Definition of Distribution: Types, Purpose and Factors

Definition of Distribution – Economic activity will always exist because this activity can meet everyone’s needs, it can even meet the needs of a country. With economic activities, it can increase income for producers or countries (if exporting).

In economic activity there are three activities, namely production, distribution and consumption, each of which has its own function. Of the three activities, it can be said that distribution has an important role because it is from these activities that the products can be consumed or used by consumers and from these activities, producers or companies can benefit.

Therefore, it can be said that without distribution activities, production results can be said to be meaningless, and can even cause losses to companies or producers.

Who knows, you want to have a business, so you need a little knowledge about what distribution is and the purpose of distribution. So, to explore the meaning of distribution, especially in economic activities, you can read this article.

Definition of Distribution

In the Big Indonesian Dictionary (KBBI) distribution is distribution (sharing, sending) to several people or to several places. From the definition of distribution according to KBBI, we know that the distribution of production results is carried out by companies in order to maintain the company’s survival.

In addition, with the existence of distribution, the production will reach consumers who are located quite far away. For example, there is a production carried out in the Jakarta area, when there are distribution activities, consumers from Central Java, East Java, and even outside Java can use the production results.

If a product is not immediately distributed to consumers, then the product is only buried in storage. In fact, it can make the price of a product increase. If it has increased, it is likely that consumers are not interested in buying it, so producers or companies can suffer losses.

Basically, each company has its own policies for conducting distribution activities. This needs to be done so that distribution can be done optimally or it can be done with the capabilities of the company itself, such as coverage and fleet. If the company does not know the range of distribution and does not know the types of goods distributed, it is possible if the production results do not arrive on time.

Definition of Distribution According to Experts

After discussing the meaning of distribution based on KBBI, we will now discuss the meaning of distribution according to experts. The following is the meaning according to experts.

1. Hall

Hall said that distribution is an activity that functions to deliver a product to customers after sales.

2. Soekarno

According to Soekartawi, distribution is an activity or process of making goods or services where consumers can receive them and consumers use them, without reselling them to other consumers.

3. Basu Swastha

Basu Swastha said that distribution is a process of distributing an item or product that has been made by a company or producer to personal or industrial consumers who receive goods or services from the distributing company.

4. Alex S. Nitisemito

Alex S. Nitisemito stated that distribution is an institution that distributes goods and services originating from producers to consumers and these distributors are known as distributors.

5. Assauri

According to Assauri, distribution is an activity with the aim of moving a product from its source to consumers with a timely distribution.

From some of these experts, distribution can be interpreted as an activity carried out by companies or producers to consumers with the right estimated time. In other words, distribution activities have a role to link the interests of producers and consumers.

For some companies distribution activities are carried out through third parties or distributors. Therefore, the distributors also really hope that this distribution activity will continue to run smoothly so that they continue to get profits.

Distribution Types

Before discussing the purpose of the distribution, we will discuss the following types of distribution:

1. Direct Distribution

The first type of distribution is direct distribution. In this type of distribution it can be said that an activity of distributing or sending goods and services is directly carried out by producers or companies. In other words, companies do not use third parties to distribute their products to consumers.

Direct distribution must pay attention to the ability of the company itself, not to force this distribution activity. If you are not aware of the capabilities you have, then the distribution process cannot run properly, so that the production results will not reach the maximum.

This direct distribution can also be carried out by producers, such as fishermen, farmers, traders, and others. They as producers will sell or distribute their products to consumers. Usually consumers who buy goods directly will sell the goods to other consumers.

2. Indirect Distribution

The second type of distribution is indirect distribution. Indirect distribution is distribution activities carried out by third parties, so the company is not directly related. This type of distribution can be done individually or using a distributor company.

Whether with individuals or companies, you should first look at the types of goods to be distributed. By checking these goods, production results can be ensured that they are not damaged. In addition, for companies that wish to carry out distribution activities through third parties, it is best to first look at the quality of the third party (distributor), whether the third party can be trusted or not. This needs to be done so that the distribution of goods reaches consumers in good condition and on time.

Not only looking at the type and trust in third parties, the company must also look at its financial capabilities, whether it is enough to distribute goods through third parties or not.

3. Intensively Distribution

The third type of distribution is intensive distribution. Intensive distribution is distribution carried out to distribute goods or products to retail. After the company distributes production results to retail, the production results will be resold by the retail.

However, not all production or goods can be distributed using this type of intensive distribution. This is because not all companies have a policy of selling their goods with a system like this. Usually goods and services that use this type of distribution are goods and services that are in demand or easy to sell in the market.

If you have a business and want to distribute it in this way, you should think about it carefully so you don’t suffer losses. This is important to do in order to maintain the viability of a business that has been run.

4. Exclusive Distribution

The fourth type of distribution is exclusive distribution. Exclusive distribution is distribution made to sell or distribute goods as much as possible. In general, when carrying out this type of distribution, it is based on the agreement of both parties, namely between producers and retailers.

