Opening a Sales Depot

In Channel of Distribution, one often encounters a situation where one opens a depot in a location which was getting difficult to service from base depot.

The following things must be kept in mind while opening a depot from sales point of view:

  1. Your depot is never going to excite a distributor in the new location, especially if you start distributing goods in small quantities in the new location or in the existing beat map of the distributor.
  2. The information about the opening of a new depot must reach every retailer in the city so that they can start picking up small quantities directly from your depot.
  3. The pricing to a retailer should always be more than your billing price to the distributor so that the latter does not start boycotting you. In addition you may end up cannibalising your own sales.
  4. The supply chain management at the depot point must cater to the smallest order possible from the given location of the depot.
  5. The new depot should be suitably stocked with all SKU’s produced by you. It is a sin to process sales orders in production after receiving them. You might end up with an “Abortion before Conception”

Whenever you think about opening a depot for your company in a location which you have been servicing even today, think about the above mentioned points with earnestness.