"...and wasn't that a dainty dish to set before the king?" You might have a product fit for a king, or offer a service suitable for royalty. But do you have the keys to the castle? You can plan, research, merchandise, brainstorm, advertise, form alliances, buy out the competition, add features, cut costs ... if the monarch's not amused, it's off with your head! Aristocracies come and go, but the customer is king. Proper distribution channels - how a product gets from manufacturer to customer - can make your merchandise available in the right place at the right time. Developing new distribution channels is a key growth strategy for many businesses. More and more common is direct marketing - going straight to the customer instead of selling to wholesalers (who sell to retailers). Dell Computer started out direct, while other companies watched nervously, unsure of the royal reaction. Some grew bolder, sent out a few thousand catalogs, put up a Web site ... but the domain was unfamiliar and there were rumors of dragons. Was the direct channel a threat or an opportunity? Should you take the high road? Strategy is about making informed decisions. In this case, you have a choice among three possibilities: retaining your current channel, combining traditional and direct channels, and going 100-percent direct. Here are some things you ought to think about before you venture onto one path or another: 1. Is the value proposition upon which your business is founded still valid? Given your business model (the way you make money), can you compete effectively by going direct? If you were starting your company today, what choice would you make? If you decide the original value proposition is no longer valid, it may be time to move completely to direct marketing. Egghead Software seems to have come to that conclusion when it closed all its retail stores and began selling direct through catalogs and the Web. If you can't compete, it may be time to retreat. 2. Can you redefine your current business? To succeed in your current channel, you may have to redefine your business and create a new value proposition. Customers may buy your products today for different reasons than they did yesterday or will tomorrow. Computer retail chains that didn't see how customer needs were changing went bankrupt. Could Computerland have reinvented itself to become CompUSA? Probably. How can you reinvent your business? What can you offer - of value to your customers - that can't be supplied direct? Can you satisfy the royal palate when tastes and preferences change? Keep in mind that the newest direct channel, the Internet, offers more than low price. Visit Art.com and not only can you order framed prints, you can see how the prints look with various mat colors and frames, and select accordingly. 3. Do you have the capability to go direct? Once you're in the door, face to face with his sovereign majesty, then what? Do you know when to bow, how to approach, what to call His Royal Self? Dell and other companies succeed where so many fail because they have years of experience with the practices and protocol of the unique on-line marketplace. If you have little such experience, if you're unfamiliar with the dialogue and without useful allies, then you must acquire them ... and it may take some time. 4. How will you deal with channel conflict? If you decide to combine traditional and direct distribution, you will probably get caught in channel conflict. When you try to sell direct while retaining your current channel, it might appear to your distributors that you're stealing their business and, worse yet, undercutting their price. Selling a product for less than your distributors sell it will win you no allies among distributors and may cannibalize your existing sales. A safer strategy is to sell a different mix of product in each channel and use a different business name when you sell direct. Whatever distribution method you adopt, it must convey you successfully to your customers. After all, they have the power to banish you from the realm.

Recommended reading: Information Rules: A Strategic Guide to the Network Economy, by Carl Shapiro and Hal R. Varian, Harvard Business School Press.