We can see this distribution in the distribution of mobile phones . Product sellers will establish cooperation and agreements with retailers, so that both parties benefit. Meanwhile, this type of distribution can be called exclusive because usually the goods sold or distributed are exclusive goods.

This distribution is very suitable for use by companies that have exclusive goods and want to introduce them to consumers. The more often it is distributed, the more people will know the product.

5. Selective Distribution

The fifth type of distribution is selective distribution. Selective distribution is a distribution activity that is used as a solution so that goods can be distributed properly. In general, this type of distribution is often used by producers who send their goods only to certain areas. This is because the goods will be in demand in these areas.

In addition, the goods to be distributed will be pre-selected so that the distribution can run optimally, so that consumers are happy. If consumers are happy, the product will run on the market.

Usually, this type of distribution is often carried out by well-known clothing manufacturers or branded clothing . Branded clothes will usually be distributed to areas that have only “exclusive” shops.

Distribution Purpose

Distribution carried out by producers or companies usually has its own goals. Below will be explained some general distribution purposes.

1. Distributing Products and Services to Consumers

As we know that the main purpose of distribution activities is to distribute products and services to consumers. This goal is very important because if products and services do not reach consumers or are not on time, then the name of a company can be bad. In other words, companies must maintain consumer satisfaction by choosing good distribution activities.

For some companies, there are those who carry out production activities through third parties, and some even dare to spend quite a lot of money so that goods and services reach consumers safely.

2. Guarantee Production Process

With distribution activities, the company aims to guarantee the quality of goods and timely delivery to consumers. In other words, companies must guarantee that a production process can run well, so that the goods and services received do not make consumers disappointed.

In this aim, the company does not only make a product or service which is then distributed to consumers, but also must participate to ensure the quality of the production process properly. In general, for the purpose of guaranteeing this production process, the company will use a third party that functions as a distributor.

Usually, third parties will provide services in the form of airline services, trucks, railroads, and others. This is done by the company so that the product arrives safely to consumers.

3. Maintain and Develop Production Quality 

The purpose of the next distribution activity is to provide assurance to consumers that product quality will be maintained and developed properly. With this goal, companies can maintain consumer desires, so that consumers do not switch to products from different companies.

Usually the company or producer will ask for feedback or an assessment of this distribution activity. With that assessment, a company or producer can develop its goods and services. For companies to maintain and develop a production result needs to be done in order to remain able to compete with other companies.

4. Increasing the selling value of a product

In carrying out distribution it is not only aimed at distributing goods and services to consumers, but this activity also has another goal, namely increasing the selling value of a product. The selling value of the goods will increase, if the distance of the goods to be distributed is very far. In short, the farther the delivery distance, the more expensive the price of the goods.

5. Maintaining Economic Stability

This distribution activity can actually affect economic activity in a country. If this distribution activity can run very smoothly, then economic stability will be maintained. That is one of the goals of distribution activities that can affect a country’s economy.

Usually, the company will have a fleet to carry out its own distribution activities because it saves expenses and can guarantee the quality of production. In addition, the estimated time can also be calculated properly, so that consumers are not disappointed because the production results do not arrive on time.

For companies that carry out distribution activities using third parties, they must ensure whether the third party can be trusted or not. This needs to be done so that distribution activities can run well, so that a country’s economy can run well.

Distribution Factors

The success of distribution activities is due to several factors, namely:

1. Cost

The first factor that can affect distribution is cost. Cost can be said to be a key factor in distribution activities because costs can determine the length of time for distribution and the quality of the distribution itself.

2. Nature of Payment

Another factor that can affect distribution activities is the nature of payments. The nature of this payment will usually be adjusted to the product to be distributed. Usually distribution activities in the form of products with relatively low prices will be paid in cash. Meanwhile, products that are quite expensive are more often paid for by credit.

3. Sales Amount

In distribution activities, the size of the sales volume will affect distribution activities, so that the sales volume factor can determine the price of distribution activities. Some products can be distributed in large enough quantities even though there are not many consumers of these goods.

4. Nature of Goods

The nature of the goods is a factor that can improve the quality of distribution. Companies or producers really need to check the nature of the goods, such as whether the goods to be distributed are damaged or not. With this check, the company will know which goods must be distributed first so that they do not experience damage or decay.

5. Profit Rate

The level of profit is a factor that needs to be considered by companies or producers because this concerns the sustainability of a company. If in carrying out long distribution activities it suffers losses, then the company should not use such distribution.

6. Capital

Each company or producer must have different capital, so the distribution activities carried out are also different. The size of the company’s capital will determine a shorter distribution or a longer distribution. In addition, capital can determine the nature of payments, whether to be paid by credit or paid by cash.


Every company definitely needs distribution activities because this activity has a very important role in economic activity. If distribution activities are not carried out optimally, the production results received by consumers will not be good, so consumers will be disappointed. Disappointed consumers can reduce the sense of trust in a company. Therefore, distribution activities must be carried out optimally starting from packaging, to delivery of products.