Distribution Channel - Explained
What is a Distribution Channel?
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
Table of ContentsWhat is a Distribution Channel? How to design a Distribution Channel? Direct ChannelIndirect ChannelCombination ChannelWhat Do Distribution Channels Do?
What is a Distribution Channel?
Distribution channels are really the way that we move product from us as producer to our end customer or the consumer. In other words, it's the combination of businesses or individuals that facilitate the flow of products, information, and finances from producers to consumers.
Notably, it's not just moving the product that happens in our distribution channel. Information and finances flow through the distribution channel as well. That can be a huge source of value both for us as marketers and for our customer or the consumer.
How to design a Distribution Channel?
Distribution channels can be broken down into:
- Direct Channel
- Indirect Channel
- Combination Channels
A Direct Channel is where we sell product as a producer directly to the consumer and we ship the product. We deliver the product. However it moves, we take care of that directly. In other
An indirect channel is where we use intermediaries or middlemen. That is, we have other businesses between us as a producer and our customer.
A combination distribution channel is a combination of direct and indirect channels. We see companies using combinations of direct channels and indirect channels. This can be done for operational efficiency, distribution channel security, or based upon the customer being reached.
What Do Distribution Channels Do?
The obvious or the most core function of the distribution channel is to connect the producer with the consumer. Distribution channels overcome what's called the discrepancy of quantity - the difference between how much we produce as a manufacturer or as a service provider and the amount or quantity that an individual consumer needs or wants
Another key discrepancy that we overcome through our channel of distribution is our discrepancy of assortment. This concerns our limitations as a manufacturer or producer to create one type of product. There will probably be other products that the consumer would want either along with or you know at the same time as our product. If we don't provide all of those different things that might go with our product, we don't provide the assortment that the consumer wants.
On the other hand we may produce different qualities and the consumer may only need one of whatever we produce. So, there is another way that we can have a discrepancy of assortment.
In any case our distribution channel is really important not only because it connects producers to consumers but because it overcomes these differences between what we do as a producer and what consumers need or want as consumers.