Have you defined the distribution channels that will be used by your company?
If not, it’s time.
In short, distribution channels determine the path goods will take from the manufacturer to the final consumer.
Thus, they have direct impact over sales.
There are many types, formats, and levels of distribution channels.
The first step is to understand each of them.
To help you with this task, this page will go over the main things you need to know about distribution channels:
what distribution channels are
the three types of distribution channels
three distribution methods
the main intermediaries
how to define them
What Are Distribution Channels?
Distribution channels are the path products take from their initial manufacturing stage to selling them to consumers. The main goal of these channels is to make goods available to final consumers in sales outlets as soon as possible.
Distribution channels directly impact a company’s sales, so you want to make them as efficient as possible.
The Three Types of Distribution Channels
There are three ways to make sure a product gets to the final consumer.
1. Direct Channels
With direct channels, the company is fully responsible for delivering products to consumers. Goods do not go through intermediaries before reaching their final destination. This model gives manufacturers total control over the distribution channel.
This is the case with people who do catalog sales, for example.
Since the manufacturer alone is responsible for delivering products, this channel generally makes it impossible to have a high number of customers.
At the same time, it’s possible to offer lower prices, since the company does not have to pay commission to intermediaries.
Resellers are companies or people who buy from manufacturers or retailers to later sell to consumers in retail.
Catalog sales, as the name indicates, is when a salesperson is connected to a company and sells its products using a magazine. Salespeople in this model also usually earn a commission for their sales.
This type of sales is common in the beauty segment, with brands like Avon and the Brazilian Natura.
Reverse Distribution Channel
Now you know the types and methods available for products to reach customers. But what happens when consumers need to return items to manufacturers?
Consumers need to rely on reverse distribution if they receive defective products or need to return clothes or shoes they bought online that don’t fit.
In this case, the consumer is responsible for returning the items and needs to find information from the manufacturer about how to do this. Usually, consumers find information about returns on the site for the product.
How to Define Distribution Channels for Your Product
Now you know the different types of distribution channels and intermediaries. But all this is of no use if you don’t know how to select the appropriate channel for your company.
Next up are seven essential tips to help you make this decision.
First, you must look at your competitors to find the best practices they adopt.