Channels Of Distribution
Channels of distribution are the routes through which a product reaches the customer from the producer. Let us see about distribution channels in detail.
There are two types of distribution channels. One is direct distribution and the other one is indirect distribution channel.
Under direct distribution, the goods reach from manufacturer to buyer directly. Advantages are the cost of middlemen is eliminated. The producer will have scope to directly meet the customer. Hence a better understanding of customer behavior is possible. The producer can get the feedback from the customer directly. Normally there is a delay in the supply of goods when the indirect channel is used. This delay can be avoided while using the direct distribution of goods.
But direct distribution cannot cover a wide range of geographical locations. Also, it is suitable only for the limited type of goods like high-value machinery.
Indirect distribution channel comprises of the wholesaler, retailer, and the internet. The channel may consist of either all the four or sometimes wholesaler will not be there. It all depends on the choice of the manufacturer.
The Internet is the latest form of selling goods. The online sale does not have geographical limitations. Moreover, the buyer can be done at the convenience of the buyer. Marketing is cost effective and easy over the internet. Demo videos, query handling etc. serve as an additional advantage. Also, information is available on the internet on almost everything right from Bitcoin Loophole full review to the latest trend in the market. Hence internet selling is the best choice.
The manufacturer can sell in bulk to a wholesaler who in turn sells it to retailers. Wholesalers normally specialize in a limited type of goods. Since they operate on large-scale, they can quote competitive prices.
Retailers deal with the customers directly. Hence attractive display of goods, prompt service, confident query handling etc. becomes inevitable for a retailer. Retailers buy at a lower rate and sell at a slightly higher price to customers. They offer discounts during festivals, year-end etc. to boost up sales. Retailers help in facilitating a good geographical network of sale. Growth in sales mainly depends on the retailer. Hence wholesalers and producers give special incentives to retailers for prominent display of goods in his premises.
In case retailer wants to return unsold goods, normally wholesalers will not accept the same. Hence the risk which retailer undertakes is more in the chain of distribution.
Depending on the nature of goods and the geographical spread of customers, a business can decide on using a channel.