Whatever your business’ product or service, it is important to establish which routes to market are the most appropriate. That is to say, through which outlets are you going to sell your product or service? From an online shop to online auction sites, mail order and wholesalers, there are any number of methods for selling to your customers. The choices you make here could have a significant impact on the success of your business and your profit margins.
The routes to market you choose will be dependent on numerous factors. The initial areas to think about when making this decision are as follows:
- What you’re selling
- Where you are based
- Where your customers are based
- The buying habits or preferences of your customers
In order to drill down into these areas, your best starting point would be to conduct market research. This will help you better understand who your customers are, what they buy, where they buy and why they buy. Once you have indentified these key points, it will be a lot easier to pinpoint the appropriate route to market. Remember, it is highly unlikely that you will select just one route. Most successful retailers utilise at least two.
Let’s take a closer look at some of the main routes to market…
Online Store:
- Low running costs
- A low volume of traffic may mean few sales. Time and money to be invested in increasing site traffic.
Online Auction Site:
- Established sites already have a high volume of traffic
- Auction-style mode of selling means profits may vary
- Highly competitive which often drives prices down
An Actual Shop:
- Goods on display to public
- Often somewhere to keep stock
- More contact with customers
- Can be one of the most expensive forms of direct selling – rent, rates, water, power to be paid before you’ve even made one sale
- Staff wages can be very high
Direct selling using sales people:
- Best for relatively expensive products where you only need to make a few sales to make a decent profit
- Also good if you’re likely to have to explain the products’ features or more than one person is involved in the decision to buy
- An expensive way to sell
Sales Agents
- Experienced self employed sales people
- Often specialise in particular sectors and bring with them a network of contacts
- Work on commission
- Useful if you are launching a new product or service or to expand sales activities into new or unfamiliar territory
Selling through third party retailer
- Will need to convince them on price and quality
- Need to be able to guarantee that you can get enough stock to them on a regular basis
- Need to find stores appropriate for your product. Find out what they sell, what they’re looking for, their buying policies and procedures.
Wholesaler
- Low value products to be sold in quantity
- Will often expect you to discount your product quite heavily to offer a better profit margin for them
- Usually buy in bulk
Distributors
- Operate in a similar way to retailers
- Buy your product and sell it on to their contacts
- Use different ways of selling to their customers
- Usually expect discounts and extended credit arrangements from their suppliers
- Might see lower profits from selling this way
Exhibitions and Trade Shows
- May only make a few sales at the event but good for generating leads and enquiries that are turned into sales after the event
Mail Order
- If you have a range of products to sell
- Through brochures or catalogues
- Need to be quick to fulfill orders
Consider the above options (and others) carefully before making a decision. The routes to market you opt for could impact significantly on the way your customers interact with you and your products and ultimately effect your profits. Once you have selected and implemented your chosen routes, ensure that you continue to evaluate each of their success. If a particular route is performing significantly better than others, you may wish to invest more money in that area and less in others.