Innovative Business Models: Distribution and Channels

Channels as a Strategic Choice

A channel is not just "where we sell"; it is a fundamental strategic choice that defines relationships with the customer, data, margin, and scaling.

Direct channels: D2C (Direct-to-Consumer) — selling directly to the end consumer. Control over data and customer experience, higher margin, but higher costs for customer acquisition and infrastructure.

Indirect channels: distributors, retail chains, marketplaces. Rapid reach, but loss of control over the customer experience, lower margin, customer data goes to the intermediary.

Omnichannel: a unified customer experience across all channels (online, offline, mobile). Nike: branded stores + website + app + retailers — a synchronized experience.

D2C as a Strategic Revolution

Warby Parker (eyewear), Glossier (cosmetics), Peloton (fitness) — brands that bypassed traditional retailers. D2C advantages: (1) customer data for personalization, (2) control over the brand narrative, (3) higher margin, (4) direct feedback for product development.

Tesla: the only major automaker without traditional dealer networks. Online sales, proprietary showrooms — complete control over the experience.

Marketplaces as Two-Sided Platforms

Amazon, Wildberries, Ozon — allow small businesses to gain massive reach, but at the expense of: (1) 15-30% commission, (2) competition with the marketplace’s own private label products, (3) dependence — if the marketplace changes the algorithm, sales collapse.

Strategy: marketplace for growth + D2C channel for loyal customers.

Practical Assignment

A natural cosmetics manufacturer sells through pharmacies and supermarkets. Analyze the transition to a D2C strategy: (1) What customer data can be obtained? (2) How will the margin change? (3) What investments will be required? (4) How to manage the conflict with current partners?