When and How to Select a Distribution Partner - ChicagoShipper

Your new products are flawless. Your shelves are full. Your online store is now operational. You must now determine how you will physically distribute your items to customers. 

Like most e-commerce operations, selling isn’t as easy as it sounds. Small businesses usually rely on self-sufficiency when selling their products for the first time, but that approach is limited, and successful e-commerce businesses quickly go beyond that. 

The next step in your company’s growth is to find a distribution partner. While this may seem daunting, the right distribution partner can help your business grow by increasing sales and revenue, freeing up more of your time, cutting costs, and assisting your company in entering new markets and channels. 

This blog will explain what a distribution partner is, why your company needs one, and the characteristics of a good distribution partner. 

Distribution Partner Definition

A distribution partner is a third party to whom a merchant grants permission to market, distribute, and/or resell Items. 

A distribution partner, in essence, collaborates with a merchant to physically get the merchant’s products in front of customers, into a marketplace, or into the hands of customers who bought the products. 

Because distribution looks different in each sales channel, distribution partners may provide different services depending on which sales channels a merchant uses. 

Distribution partners, for example, in retail distribution, coordinate the logistics of getting products into retail stores or wholesalers. 

Distributors in e-commerce channels, on the other hand, focus on processing, fulfilling, and shipping orders to end-users. 

If a company uses a multichannel sales strategy, it will require a distribution partner who can work across channels. 

When do you require the services of a distribution partner? 

Outsourcing fulfillment and distribution to a third party may not yet make sense for small e-commerce businesses. However, as your company grows, new challenges emerge that necessitate the use of outside expertise. These critical junctures are frequent situations that distribution partners are well-equipped to handle. 

Here are a few red flags that it’s time to think about a distribution partnership. 

  • International shipping is required. 

Tariffs, import duties, customs, restrictions, and regulatory requirements are just a few of the complexities that small business owners must consider when shipping internationally. These additional fees and taxes increase the cost for both the seller and the customer, and orders continue to take longer to arrive than domestic shipments. 

Many small businesses lack the time, resources, and expertise to sell internationally on their own; however, with a distribution partner, e-commerce stores have an ally to help them navigate international shipping. 

Distribution partners understand the complexities of international product distribution and can assist merchants in developing strategies to secure quick and cost-effective international shipping. 

  • Your shipping time is excessive. 

Today’s online shoppers expect their orders to be delivered quickly (e.g., 2 days in the US). While some customers may be willing to wait an extra day or two, orders that take a week or more to arrive are likely to generate complaints, especially if a quick turnaround time was promised. 

When customers must wait too long for their orders, the customer experience suffers. Quick and dependable shipping is required to maintain brand loyalty, generate repeat sales, increase conversions, and reduce cart abandonment rates. 

Distribution partnerships enable small businesses to meet this fast standard at a low cost. Distributors use various strategies as logistics experts to optimize your supply chain, which speeds up order fulfillment while lowering shipping costs. 

At the same time, distributors will collaborate with reliable last-mile carriers to ensure that the final leg of distribution runs smoothly and quickly. 

Channel partners have no control over supply chain delays but have the resources, best practices, and industry experience to provide fast, cost-effective transportation that small businesses may not be able to provide on their own. 

  • You require improved supply chain logistics. 

When it comes to self-fulfillment and self-distribution, it’s very easy to make mistakes, but even small mistakes can stall your supply chain and prevent you from distributing your products to your customers. 

Assume you accidentally miscount your inventory and believe you have more of a particular SKU than you actually do. This miscalculation may cause you to time inventory replenishment incorrectly, resulting in a costly stockout that slows supply chain velocity to a crawl. 

Samely, suppose you need to ship a batch of orders from your local post office, but you leave too late and the post office is closed by the time you arrive. You must then wait until the next day to send the orders, which means they will arrive late and harm customer confidence. 

Small errors make it difficult to get products into the hands of customers in a timely manner in these situations. Handing off fulfillment to a distribution partner can help you iron out those minor hiccups while also streamlining your supply chain. 

Distributors understand how to fine-tune a supply chain by combining SOPs, technology, and automation to reduce the number of hiccups that snowball into major problems. 

What should you look for in a distribution partner? 

