How does a record label distribute CD?

Distributers are the ones that distribute the CD's. Labels need a distributer to get their CD's to more stores. A label can go to local stores and talk to the managers to get the music onto those stores shelves. For larger retail outlets you will need a distributer. You wont get a distributer unless the CD is good enough. There are independent distributers that help independent labels. Usually it takes a long time and a lot of independent sales to get a good distribution deal.

Starting out I would recommend pressing up as many CD's as you can afford and sell them yourself. Go to local record stores and try to get them on those shelves. Sell you albums at shows the bands perform. Keep track of every sale, so that when it comes time to talk to a distributer you can show the actual sales of the album. If you sell a lot on your own you prove that the CD is selling and are more likely to get a deal with a distributer.