Distribution Channels

Distribution channels connect the firm and its customers (Osterwalder & Pigneur, 2002). From this perspective, SE organizations have two types of customers: primary customers to whom the social value is created and delivered, and secondary customers, those that through their purchases create an income stream to support the SE (Sommerrock, 2010).

Commercially, the secondary customers can be reached through direct and indirect channels. Direct channels are the firms’ own channels to reach the guests, such as a direct sales force or website-driven sales. In contrast, indirect or partner channels include a range of distribution methods such as partner websites or wholesale distribution. Direct channels allow for higher margins as no commissions apply, but they could be more costly. On the other hand, partner channels offer lower margins due to commission fees for the distribution, but are generally able to reach a wider audience. The most important element in selecting distribution channels is to find the right balance between costs and distribution effectiveness (Osterwalder & Pigneur, 2010).

In traditional businesses, the distribution process is generally composed of five phases: awareness, evaluation, purchase, delivery and after sales. The awareness, determines how the customer first comes to know about the product, the evaluation phase determines how the customer accepts the value proposition, the purchase phase determines how the product is made available to the guest for the purchase, the delivery defines how the value proposition reaches the customer and lastly the after sale provides the post purchase support (Osterwalder & Pigneur, 2010).

From a SE perspective, if the primary customer is part of the value chain, the distribution channel will be part of the internal process. In contrast, if the target group benefits from the organization by consuming the product, the distribution will resemble that of regular customer. An innovative approach to distribution can be seen in joint liability or community trusts created in micro finance, which distribute the product, in this case credit, to a group of people using joint liability to ensure repayment (Sommerrock, 2010).

Marketing and distribution are key activities for tourism and hospitality SEs and the problems faced by SMEs in trying to access global markets have been well documented over the years (Benckendorff, Sheldon, & Fesenmaier, 2015; Buhalis & Licata, 2002; Daniele & Frew, 2006). The costs of distribution via traditional online travel agents (OTAs) have become prohibitive for small companies particularly for social enterprises who are trying to maintain good profit margins to reinvest in their social mission. A new breed of small specialist intermediaries focusing on the promotion of sustainable and responsible tourism businesses (including many SEs) is emerging. Some examples include www. responsibletravel.com, www.muchbetteradventures.com and Sumak Travel. Word of mouth and eWord of mouth in particular seem to work well for travel and tourism social enterprises as customers are keen to tell the story of deeper travel experiences and the connections made during their travels.