Distribution channel diversification: How to access new markets

As businesses aim to grow, accessing new markets becomes a top priority. One major approach is through distribution channel diversification. By expanding the ways products reach customers, companies can mitigate risks, tap into new customer bases, and optimise operational costs.

Boost Scale to Thrive business adviser Joe Twigg provides a guide to help you strategically diversify your distribution channels and unlock growth potential.

Direct vs indirect distribution channels

When diversifying distribution channels, it’s important to balance direct and indirect methods based on control, reach, and brand alignment.

Direct channels

Selling directly to consumers enables businesses to control the entire customer experience, from sales to feedback. This direct line also typically offers higher profit margins and better data on customer preferences.

Examples include:

• E-commerce websites: Allows for global reach and brand-specific experiences.
• Company-owned retail stores: Enhances brand presence in strategic locations.
• Direct sales teams: Personalises interactions, especially for high-touch products.

Indirect channels

Indirect channels involve partnerships with third parties, providing faster market access, local market insights, and established distribution networks. While businesses have less control, indirect channels can be instrumental in reaching broader audiences quickly.

Examples include:

• Wholesalers and distributors: Offer regional and local access.
• Retail partnerships: Expand the brand’s physical footprint without building new infrastructure.
• Online marketplaces: Tap into platforms like Amazon or eBay for greater online visibility.

Key strategies for channel diversification

Here are some effective strategies to consider for a diversified distribution approach:

1. Research target markets

Market research is essential before entering new territories. Understanding local consumer preferences, the existing competitive landscape, and regulatory constraints will help companies choose the most effective channels. For instance, in a market with a strong e-commerce presence, direct online sales may be more profitable than establishing physical stores.

2. Evaluate channel options

Choose distribution methods based on product type, target customers, and overall business goals. Options range from traditional wholesale to digital-only models:

• E-commerce platforms for a streamlined online presence.
• Brick-and-mortar retail partnerships for physical access.
• Online marketplaces for visibility among a broad audience.

3. Implement a hybrid approach

Many companies use a hybrid distribution model to maximise reach. For instance, a brand might sell through its website and partner with select retailers. This dual approach combines the control of direct channels with the scalability of indirect channels, allowing businesses to cater to different customer preferences.

4. Leverage technology

Technology plays a crucial role in managing and optimising diverse channels:

• Inventory management systems keep stock levels accurate across channels.
• Mobile apps make ordering more accessible for customers.
• Data analytics enable monitoring of channel performance, identifying top performers, and making real-time adjustments.

5. Build strong partnerships

When working through indirect channels, nurturing strong relationships with partners is essential for mutual success. Providing partners with product training, marketing resources, and ongoing communication can enhance their effectiveness. Aligning incentives can also ensure that partners are motivated to represent the brand well.

6. Tailor strategies for local markets

Each market is unique, and distribution strategies should reflect local nuances:

• Product adaptations: Offer versions of your products that cater to local preferences.
• Pricing adjustments: Reflect local pricing expectations and purchasing power.
• Localised marketing: Tailor brand messaging to resonate culturally and socially.

Real-world example: Apple’s Market Entry into International Markets

Apple’s entry into international markets offers a great example of channel diversification in action:

• Mobile partnerships: Apple partnered with the largest mobile network providers to access millions of potential customers quickly.
• Apple stores: Flagship stores in key cities showcased Apple’s brand and provided direct access to premium buyers.
• Online presence: Apple established a strong e-commerce platform designed for each countries’ consumers.
• Local retail partnerships: Collaborations with local retailers expanded Apple’s reach to rural and smaller cities.

Apple’s multi-channel strategy helped it become a dominant player in many markets, allowing it to balance control with local reach.

Setting the stage got sustainable growth

Effective distribution channel diversification requires a thoughtful blend of direct and indirect methods, localised strategies, and continuous improvement. By carefully selecting and managing a mix of distribution channels, companies can mitigate risk, reach new customers, and optimise costs, setting the stage for sustainable growth.

About the author

With over 12 years' experience of running a diverse business, Joe Twigg has developed a knowledge base across operations and sales, mergers, acquisitions and integrations, transformation and change projects and continuous improvement. 

As a Boost business adviser, Joe advises businesses on Boost's Scale to Thrive programme. He helps businesses recognise and remove obstacles that may stifle future growth and enjoys guiding businesses to help maximise their potential through unpicking what makes them special and understanding their challenges. 

If you’re looking to grow, scale or start your business, use Boost; Lancashire’s Business Growth Hub. We offer a range of funded business support services. Call our Business Support Helpdesk on 0800 488 0057 to find out more or complete our enquiry form.