The role of distribution

I’ve been thinking about distribution quite bit with regards to different businesses. I believe the role of the distribution network is usually overlooked or not given enough importance with regards to the potential growth speed of companies. One of the reasons Supercell was able to ramp up sales of almost a billion euros in just three years was due to the existing and extremely well functioning Apple’s app ecosystem. Hundreds of millions of devices that have a very tightly knit integration with the credit cards of their owners to the accounts on AppStore. There is very little friction between discovery, purchase and actual use.

This is not the case in all industries. For example with UpCloud, we rely fully on the internet as a distribution channel. This of course means that we too have a powerful distribution platform on our hands, but it is not as tightly integrated as that of Apple’s. Our customers need to enter their credit card details to their account on UpCloud to be able to use it. Needless to say we have tried to make the sign-up and purchase of our service as easy as possible.

However, I believe a great way to understand the role of the distribution channel can be summed up through the amount of friction between discovery, purchase and being able to actually use the service. Distribution plays a key role, but so do the types of equipment required to actually consume that service. This is also one of the reasons why HTML5 and other cross platform languages are extremely crucial in designing and building online services these days.

One of the reasons I believe you need to assess the path to purchase from the discovery is because that is ultimately the point when the customer receives the value of the service in return for the money she paid. In the quest to lower friction between the different steps, tutorials and other methods are extremely important in creating a successful on-boarding experience.

I got the idea for this post after I decided to pull the trigger for the Android phone I blogged about previously. While the shopping experience is one that tries to increase the attribute of exclusivity – it is not very scalable nor very enjoyable. I had to wait 90 minutes before I was able to enter the store and then after a few failed attempts, I was able to finally buy the phone.

It might create appeal towards the phone, but it is not very scalable. One has to remember that growing companies have very concrete boundaries of growth that are sometimes very hard to overcome, especially in the case of physical products like that of the OnePlus One. Despite all this, my order number was north of 145 000 from which I gather that OnePlus sold more than 145 000 phones yesterday in just three to four hours.

Despite the tough to scale sales process (one through invitations) – selling 145 000 phones a day is impressive.