The Balance between Efficiency and Cost-Effectiveness: How should SME’s Distribute their Products?

For SME’s and e-commerce business-owners, there is always a keen focus on creating a stylish and functional website that optimises sales conversion rates. While this is understandable, it is important to note that there are other factors which can impact on the profitability of your venture and the way in which you are perceived by customers.

Perhaps the most prominent is the need to develop a viable distribution network, as this guarantees the timely and efficient delivery of your goods once they have been purchased. Without this, it is almost impossible to develop a positive online reputation or build a community around your small or medium-sized brand.

How should SME’s distribute their goods in a cost-effective and efficient manner?

With this in mind, it is crucial that you strive to create a distribution network that is both cost-effective and efficient. Here are three steps towards achieving this: –

Consider flexible service providers that can guarantee quality

While it may initially be tempting to distribute products independently, ambitious SME’s will need to consider partnering with an expert courier as they continue to grow. The key is to identify reputable and flexible service providers, who can guarantee reliable delivery and time frames while also offering tailored price packages.

Take TNT, for example, who have offer a flexible pay-as-you-go service to SME’s for everything from small business parcels to larger consignments. Clearly this minimises your annual investment, as you only pay for the shipments that you send rather than being consumed by a costly subscription fee. While smaller couriers offer this service, they often lack the experience and global network to guarantee quality.

Scale your distribution efforts

Even with a reputable partner is place, it is extremely risky to make the leap from organising small, domestic consignments to undertaking larger shipments overseas. You need to instead scale your distribution efforts in conjunction with your sales and chosen service provider, working together to drive organic and sustainable growth.

This is absolutely imperative, as otherwise you will commit to orders than simply cannot be packed, shipped or delivered on time. An understanding of your own brand’s growth and capabilities is therefore crucial, as is the ability to communicate openly with logistics partners.

Calculate shipping costs and offer incentives to customers

With a viable service provider and growth plan in mind, you need to ensure that you calculate your total shipping costs and factor these into your pricing. This will impact on the margin of each product that you sell, so it is crucial that you work accurately and in detail if you are to pay your partners and still make a sale (while also continuing to ship consignments on-time).

Interestingly, businesses that are able to drive a higher margin may also take this opportunity to offer consumer incentives when distributing goods. Offering free shipping to selected customers or for a limited time only and help to drive a higher volume of sales, without compromising on margin or the stress that is placed on your distribution network.