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Distributing
your product
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Outline
• What is distribution?
• Why use distributors?
• Distribution channels: local, domestic, international
and online
• Cost and resource implications
• Where to from here?
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What is distribution?
DISTRIBUTION IS
All about enhancing the visibility and sale
of your product
BY
Providing your target market with a variety of
ways to buy your product
USING
Third party channels who act as
an extended sales team for your product
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Why use distributors?
• Increased visibility of your product
• Increased sales of your product
• Increased reach into markets you cannot access
easily yourself
• Advance sales
• More options to fill capacity in low season
All of the above provide benefits to your business.
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Traditional distribution channels
Traditional rates:
10% commission 20% commission 30% commission
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Retail Travel Agents
• Traditionally located in key suburban locations
• Many now also have an online presence
• Can be based in Australia or overseas
Consumers
• Sell directly to consumers
• Provide a link between wholesaler programs and consumers
Tourism Business
• Tourism businesses can work directly with a domestic travel
agent or via a domestic wholesaler
• Tourism businesses would not work with an international travel
agent directly – rather through a wholesaler or inbound tour
operator
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Wholesaler
• Based in Australia or overseas
• Wholesalers develop packages and itineraries offering
transport, accommodation and activities
Consumer
• Wholesalers can sell directly to consumers or via their
preferred travel agent network
Tourism Business
• Tourism businesses can work directly with a domestic
wholesaler
• Tourism businesses can work directly with some international
wholesalers or via their preferred inbound tour operator
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Inbound Tour Operator (ITO)
• Based in Australia
• Book Australian travel packages for overseas consumers who
have booked via an overseas wholesaler or retail travel agent
• Some ITOs deal with all international markets, while others
specialise in one
Consumer
• Do not sell directly to consumers
• Do provide a local contact and assistance for international
consumers once they arrive in Australia
Tourism Business
• Tourism businesses can work directly with an inbound tour
operator
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Distribution across markets
Local
Domestic
International
Online
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Local Market
Tourism Product
Visitor
Information
Centre
Retail travel
agent Online
Local booking
agents e.g. car hire, hotels,
travel desks
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Domestic Market
Tourism
Product
Wholesaler
Retail Travel
Agent
Visitor
Information
Centre
Online
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International Market
Tourism Product
Inbound tour
operator (ITO)
(Australia)
Online
Wholesaler
(Overseas)
Retail Travel
Agent (Overseas)
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Online
Tourism Product
Tourism Product
Website
Online travel
agent
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Online Travel Agent
• Specialise in online distribution
• No intermediaries
Consumer
• Sell directly to consumers
• Consumers can purchase a product or an entire holiday
package
Tourism Business
• Tourism businesses can work directly with an online travel
agent or via a channel manager
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Online Travel
Agent (OTA)
Online travel
agent sites Agoda
booking.com
Expedia
Facilitate search
& redirect to 3rd
party site Tripadvisor
hotelscombined
Online
reservation
services www.visitnsw.com
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Distributing your tourism product
To view this video on ‘Distributing your tourism product’, please go to:
http://toolkit.smallbiz.nsw.gov.au/chapter/25/127
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SmallBiz Connect
http://toolkit.smallbiz.nsw.gov.au/
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Commission
Distributor
Commission levels
Retail Travel Agent 10%
Wholesaler 20%
Inbound Tour Operator 30%
Online Travel Agent 30%
All commission indicated is provided as a guide only
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Cost and resource implications
Retail at
$100.00
Cost Sell Resource
Local 10-20% $80 – 90 • Close proximity to your distributors
• Sales visits are cost effective
• Training appointments easier
• Often networking locally means
relationships establish more quickly
• Partners are already familiar with your
destination
• Familiarisations for those selling your
product are easier to arrange
All commission indicated is provided as a guide only
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Cost and resource implications
Retail at
$100.00
Cost Sell Resource
Domestic 20% $80 • Rates are required for the wholesale year
(1 Apr - 31 Mar)
• Sales visits often include an overnight stay
• Networking opportunities are less frequent
(formal functions)
• Strong online relationship with partners
• Trade kits
• Familiarisation tours
• You need to sell your destination and
experience
All commission indicated is provided as a guide only
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Cost and resource implications
Retail at
$100.00
Cost Sell Resource
International • Rates required for the wholesale year (1 Apr - 31 Mar)
Inbound 30% $70 • Formal networking opportunities that involve an
attendance cost
Wholesale 20% $80 • Strong relationship strategy important (online and in
person)
• Trade kits are essential
• You need to sell your destination and experience
• Familiarisation tours
• Sales visits to Inbound Tour Operators
• Trade shows and sales missions overseas
• Long term commitment
All commission indicated is provided as a guide only
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Cost and resource implications
Retail at
$100.00
Cost Sell Resource
Online
30%* (*varies
depending
on OTA
type)
$70*
• Use a channel manager to manage inventory
distributed across multiple sites
• Or contract directly with OTAs
• You need to choose which OTAs to ‘opt in’
with and agree to terms and commission in a
written contract
• OTAs that also have inbound or wholesale
divisions generally charge 30% commission
• Service OTAs with trade kits
All commission indicated is provided as a guide only
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Exercise
Target market
Choose:
accommodation, tour operator or attraction
Choose 3 distribution channels from the following table
from a tourism business perspective and explain why
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Exercise
Family from Sydney with two
children under 14
Couple over 55 years from
United Kingdom
Distribution channels
Domestic
wholesaler
Online experience
website
(Adrenalin)
International
wholesaler
Booking engine
on your website
Online
accommodation
(Wotif)
www.visitnsw.com
product listing
Domestic retail
travel agent
Email booking
form on your
website
Local motel
booking desk or
hotel concierge
Visitor information
centre booking
Online travel
agent
(Expedia)
Inbound tour
operator based in
Sydney
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Where to from here?
• Have a plan
• Research your target markets to establish how they purchase
your product
• Choose your distribution partners and the best distribution
channels to reach your target market
• Be realistic about the time commitment and resourcing
requirements for each distribution channel
• Ensure your pricing can accommodate the required commissions
• Support your distribution partners through regular updates,
sales training, famils and trade kits
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