By Ian Ortega
Every experienced businessperson will tell you that the hardest thing to crack is distribution. Most businesses fail because they failed to win the game of distribution. Sometimes I hear of a beautiful business idea, then when I think through it, think about the distribution, I soon realize it’s not as easy as it sounded.
I love to think of distribution as getting to the end consumer with the right product, at the right price, at the right time, in the right quantity. So let me illustrate something. Let’s assume you’re excited and decide to start a beer delivery business. And your model is, that people shouldn’t leave their homes, they should just place an order, and their alcohol will be at the doorstep.
What will be the minimum order you will accept? Will you accept it for example if Ortega orders just two beers? And how long will those beers take to arrive? Will it be a free delivery? Or a beer that’s UGX 3500 will now become UGX 4500 with a markup being given for transport? And assuming your first order is in Namugongo, and the next order is in Bugolobi? What will you use to do these deliveries? A bicycle? A bodaboda? How will you pay those people? On commission basis? Will you tell them to bring their own bikes? Or you will lease the bikes?
The point I am stretching here is that something that looks easy on the onset. I mean, it’s just delivering beer. Somebody places an order; you send them the beers. So back to our app, is it going to be a marketplace. Shall you enlist different bars or shops? Or will you carry all the stock and have a central warehouse?
When Philippa and I worked on the Taxi industry report, we also asked similar questions. How are the Taxi journeys optimized. Because in the morning hours, they leave full, let’s say from Namugongo to the city centre. But they don’t have a full trip on the immediate return. At the same time also, they compete with Bodabodas in those peak hours. One of the things we did think about was Taxis doing shorter journeys and gazetting areas. You drive people from Namugongo, drop them in Ntinda, rush back to Namugongo to pick others. Another does from Ntinda to town.
And the more I have thought about distribution, the more I have started to think that it’s also high time newspapers stopped thinking of themselves as just newspapers and pursue other business lines. Monitor, and New Vision already run next morning deliveries across all parts of the country. If you are in Gulu, you will wake up on Tuesday morning to the Tuesday copy of Daily Monitor. Basically, these newspapers are already in a logistics business. But newspapers are also in the distribution business. It’s often said that Monitor always had the superior product. But New Vision figured out distribution better that Monitor. So New Vision always arrived on time before Monitor. And if I have just 2K to spend, I will spend it on the first newspaper.
You could have a crappy product, but if you have excellent distribution, you will most likely beat a great product with a shitty distribution. Same thing goes for beer. UBL is the best at branding. No body brands like UBL, UBL builds great brands. But for many years, NBL just had the better distribution. Well, you could also say that branding and marketing is distribution in a way (mental distribution), but the physical distribution is what finally brings in the money.
In our Ugandan context, distribution also means two other unique things – bodabodas and hawkers. These are the people that cover the last mile. You stand on the road and observe the products that bodabodas keep carrying. And then observe the products being hawked in traffic, in the communities.
Think of distribution in two ways – the inventory/stock/warehousing aspect and the logistics/transport aspect. These two things are what makes distribution crazy. If you are going to keep too much stock, that’s too much money. But then you don’t want to keep little stock, because customers hate those who stock out. So how much is much? How little is little? And how do you protect it? From expiry? From theft? If we think of transport? Are you using Tuktuks? Bodabodas? Are you using foot soldiers?
I am so convicted that if one is going into any business, especially a product business, you want to spend most of your time thinking about distribution. How do I get to the final consumer at the least cost possible?
Because what is Quality Supermarket? Or Capital Shoppers? They are in the business of distribution. What about Kikuubo? That’s Uganda’s distribution hub. That’s where volumes are pushed.
I have asked this same question to my awesome friend, Dr. Mas Yunus. He has a great Kombucha product named ‘Hozambe’. And I told him, your journey has just started. The real monster is distribution. And once he cracks distribution for that product, then he becomes the monster himself. Because once you have one proper distribution network, you can just add other products over it. He won’t just do Kombucha, he can do mineral water, he can do other consumer products.
Ugandan entrepreneurs and businesspeople need to spend more time talking about distribution, sharing learnings. I was recently consulting a friend about the beer distribution business. And he said, “if you want to lose money and lose it fast, enter there.” He didn’t say this to discourage but because the games on ground are so many. You will have fictitious debt, you will have fuel fraud, you will have stock games. You are paying an askari 200K, he’s guarding boxes of Don Julio and maybe JW Blue Label. He just needs two boxes to have his annual salary. So the incentives must also be designed right.
For everything one plans to do business wise, one must think distribution. How do you distribute the idea? It’s not the best ideas that win. It’s the ideas that get distributed better. That’s why you will hear one silly idea from one person, hear it from another, then start to assume it’s the truth. It’s just distribution.
One last thing, you know how it’s always said that we currently produce more electricity than we consume. We can summarize that problem in one way – we just can’t distribute everything we generate. Same problem for food. You will find food go bad in one area while another region starves.
And of course, there’s the infrastructural aspect to distribution, roads, warehouses, internet connectivity, financial intermediation, name it all. If you crack distribution, you are guaranteed to be wealthy. Because everybody will die to use your distribution network. That’s what influencers sell, they sell distribution.
Let’s take this piece right here. If I chose to distribute it fast and cheaply. I would take it right now, put it in either ChatGPT or DeepSeek and create tweets out of it. I will then use the Google Notebook and produce a podcast out of it (upload on Soundcloud or Apple). Then, I would post it on Linkedin. Then I would put it on the Ortega Group website. Then I could create a pdf out of it and throw it in some groups or send it directly to some people. So just this one article, you give it the power of distribution and you will be shocked what could come out of it.
That’s why I did say that the best school is a retail shop.