How to Define Distribution and Delivery in Your Business Plan
The distribution and delivery section in your business plan is all about how you get your products and services into your customers’ hands. Not all businesses are equally concerned with distribution and delivery systems, of course.
A telephone, e-mail access, and a means for personal transportation may be the extent of your distribution and delivery needs, for example, if you’re a psychologist whose clients come to your office for counseling, or if you run a freelance design business or a dog-walking service.
For some businesses, however, capabilities in distribution and delivery are important, if not downright critical, to success. Consider these examples:
Every time the holiday season rolls around, catalog companies and online retailers face the same nail-biting challenge: how to ensure that customer orders reach their destinations in time for the big day. Some retailers absorb overnight express delivery costs in order to meet promises. A few companies have seen their reputations plummet — and their customers disappear — when they haven’t been able to get deliveries out on time.
One of the biggest challenges for a new magazine is getting distributors to give the magazine valuable shelf space on newsstands. The same goes for food manufacturers. With grocery store aisles already overcrowded with thousands of products, achieving shelf space for a new breakfast cereal or snack chip is a tall hurdle to clear.
Even businesses in service industries sometimes have to focus on distribution and delivery. Management-training companies, for example, often deliver training programs to thousands of managers in dozens of locations — all at the same time. They can’t deliver on their promises unless they have trainers available and in place when and where they need them.
Those who do business primarily online have distribution challenges of their own. They need sites that load quickly, with easy navigation, links that work, and live help options for those who need them.
If sensitive information is requested, they need secure web connections. And if they provide help or customer service, they need to consider online chat software, backed by staffing that ensures acceptable wait times. Plus, they need a program for search engine optimization (SEO), to up the odds that they end up high in search results, along with an aggressive program to drive traffic to the site through marketing and online link-building.
Failing to plan for the method and cost of distribution or delivery can be a fatal business mistake. Consider the Internet grocery service that staked its reputation on the promise of free delivery on orders of any size.
Customers accepted the offer — ordering a single frozen dinner, a bottle of wine, or even a candy bar. Delivery costs ran more than $10 on each order. It didn’t take long for this particular business promise to fade away — along with the company.
Assess the importance of distribution and delivery to your business success by filling out the Distribution and Delivery Survey shown. Be as specific as you can. Flag areas where you need to track down more information and then do the necessary research.
Use the questions in the form shown to help develop your distribution and delivery system. As you complete the form, consider the following:
Include all costs involved with product distribution and delivery — including warehouse space, transportation, shelf space allocations, product returns, and other necessary expenses.
Consider how you can use distribution and delivery to your competitive advantage. Look for ways that you can excel over competitors by offering home delivery, subscription delivery, online service, or other ways that fit the realities of your product and the desires of your customer.
View distribution as an expansion strategy, looking for new distribution channels — new paths that your products can follow from your company into your customers’ hands — as a way to expand into new markets. Offering your products online, for example, or through new distributor or retailer relationships are ways to open new distribution channels.