Distribution channels are the many ways in which you get your product out to the public. It can be as simple as selling it yourself, or it can involve a complex series of exchanges before ultimately reaching the consumer. As a budding business owner, it is important to familiarize yourself with these various options to incorporate them into your operation plan. To learn more about the many distribution channels you can utilize for your product, see our top five choices below.
The first and simplest distribution channel you can utilize is a direct business to consumer model. As the name implies, this type of channel involves you selling the product directly to your customer. This can be done through your own storefront, website, catalogue or sales team. Regardless of what medium you choose, if the product goes directly from your manufacturer to the consumer then it is a direct distribution channel.
Direct Distribution Channels
Direct distribution does not just refer to in-store sales. Direct distribution channels include direct catalog, direct sales team and direct internet channels. If you have a team of sales professionals slinging your product, this is still direct distribution. This is also true if you own an ecommerce business or makes sales through a mail-order catalog. This is important to note, as most business owners are unaware of these distinctions.
Selling your product through a wholesaler or distributor is another option to get your product into the hands of your customers. The chain of this distribution channel is slightly more complex than selling directly to the consumer. Instead, you can sell your product to a wholesaler who will then sell it to retailers or customers. The good thing about this enterprise wide form is that wholesalers can provide your smaller business with greater access to larger markets.
Another popular distribution channel is through a retailer. Unlike the wholesaler, which adds an extra component, you will have a direct exchange with the retailers of your product. You sell them your product, and then it is their job to sell it to consumers. This takes the pressure of selling to consumers off of you. Instead, the retailers will be responsible for making sure your goods are sold.
A value-added reseller (VAR) is a company or distributor that adds business applications, features or services to an existing product. This means that you can sell your product to them and they will make it part of a package deal that will then be sold to customers. Value-added resellers are particularly common in the IT industry. This is a great way to increase your market reach as it adds value to your product, encouraging customers to buy it.
A sales agent is a good distribution channel for entrepreneurs and business owners who want help launching their product. Sales agents will market your product to other businesses on your behalf. In this form, your sales agent acts as a liason between you and potential retailers or wholesalers. This can help introduce your product to the market more successfully because sales agents often have pre-established connections that can benefit your business.
Understanding the distribution channels that are available for your product is an important aspect to getting your business off of the ground. You can choose to sell directly to consumers, or you can work with a variety of retailers, dealers and distributors in order to increase your market reach. No matter what you choose, these distribution channels are an essential part of your business process.
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