Distribution in a relatively young and unsophisticated market can prove to be a difficult task. Here are some important factors and issues to consider when looking at distribution in an emerging market.
1. Fragmented markets
Modern trade in most African countries is still in the very early stages of development and reaching large numbers of traditional outlets (e.g dukas) is a difficult and costly business.
When working with distribution partners, does the distributor have the ability to service the territory? Are routes and maps in place?
3. Customer service frequency
Outlets in emerging markets often have limited cash flow and space to stock product. Review the required service frequency and the need for micro supply depots or wholesalers.
4. Cost to serve
The true cost to serve is often underestimated and companies must have a clear understanding of the cost to serve for both the distributor and the company.
5. Skills & Technology
Emerging market operations often lack critical skills. Evaluate mid tech solutions and identify the “appropriate technology” for your operation.
6. Regulatory environment
Review the regulatory environment including cross county or district tariffs where applicable. In some countries distributors and transporters are subject to multiple charges for crossing county borders.
Take time to understand culture issues and don’t assume anything.
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This is an extract taken from our full Key Distribution Issues guide.
Many thanks to Supply Chain Lab for contributing this guide.