Distribution in the marketing sense doesn't mean strictly physical distribution of a product. It's the place where you sell it. For most SaaS products the product can only be bought from the company website.

If you sold your SaaS as a white label product or OEM through partners or affiliates, that would be another way of distributing it.

But the traditional marketing concepts, like the four Ps (distribution being the Place), fit better with physical products IMHO.

Well, by distribution, I mean "How do you acquire users / mindshare / customers?"

Marketing, actually. =)