There’s something going on with the tried and tested business model of Brand > Distributor > Retailer. It is clear to see that this is nothing new when it comes to the high street but, even in such niche industries as leisure marine and water sports which rely on specialist retailers, there are big changes.

The conventional distribution model.

Well it was pretty simple, before the internet, Brands needed distributors to represent them in foreign locations.

The distributor would have responsibility for:

1. Warehousing and Logistics – Storage and delivery of sufficient stock to cover that territory
2. Trade Sales – Appointing and motivating retailers
3. Territory Marketing – Carrying out demo days, trade shows and advertising in regional media

Distributors needed Retailers to represent them on a more local level:

1. Final sale to consumer – Develop personal relationships
2. Carrying enough stock to serve location
3. Maintain a showroom/demo centre to attract customers
4. Local advertising

Direct Sales

Of course this isn’t for everyone, and certain companies have always chosen to deal directly with the public. This is facilitated hugely by e-commerce, improved international shipping and digital marketing. Prior to these modernisations a direct model would have limited the growth of a brand but nowadays it is a small world.

The benefits of doing this is often marketed very openly to consumers on the basis of:

1. You’re not paying profit and overheads of distributor and retailer
2. Deal direct with the manufacturer
3. Same quality product, better business model

What makes most sense?

In one way it depends on which side of the consumer/seller fence you are.

The lower price of direct sales is attractive to consumers and now, wherever a brand is based, it can reach its customers through social media, google advertising and good content. Marketing, sales and client relations can be managed centrally and consistently from one central point.

Local water sports retailers, chandlers, surf shops and boat dealers are central to their communities and form a large part of marketing the sports as a whole, they provide impartial advice and often work across a number of different brands, hand picking products that suit their local conditions the best.

Distributors have traditionally taken on the larger open days, boat shows national sponsorships and marketing efforts, also giving one voice of feedback to the brand – valuable for product development.

Whichever way you look at it both models have their merits and drawbacks.

So what is happening now?

There seems to be confusion and inconsistency. Certain brands are wavering from a Distributor model to a hybrid, including some direct sales. This can leave retailers with unsold stock that is devalued when the brand choses to sell direct to consumers at a discounted rate.

Equally, with a small investment in building an e-commerce website and adding some digital marketing strategy, a distributor can establish its own direct to consumer store. This competes directly with the retailers that they also supply.

Competition between water sports and marine retailers

Now that consumers have so much information and access to global retailers of a given product there is huge competition.

How often do you search a product and see google advertising from many international dealers? it happens to me a lot. The issue here is that the retailers are essentially fighting to pay Google more for the advert in order to charge less for the product.

Good for the consumer…. until there are no retailers left in business to offer guidance.

What is the cause and who is the winner?

Online selling is without doubt the cause. Without the internet direct sales would be limiting to brands, distributors could not compete with their own clients and retailers would not be fighting over the same customers.

Consumers also need to take their share of responsibility. We all want the same product for less but expect our local store to hold it in stock for a look or even a demo.