The perfect distribution partner can transform your business by increasing sales, improving operational efficiency, and expanding into new channels. 

Here are a few factors to look for in your next distribution partner to help you find the best distribution partner to help your business grow. 

  • Fulfillment Reach 

In today’s global e-commerce industry, merchants should be able to ship nationwide (and internationally as needed) for your business and even deliver from multiple countries. 

In order to meet this expectation, the perfect distributor for your brand will have a large network of fulfillment centers where orders can be processed, picked, packed, and ready for shipping. 

With fulfillment centers located throughout the country (or the world), merchants should be able to distribute inventory so that each order is fulfilled from the location closest to its destination point. 

This reduces the average distance an order must travel, allowing for faster shipping and significant cost savings for your company. 

The benefits are amplified when you ship internationally, because having fulfillment centers in multiple countries makes international shipping much easier, faster, and less expensive for merchants. Whether you are planning local, regional, or international shipping, make sure your channel partners have a fulfillment and distribution network to stay competitive in delivery speed and cost. 

  • Infrastructure 

Efficient fulfillment and distribution necessitate infrastructure that most small businesses lack. An established distributor, on the other hand, will have already made the necessary investments. 

The right partner will have not only the essentials, but also additional equipment, capabilities, and tools to support their partners’ top-quality fulfillment and distribution. 

  • Reliability 

The ability of your distribution partner to follow through on delivery and distribution promises directly impacts your company’s ability to satisfy customers and turn a profit; therefore, prioritize trust and consistency in your partner relationship when selecting a distribution partner. 

Find a channel partner with high order accuracy, short fulfilment times, consistently proven two-day delivery times, and using the latest reliable technology to prevent supply chain disruptions. 

In addition, the distribution partner should be easily accessible in the event of an issue and should demonstrate a commitment to resolving issues rather than passing them down the supply chain. 

  • Scalability 

In general, an e-commerce company should collaborate with a distribution partner of comparable size and proximity to the local markets it serves. 

Nonetheless, you should find a distribution partner who can grow with your company. The right distribution partner will be able to provide you with new avenues for growth and will facilitate your company’s expansion into new markets, locations, and channels. 

Smaller brands should therefore seek a 3PL distribution partner who, while capable of supporting a small operation, also has the capacity to grow alongside your company. 

Distribution Issues 

Every e-commerce business faces distribution challenges, but having the right distribution partner is a significant competitive advantage, particularly for emerging brands. 

Here are a few examples of common e-commerce issues that distribution partners can assist you with. 

  • Increasing Number of Orders 

The logistics of getting orders out the door become exponentially more complicated as demand for your product increases and order volume increases. Having to fulfil more orders in the same amount of time without any additional help is not only stressful for business owners, but it also leads to packing errors and missed delivery deadlines. 

All of those orders will be fulfilled accurately and on time thanks to an expert team that is equipped to handle these increased volumes. 

Distribution partners allow your company to process, fulfill, and deliver even more orders while allowing stakeholders to focus on other critical business functions — a true win-win situation. 

  • Disruptions in the Supply Chain 

Supply chain disruptions can be as devastating as they are unexpected, as 2020 (and 2021) repeatedly demonstrated. 

While some are more predictable than others (for example, holiday shipment delays and shutdowns), a smart distribution partner will have infrastructure and processes in place to assist you to plan for and negotiate those you don’t see coming. 

  • Keeping up with customer expectations 

Customer satisfaction has never been more crucial for e-commerce businesses — but it has also never been more challenging. Online buyers today demand a lot from e-commerce firms, including accurate orders, reasonable (or even free) 2-day or next-day delivery, and a memorable unboxing experience that wows them. 

As expectations continue to climb, you’ll want a distribution partner who can keep up. Top practices are used by the best distribution partners to help you satisfy consumer expectations at every point. 

This includes implementing fulfillment best practices to maintain high order accuracy rates, implementing a distributed inventory approach to enable cost-effective 2-day shipping, and even collaborating with you to store and use customized packaging materials so that your shipments leave a lasting impression on your customers. 

While an e-commerce firm may theoretically accomplish this on its own, it is considerably easier and less expensive to outsource the duty to a professional distributor.