What are Channels of distribution? Types, Advantages and Disadvantages, FAQs

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What are Channels of Distribution?

Channels of Distribution, also known as Distribution Channels, are the channels and pathways of business through which a product or service is transmitted before reaching the final user. These channels often consist of distributors, wholesalers, retailers, online stores, etc. 

What are the three types of Channels of Distribution? 

Channels of Distribution are divided into three types. Each type of distribution consists of a mixture of the four channels namely wholesaler, retailer, manufacturer, and the final customer. 

The first type consists of all four channels and it is considered the longest among the three. For example, an alcoholic beverage manufacturer has to first sell the product to a wholesaler who will later sell it to a retailer. 

The second type is where the wholesaler is excluded and the product directly goes from the manufacturer to the retailer. For example, Car dealerships typically buy cars directly from the manufacturer and sell them to the final customer. 

The last stage is where the wholesaler, as well as the retailer, is excluded. For example, you can buy Apple products directly from the manufacturer’s own retail stores. 

What are the advantages and disadvantages of Channels of Distribution?

 Based on one’s preferred distribution channel, the manufacturer can unload a lot of products very fast. However, they may not always be getting the best prices. 

In order to sell with the third type of channel distribution where your product goes directly from the manufacturer to the final customer, your brand has to be established and influential where your initial cost will be much bigger. 

You need to consider all the costs and do your own personal research before choosing your channel of distribution. What works well for other companies may not always be suitable for your own. Thus, it is important to overview the feasibility of your business in order to choose the most effective channel of distribution for your business. 

FAQs

Q: What are Channels of Distribution?

A: Channels of Distribution, also known as Distribution channels, are the channels and pathways of business through which a product or service is transmitted before reaching the final user. These channels often consist of distributors, wholesalers, retailers, online stores, etc. 

Q: What are the motivating factors for channels of distribution to sell a product? 

A: Motivating factors for channels of distribution to sell a product are better prices, good customer care and support, exclusivity for the product or brand, and a unique selling point. 

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