A distribution channel refers to the path or route taken by goods and services as they travel from the point of production to the point of consumption. In short, a distribution channel is a way for businesses to get their products to consumers. A channel is a specific touchpoint in which a company sells its products, including ecommerce, retailers, and wholesalers. There are two main types of distribution channels: direct and indirect.
Indirect distribution channels are often used when businesses want to reach a larger number of consumers or when they want to sell products in a different geographical area. In an indirect distribution channel, producers utilize intermediaries such as wholesalers, retailers, or distributors to sell their goods and services to consumers. As an example, Walmart and Sephora are all indirect distribution channels, as they allow the brand to indirectly distribute its products to their customer base.
A direct distribution channel is one in which producers sell their goods and services directly to consumers without the use of intermediaries. Selling directly to consumers is a tried-and-true business strategy that has been practiced for centuries. When you sell direct, you don’t need to deal with the added costs of intermediaries – instead of paying sellers, shipping companies, and third-party retailers, your business keeps your profits. Early tech giants like Apple and Dell capitalized on direct sales models to build early success.
Get started on your CEO Journey with this curated collection of exceptional CEO resources.
Turn your passion into profit, with the #1 Business and Creative Center.