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October 19, 2020

Key Selective Distribution Implementation Considerations

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There are several important considerations brands have when implementing selective distribution in Europe. Having clarity on the impact of these considerations on your business should be a key initial focus of your selective distribution journey:

EXISTING DISTRIBUTION MODEL AND RELATIONSHIPS

Understanding a brand’s existing distribution relationships is an important first step in implementing selective distribution. Companies with existing exclusive distribution relationships will need to evaluate their contracts and strategic priorities to plot the most efficient path to selective distribution. Companies will need to understand and plan for the winding down of existing distribution models – and how to bring key customers along – as they work to implement selective distribution.

MARKET SHARE

Your brand’s market share will be a key determining factor in the type of selective distribution criteria that can be implemented. As discussed above, brands with market shares under 30% will enjoy greater commercial freedom in designing their criteria, with both qualitative and quantitative criteria possible in many instances. If your brand has over 30% market share, selective distribution is still possible, though there may be less flexibility on the criteria that can be applied and the process for selecting authorised sellers.

ONLINE MARKETPLACE DISTRIBUTION STRATEGY

Companies should also give careful thought at the outset to their desired online marketplace distribution strategy. For example, does the company want to ban marketplace sales altogether, does it want to sell through an expert 3P seller, does it wish to sell through its own marketplace storefront? Having clarity on an online go-to-market strategy will allow your selective distribution framework to be implemented more efficiently and more effectively tailored to your commercial goals.

KEY STAKEHOLDER BUY-IN AND ALIGNMENT

Finally, and perhaps most importantly, threshold internal alignment among relevant stakeholders is imperative. In particular, the brand should involve executive leadership from its sales, eCommerce, marketing, and legal teams in the decision to implement and the design of its selective distribution system. Agreement among these cross functional leaders is typically necessary for an efficient and effective selective distribution rollout.

To learn more about selective distribution, download our selective distribution guide