Distributing

your product

Outline

• What is distribution?

• Why use distributors?

• Distribution channels: local, domestic, international

and online

• Cost and resource implications

• Where to from here?

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

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.

Traditional distribution channels

Traditional rates:

10% commission 20% commission 30% commission

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

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

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

Distribution across markets

Local

Domestic

International

Online

Local Market

Tourism Product

Visitor

Information

Centre

Retail travel

agent Online

Local booking

agents e.g. car hire, hotels,

travel desks

Domestic Market

Tourism

Product

Wholesaler

Retail Travel

Agent

Visitor

Information

Centre

Online

International Market

Tourism Product

Inbound tour

operator (ITO)

(Australia)

Online

Wholesaler

(Overseas)

Retail Travel

Agent (Overseas)

Online

Tourism Product

Tourism Product

Website

Online travel

agent

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

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

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

SmallBiz Connect

http://toolkit.smallbiz.nsw.gov.au/

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

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

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

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

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

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

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

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