Why would producers want exclusive distribution?

Discussion: there are many reasons why the producer would want to be the exclusive distributor for the products they manufacture. The producers might already have a firm presence in the market and they don’t want to share their profits with others as their distributors. Other reason can be that the producers already enjoy a loyal customer base and they have the full capability to reach out to them via online or physical means. For example App Store is the exclusive distributor of iPhone Apps (“App Store Exclusive Distributor of iPhone Apps). Apple enjoys a huge and loyal customer base. The only way you can purchase the iPhone Apps is from the App Store alone.

Another reason could be the number of items that a factory produces. In case a company is producing big machinery like wood working heavy machinery used to cut and chop trees and the total number of the units they produce per month is 15, then they would certainly want to retain the distribution rights as well. They would not want to spend huge amounts of commissions by selling their products via other distributors.

Companies might be willing to reserve the exclusive rights to their product to discourage “knock-off” or fake versions of the products sold in the market. If say a Steak Knives brand allows an intermediary to distribute their product, they might find out that the distributor is selling Steak Knives made from lower quality material and presenting them to be from the original brand. This could hurt back the customer’s trust and the market share of the Steak Knives brand.

Products related to secret operations would be distributed most certainly by the producers as there is a greater risk in the declassification of the product related information with an increase in the people who know about its existence.