Distribution Strategy
A distribution strategy is a method of disseminating goods or services to end-users. Implementing
the most efficient distribution method for your business is key to obtaining revenue and retaining
customer loyalty. Some companies opt to use multiple distribution methods to adhere to different
consumer bases.
A distribution channel is a chain of businesses or intermediaries through which a good or service
passes until it reaches the final buyer or the end consumer. Distribution channels can
include wholesalers, retailers, distributors, and even the internet.
Intermediaries (wholesalers, retailers, agents, brokers) are needed because manufacturers lack the
necessary financial and human resources to carry out direct marketing.
Channel Levels:
i . A Zero Level Channel: A zero-level channel, commonly known as direct marketing channel has no
intermediary levels. In this channel framework manufacturer sells merchandise directly to
customers. An example of a zero-level channel would be a factory outlet store. Eureka Forbes,
leaders in domestic and industrial water purification systems, vacuum cleaners, air purifiers &
security solutions is pioneered in direct selling that makes it an Asia’s largest direct sales
organization.
(ii) A One Level Channel: A one level channel contains one selling intermediary. In consumer
markets, this is usually a retailer. The consumer electrical goods market in the United Kingdom is
typical of this arrangement whereby producers such as Sony, Panasonic, Canon etc. sell their goods
directly to large retailers such as Comet, Dixons and Curry’s which then sell the goods to the final
consumers.
(iii) A Two-Level Channel: A two-level channel encompasses two intermediary levels – a wholesaler
and a retailer. A wholesaler typically buys and stores large quantities of merchandise from various
manufacturers and then breaks into the bulk deliveries to supply retailers with smaller quantities.
For small retailers with limited financial resources and order quantities, the use of wholesalers
makes economic sense.
(iv) A Three Level Channel: A third level channel, as the name implies, encompasses three
intermediary levels – a wholesaler, a retailer and a jobber. In the poultry industry, products like
mutton, chicken, eggs etc. are first sold to wholesalers; he then sells it to jobbers, who sell to small
and unorganized retailers.
Distribution Policy Adopted by OLA
The company has received bookings for its e-scooter from over 1,000 cities in India. Being a fresh
entrant in the scooter business, Ola Electric – which views itself as a tech mobility start-up and not a
vehicle manufacturer – has chosen to adopt a different approach compared to established two-
wheeler brands. Ola will employ a direct-to-consumer sales model, so the entire purchase process
will be between the manufacturer and the buyer, eliminating the need for Ola to set up a Benz is
about to adopt this sales model starting later this year, and Tesla has globally followed the same
model as well.
Ola has set up a separate logistics department to facilitate the direct purchase process, essentially
letting prospective customers complete documentation, loan applications and other related steps
online. This logistics team will see to the scooter being registered and delivered straight to a buyer’s
home. While luxury carmakers such as Mercedes-Benz and Jaguar Land Rover have been facilitating
home delivery of vehicles to customers for a while now, Ola will be the first player to execute a
model of this sort at a large scale.
While this approach saves Ola the resources required to set up an expansive retail chain, it also
means the company can meet demand in pretty much any location across India. Be it in a metro or in
a Tier-III city, those who want to buy an Ola e-scooter will be able to do so, as Ola will make sure the
Series S reaches buyers regardless of their location.
Additionally, Ola is expected to open ‘experience centres’ – much like Ather Energy’s ‘Ather Space’
outlets – for potential buyers to check the e-scooter out in person and take it out for a test ride.
Ola Electric set to go with remote servicing
In the absence of a full-fledged sales and service network, many people may reasonably have some
concerns regarding after-sales support. But considering the company's approach of selling online,
those concerns could easily be addressed by providing remote service support to customers. As is
being followed by several automakers these days, instead of having customers schedule an
appointment and then drop the scooter off at the service station to pick it up again later, Ola is likely
to simply arrange for service staff to visit a customer at their residence and carry out any
maintenance work that may be needed. We expect to learn more about this aspect closer to the
scooter's launch.