Seth Godin’s Right — Ubiquitous Distribution is Overrated

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In a recent post on his marketing blog, Seth Godin said that ubiquitous distribution is overrated.  He said, “some industries (like book publishers and analgesic makers) believe that they best serve their audience when the product is available everywhere…The thing is, scarcity creates value. You can’t get a Pepsi at McDonald’s. You can’t buy Hermes at Target. By limiting choice, you can create value.”  I agree.  Not only is ubiquitous distribution overrated, but often, limited distribution is better for building a brand.  Let me explain.

First, let’s talk about what ubiquitous distribution is.  Ubiquitous distribution is the thought that the best way to sell a product is to get it into every store possible.  It’s when a product manager thinks, “If I can only get this product into Wal-Mart, I’ll be set.  After that I can get into Target.  And then maybe every grocery store in America.  Then I can…”  You probably get the point.  The goal of ubiquitous distribution is to make a product available everywhere that it can be.  It is to make a product ubiquitous.

In many cases, this is obviously a good thing.  Getting a product onto Wal-Mart’s shelves is like winning American Idol—you’re guaranteed to be noticed by millions.  Most of the time, this is a good thing.  But there are times when it’s not.  Let me give you an example that includes a family recipe.

My mom, who happens to be a very amazing woman, has the best coffee cake recipe ever.  It’s called Kuchen—which means “cake” in German—and it’s a recipe that has been passed down for several generations.  It also happens to take an insane amount of time to make—like 10 hours.  Recently, I had the thought, “I wonder if we could sell Kuchen.  It’s delicious, and coffee shops sell all kinds of desserts.  Maybe we could sell Kuchen in coffee shops.”  I don’t have an answer yet, but if we did sell it, what would the best way be?

The best way to start this kind of niche business would be to sell to family and friends.  They could then tell more family and friends, who would tell their family and friends, and a bakery would be born.  Eventually, we could sell Kuchen in coffee shops, bakeries, etc.  Once we reached this point, which shops would be the best?  According to the ubiquitous distribution thought, any store that would sell Kuchen would be the right store.  Small stores and big stores.  Short stores and tall stores.  Any store and every store.  If they want to sell Kuchen, they can sell it.  That’s one way.

Another way would be to find exclusive distributors.  The beginning of any business is a slow, growing process, and exclusive distributors give a business time to grow.  The best distributors would be ones that make Kuchen special, not every shop on the corner.  This is called limited distribution.

The benefit of limited distribution is that it makes a product scarce, and in marketing, scarcity is good.  Apple products are good examples of this.  Whenever Apple releases new products, they never fail to mention that they’ll run out of stock.  They always send out a press release that says, “Hey everyone, if you want the latest iPhone, you need to buy it now.  Of course we’ll have more later, but that’s not the point.  If you want to be the first with this iPhone, we’re going to run out, so buy it now.”  It may be a little bit shady, but it works for Apple because scarcity in marketing is a good thing.

Diamonds and Rolexes are other examples of scarcity.  Diamonds are pretty and also happen to be rare.  Rolexes are opulent and are only sold at exclusive dealers.  Rarity and exclusivity creates value.  Why does it create value?  I’m not sure.  Maybe it’s because people always want what they can’t have.  Or maybe it’s because people want things that other people can’t have.  Whatever the reason, scarce products are special, and specialness is good for a brand.

The lesson is this: ubiquitous distribution is not always the best answer.  Instead, there are times when limited distribution is better for a brand.  This is especially true for luxury goods and rare products.  It’s also true for small businesses serving niche markets.  By creating scarcity through exclusivity, companies can increase brand value.  So if your goal is to sell an incredibly high volume to every imaginable customer on every continent (think Coca-Cola), then ubiquitous distribution is for you.  But if you’re trying to build a niche company with high value, creating scarcity is the way to go.

What’s your take on this?  Can you think of any other examples?  Do you agree or disagree?  I’d love to hear your comments below.

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