Channel Strategy
Marketplace or Distributor?
The first structural decision in a European entry is not which country. It is who owns the customer, the price and the risk.
Most European entry plans we are shown have already made this decision before anyone looked at the numbers. Either a marketplace account is being opened because it is the fastest thing available, or a distributor is being signed because someone at a trade fair was persuasive. Both can be right. Neither is right by default.
The choice is not really "marketplace or distributor". It is a decision about three things you are either keeping or giving away: the customer relationship, the pricing decision, and the commercial risk.
What each route actually costs
A marketplace keeps control and hands you the operation. You set the price, you see the demand, you own the customer data, and you can change direction in a week. In exchange you carry inventory risk, advertising cost, and the full operational load — listings, catalogue, compliance, fulfilment, returns. Your margin is higher on paper and thinner in practice than the headline numbers suggest, because the operating cost sits with you.
A distributor buys the risk from you and charges for it. They take title to the goods, they already have the retail relationships and the local logistics, and they know their market. You give up a substantial share of margin, most of the pricing control, and nearly all direct customer insight. You also become dependent on how hard they actually push your brand, which is largely outside your control once the contract is signed.
The honest framing is that a distributor is not a cheaper route to market. It is a different allocation of margin, effort and risk — and for some brands it is clearly the better one.
Where the decision usually goes wrong
Comparing gross margin instead of contribution. A distributor price that looks brutal next to a marketplace price is often competitive once you subtract the advertising, fulfilment, returns, storage and headcount that running the channel yourself requires. Compare what each route leaves you after the cost of serving it — not the invoice price.
Ignoring capacity. A marketplace operation needs sustained attention from someone who understands the category. If nobody inside the company has that time, the choice is not really between two channels. It is between a distributor and a marketplace operation that will be run badly.
Signing a distributor without a channel policy. This is the one that surfaces later and hurts most. A distributor agreement made without a documented position on marketplace listings tends to produce a pricing conflict within a year — usually when the distributor's own customers start reselling online below the price the brand is trying to hold.
Treating it as permanent. Entry structure and long-term structure are different questions. Entering through a distributor to establish demand, then building a direct operation once the market is proven, is a legitimate sequence. So is the reverse: using a marketplace to generate the demand evidence that makes you credible to a distributor or a retail buyer.
A more useful set of questions
Before choosing, a management team should be able to answer:
- What does each route leave us in contribution margin per unit, after the cost of serving it?
- Do we have the internal capacity to run a channel ourselves — and for how long?
- How much does it matter to us to see customer and demand data directly?
- How fast do we need evidence about whether this market works?
- What is our position when a distributor's customers list our product online?
- Which route makes the next step easier, rather than only this one?
Hybrid is common, not a compromise
In practice many brands end up running both: a marketplace presence that generates demand evidence and protects the brand's own price position, alongside distribution that reaches retail. That works when the boundary is deliberate — which products, which markets, which price floors, who lists where.
It fails when it happens by accident, one channel at a time, with no policy governing the overlap.
The decision deserves the same rigour as the choice of market. It is made once, it is expensive to reverse, and it determines what every subsequent decision is allowed to look like.