June 29, 2020

Q&A: How Limited Distribution Is a Secret to Ecommerce Success

You’ve heard the saying “less is more,” and when it comes to product distribution, this is often the case. Limited distribution has distinct advantages for your brand that can help you gain control online and increase sales in the long-run.

Zech Hintz, President of Borderless Distribution, sat down in a Q&A to discuss how limited distribution can benefit brands and what they can do to transition into it.

Q: What is limited distribution?

A: If we think about this from a really high level, you’re a brand. You’re producing a product and your sales team's goal is to get that product in every person’s hand possible. And so, you’re going out there and you’re trying to fulfill or generate as many orders to generate more demand and more availability in the marketplace. In traditional thinking, the more the merrier, because really the only way to buy a product was at a brick and mortar location. A brick and mortar location could be a store, it could be a boutique, it could be a doctor’s office, it could be a veterinary clinic. Depending on your product and the market you’re trying to penetrate, you could have seen that product in very different types of stores and locations.

With the growth and the birth of ecommerce, what has happened is now you have a lot more transparency from an information side that consumers can research and look up to get the best price, and so unlike the traditional model . . . on ecommerce, you don’t want every person selling your product, because there’s less ability to control or influence the consumer’s experience. And that experience can be defined in a couple of ways: it could be price, it could be product packaging, it could be quality of service once delivered. There are a lot of different factors that now go into ecommerce channels. Limited distribution comes down to the concept of, “How can I limit the number of people who represent my brand online so that I can make sure that the consumer is getting a consistent, quality experience that I design or my company designs?”

Q: Why is it a good idea to only sell through one distributor as opposed to multiple?

A: It goes back to the control piece. When you have one partner—it’s not even just a seller, it’s a partner—someone who really is ingrained into your brand, who is a part of your team, who really moves the ball forward and does all the leg work to achieve the success because they’re just as bought-in as you are, then you’re able to just do things that were probably never conceivable before. You’re able to run campaigns that were never possible without that control. You’re able to develop content that is only applicable to ecommerce.

The content and the experience that the shopper has online is different than in-store, and a lot of times these brands are utilizing their in-store content for an ecommerce platform. Although that's okay, it’s not totally optimized and it’s not 100% effective, and so having a single partner like Pattern would allow the brand to achieve all those efficiencies at a more micro level, at an item by item level, and allow them to grow even faster and stronger than historically.

Q: Why do some brands struggle with limited distribution?

A: I think it goes back to that old way of thinking. I think there are brands who struggle to get organizational buy-in, so you might have the ecommerce leader in the company sitting on the marketing team, and they recognize and understand that until they get that control with the limited distribution, they’re going to continue to not be able to grow their sales effectively, they’re going to continue to have bad experiences with consumers, and they’re not going to be able to really move the ball forward in an ecommerce court.

So what happens is these sales teams . . . struggle with the idea of, “I now have to cut off a customer that’s going toward my salary or my bonus, hitting my goals? That’s not benefiting me.” And so if an organization at the very top level all the way down has not bought into this idea of maintaining that consumer experience, then you’re going to struggle to get the buy-in to develop a limited distribution program.

We have brands where they’ve gotten so much buy-in across the organization that they are able to say, “Hey, salesperson X Y Z, your distributor that you’re selling to, they’re leaking a lot of product into the online marketplace.” And so after investigating that, because there’s so much buy-in, the salesperson’s like, “Great, let’s cut them off,” and they begin to have a process where maybe it’s a probation period of 30 days, 90 days, permanent expulsion, what have you, and they’re able to cull down that list of online sellers until eventually they gain all that control back. Really I think the biggest factor of not getting that control is the lack of buy-in at an organizational level.

Q: What advice would you give brands who are wanting to switch to limited distribution and how can Pattern help?

A: I’d say understanding how important it is and really understanding the long-term benefit. In the short-term, you might have some really big struggles. You might have to cut off some suppliers temporarily. Most of the time, from what I understand of what I hear from other brands, a probation period is very effective. If you cut off supplies for thirty days, that distributor is much more incentivized to not do it again. That can be difficult, though, in the short-term. You’re losing a customer, and that can feel like a big impact to sales, and so if you’re an organization who’s really focused on a monthly goal rather than a one-, three-, or five-year goal, you’re going to really struggle with the idea of limited distributor, but if you look at more of the longer term, you’re going to gain so many more benefits that your brand will actually grow even faster once you can gain that control.

For example, if you’re a brand and you want to advertise on Amazon, you can do it in two ways: you can use Vendor Central, which applies generically to your products, but you can also partner with sellers or a company like ours where you are able to run campaigns within the seller account. The caveat there is that those campaigns only work if that seller has the Buy Box, so if you don’t have 100% control on platforms or you don’t have the majority of that Buy Box, then what’s going to happen is you’re going to be less effective promoting your products, and that’s one example of the many ways that over the long-term you’re going to get more benefit, consistent content, consistent availability on platforms, etcetera. There’s a lot of different quality checks or attributes that are going to be impacted if you don’t get that limited control, so my advice would be look at the big picture and don’t focus on the short-term, because it can be a little painful to start. I don’t think anyone’s denying that. But the reward at the end of the day is just so much greater.

That’s what we really focus on, is helping these brands gain that control and we’re able to make sure that there aren’t four, five, six, seven other sellers on a particular item selling below the suggested retail price that are devaluing the brand, that are shipping something to a consumer that’s expired, that are delivering just a different experience than what the customer’s looking for.

In ecommerce, our goal is to make the shopping experience online as good, if not better, than in-store, and especially during a time like this, our mission is even more critical to make sure that we continue to keep up the brand loyalty and the brand perception of consumers.

Want help with creating a limited distribution plan for your ecommerce business? Contact Pattern below to find out how we’ve already done it with 70+ brands and helped them grow their ecommerce business long-term.