Distribution Channels: Identifying the Right Online Retailers For Your Brand

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Business Strategy
Distribution Channels: Identifying the Right Online Retailers For Your Brand

For many brands today, moving into new online distribution channels is of utmost priority.

The e-commerce space is necessary as consumers become accustomed to the new normal of social distancing. More than ever, consumers are looking towards online shopping to fulfil their needs, a habit fuelled by shuttered stores and low confidence in physical retail.

But now you’re faced with a problem: how do you figure out the right e-commerce partners with shoppers that you never get to see?

With brick-and-mortar stores, you could visit each location and scope out the crowd to identify what works best for your brand. But with online retailers, you only have access to monthly sales reports (of your own brand), which arrives a month later – at best. What’s more, if you’re new to the retailer, you don’t have historical trade performance that you can refer to.

To determine the right distribution channel for your brand, you need key market insights. There’s a three-step process to do so:

  1. Gather market insights 
  2. Evaluate value propositions
  3. Determine the sell-out performances 

The first step is to understand the e-commerce landscape at the market-level by studying key brands and competitors. This allows you to gauge your market’s main online presence – and which retailer are they listed at. 

Next, you then dive into studying the value propositions of these retailers – and identify the ones most relevant to your own brand positioning. Finally, you assess them at a performance level. 

Reviewing Distribution Channels

Step 1: Gather Market Insights 

Before diving straight into your direct competitors, it’s important to also get a high-level overview of who are the key brands in the market. These are often legacy brands, or even rising brands in your market. For example, if you’re a denim brand in the US, the top brands would be Levi’s and J Brands. 

Next, look into where your competitors are available. This gives you a good idea of where your customers frequently shop at. Using the same example above, you’d want to find out who carries top brands like Levi’s and J Brands, as well as brands you identify as your competitors, such as 7 For All Mankind. 

In the screenshot below as captured on the Omnilytics dashboard, you can see that Yoox, Selfridges and Shopbop are the top retailers that carry denim products from Levi’s, J Brand and 7 For All Mankind in the US. 

Distribution Channels: Comparing denim jeans
Image Source: Levi’s, J Brands and 7 For All Mankind were selected on the Omnilytics Dashboard, filtered by the material Denim.

This gives you an immediate insight into how widely distributed your competitors are. If you’re a Sales Manager for your brand, these are opportunities that you can tap into.

The key lesson here is to go where the competition is. There is a proven market there that you can tap, and with Omnilytics’s detailed analytics on assortments and pricing, you can place yourself in an optimal position to negotiate more effectively with those retailers.

Evaluate Value Propositions: Uncover the Retailers that Match Your Brand Positioning

For the next step, we want to zero in on retailers that match our brand identity. 

Distinctive areas like assortment mix and pricing play a crucial role in decision making. You don’t want to list your products in an online distribution channel with a polar opposite target market.

If you target petite consumers for your denim brand, you’d need to look at the retailers that also offer these selections as an indication of available demand for petite size products.

Distribution Channels: Comparing assortment mix
Image Source: Screening the subcategory skinny jeans across the US market on the Omnilytics Dashboard

By breaking down to the niches, you then have a list of retailers that targets the petite consumer. The competition is much smaller, and likely the audience size as well.

But there’s still one more question to answer: which retailers are selling well?

Picking the Optimal Distribution Channels

So we’ve identified the retailers carrying your competitors, as well as other brands in a similar space to ours. Now we need to pick the right retail partners that have performance. 

Picking the wrong retailer may mean as little as wasted time, but it could also mean seasons-old inventory consigned to the bargain section because the retailer’s audience doesn’t match up with your brand’s.

Compare the retailers against each other to see which online distribution channel is the best fit not only in terms of branding but also has strong product movements and conversions.

Distribution Channels: Comparing sell-out rates
Image Source: From January to June 9, we’ve screened data across retailers in the US on the subcategory petite skinny jeans.

In this case, it’s clear that Nordstrom is the online retailer of choice, as its denim jeans sold out more than half of its petite skinny jeans in the $100-$200 price range.

Bergdorf comes next, but with a meagre assortment of only 11 styles matching our criteria, so it’s not an ideal choice.

Wrap Up

Covid-19 has hit a reset button for the entire industry, making e-commerce a crucial pathway.

Use the key steps above to identify the right online distribution channels that align with your brand identity, and most importantly, are able to sell your products.