The per-unit value of the product also decides whether the product is sold through a direct channel or through an indirect channel. Whereas, if the product is fairly easy to use and direct contact makes no difference to the number of sales, longer channels are used. If the nature of the product is more technical and the customer may require direct contact with the manufacturer, direct channels are used. require longer channels as they need to reach customers who reside in areas that are geographically diverse. Whereas, non-perishable goods like soaps, toothpaste, etc. Manufacturers of these goods often opt for direct or single-level channels of distribution. Perishable goods like fruits, vegetables and dairy products can’t afford to use longer channels as they may perish during their transit. Product cost, technicality, perishability and whether they are standardised or custom-made play a major role in selecting the channel of distribution for them. They may open their own showrooms to sell the product directly while at the same time use internet marketplaces and other retailers to attract more customers.Ī perfect example of goods sold through dual distribution is smartphones. When a manufacturer uses more than one distribution channel simultaneously to reach the end-user, he is said to be using the dual distribution strategy.
Manufacturers opt for a three-level channel when the userbase is spread all over the country and the demand for the product is very high. Whereas, carrying and forwarding agents work on a commission basis and provide their warehouses and shipment expertise for order processing and last-mile deliveries. Super stockists buy the stock from manufacturers and sell them to wholesalers and retailers in their area. Both these agents keep the stock on behalf of the company. The agents can be categorised into super stockists and carrying and forwarding agents. They are given the duty to handle the product distribution of a specified area or district in return for a certain percentage of commission. These agents come in handy when goods need to move quickly into the market soon after the order is placed. Three-level channel of distribution involves an agent besides the wholesaler and retailer who assists in selling goods. Three-Level Channel (Manufacturer to Agent to Wholesaler to Retailer to Customer) Indirect channels can further be divided into one-level, two-level, and three-level channels based on the number of intermediaries between manufacturers and customers. They are in direct contact with the end customers and help the manufacturers in propagating the brand message and product benefits and other benefits to the customers.Ĭhannels of distribution can be divided into direct channel and indirect channels. Marketing: Distribution channels are also called marketing channels because they are among the core touchpoints where many marketing strategies are executed.Sharing Risks: Since most of the channels buy the products beforehand, they also share the risk with the manufacturers and do everything possible to sell it.They also offer different types of products in a single place which is a huge benefit to customers as they don’t have to visit different retailers for different products. Wholesalers and retailers purchase large quantities of goods from manufacturers but break the bulk by selling a few at a time to many other channels or customers. Creating Efficiencies: This is done in two ways: bulk breaking and creating assortments.Facilitation: Channels of distribution even provide pre-sale and post-purchase services like financing, maintenance, information dissemination and channel coordination.Logistics and Physical Distribution: Distribution channels are responsible for the assembly, storage, sorting, and transportation of goods from manufacturers to customers.But other than these transactional functions, distribution channels are also responsible to carry out the following functions: They make the product available when, where, and in which quantities the customer wants. In order to understand the importance of distribution channels, businesses need to understand that it doesn’t just bridge the gap between the producer of a product and its user.ĭistribution channels provide time, place, and ownership utility.
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