What is a distribution channel?
Posted: Sun Dec 22, 2024 10:43 am
There are two main variants:
Direct : the manufacturer of the product delivers it to the consumer himself, without any intermediaries. With the help of his own network of stores, for example.
Indirect : the distribution process involves japan phone number several intermediaries. The distribution line can be either short (consisting of a single representative) or long (consisting of several participants).
Types of distribution channels
In turn, indirect distribution channels are divided into:
Single-level : the sale of goods is carried out by only one intermediary, which may be a retailer in the consumer market and a sales agent or broker in the industrial segment.
Two-level : the manufacturer and the user are separated by 2 links. In the consumer market, this is the already familiar retailer and another level - the wholesaler; for industrial - a bundle of dealer and distributor.
Three-tier : the chain of product distribution consists, in addition to the user and the manufacturer, of 3 intermediaries. For example, a large wholesaler and a smaller one (working with small lots), as well as a retailer.
When choosing a sales route, the main criterion is its optimality for the product you will be selling.
Every distribution channel structure has its pros and cons.
By choosing the direct option, the vendor company will have to accumulate goods in its own warehouses. This option is suitable for a very small number of target markets. The manufacturer will also have to take on all issues of after-sales service, support, etc., and this is an additional expense for which you need to stock up on finances.
With an indirect distribution channel, the end customer does not contact the manufacturer at all. There are already many more target markets here, and it becomes possible to significantly increase sales volumes and reach a larger audience. This provides additional income to the manufacturer.
Direct : the manufacturer of the product delivers it to the consumer himself, without any intermediaries. With the help of his own network of stores, for example.
Indirect : the distribution process involves japan phone number several intermediaries. The distribution line can be either short (consisting of a single representative) or long (consisting of several participants).
Types of distribution channels
In turn, indirect distribution channels are divided into:
Single-level : the sale of goods is carried out by only one intermediary, which may be a retailer in the consumer market and a sales agent or broker in the industrial segment.
Two-level : the manufacturer and the user are separated by 2 links. In the consumer market, this is the already familiar retailer and another level - the wholesaler; for industrial - a bundle of dealer and distributor.
Three-tier : the chain of product distribution consists, in addition to the user and the manufacturer, of 3 intermediaries. For example, a large wholesaler and a smaller one (working with small lots), as well as a retailer.
When choosing a sales route, the main criterion is its optimality for the product you will be selling.
Every distribution channel structure has its pros and cons.
By choosing the direct option, the vendor company will have to accumulate goods in its own warehouses. This option is suitable for a very small number of target markets. The manufacturer will also have to take on all issues of after-sales service, support, etc., and this is an additional expense for which you need to stock up on finances.
With an indirect distribution channel, the end customer does not contact the manufacturer at all. There are already many more target markets here, and it becomes possible to significantly increase sales volumes and reach a larger audience. This provides additional income to the manufacturer.