners as possible, even if I did (on my own). Of course, it depends on the business style and nature of each startup. Also, to waste time and energy, we offer much greater opportunities and they will be described in the scalability dimension.
If you think it is necessary for your startup to do without other channel partners, prepare a thorough investigation of the scenario, especially if they are wrong in their responsibilities, to have a transparent plan on how to deal with this adverse situation. .
e) Create a new scalable company; This is incredibly important, scalability is not just a prerequisite. That being said, you want to build all the elements of your initial business style for this ultimate goal.
Automation: Ideally, you deserve to standardize your distribution procedure in a way that doesn’t require direct involvement on your part. For web-based startups, it’s pretty straightforward. However, even non-web startups have incorporated online sizing due to the professional phenomenon in their distribution model.
Affiliates: I probably wouldn’t explore this detail much (I’ll expand on it in depth in a marketing-oriented article). However, I would like to emphasize the fact that distribution can be done through this channel with limited threat if it is structured. somewhat through our startup experts (I promise this will be included as part of our marketing article very soon).
After contemplating those five basic factors, you create a definitive list of the most sensible 3-channel features and only focus on one of them. You have to focus and choose just one to be able to check it through our MVP and measure its effectiveness.
That’s all for today, I hope you find this article helpful in your goal of becoming your own boss. If so, it would be wonderful if you could share it with the buttons below.
“Action does not bring happiness, but there is no happiness without action” —BENJAMIN DISRAELI, former British Prime Minister/
[Contributed via Andreas Aravis, founder of No More Startup Myths. He is 25 years old, a junior startup specialist, blogger and budding entrepreneur. ]
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