What Is A Distribution Channel, The Types Of Distribution Channels, The Benefits Of Manufacturers Leveraging Indirect Distribution Channels For Their Products To Reach Customers, And The Benefits Of Manufacturers Leveraging Direct Distribution Channels

This essay sheds light on what is a distribution channel, demystifies the types of distribution channels, reveals the benefits of manufacturers leveraging indirect distribution channels for their products to reach customers, and explicates the benefits of manufacturers leveraging direct distribution channels for their products to reach customers. A distribution channel represents a network of intermediaries that products pass through to reach the end users, the customers. The intermediaries that are apart of an indirect distribution channel encompass businesses, such as distributors, wholesalers, and retailers. The more intermediaries that are apart of an indirect distribution channel, the higher the prices that the products need to sell for in order for the product sales to be profitable for the intermediaries that are apart of an indirect distribution channel. In stark contrast to an indirect distribution channel, a direct distribution channel renders it possible for manufacturers to sell their items directly to customers without its products being sold to intermediaries before reaching the end users, the customers. It is easier for companies to sell their items directly to customers without their products being sold to intermediaries before reaching their target market in contexts in which they have digital product offerings. Most companies however produce tangible products in lieu of digital products and would therefore prefer to avail themselves of having their products pass through a network of intermediaries to reach the end users if it can allow them to ultimately maximize their sales volume even if doing so results in yielding them a lower profit margin per sale. When companies have their products pass through a network of intermediaries to reach the end users, they resort to selling their products to intermediaries at significantly discounted rates in lieu of selling their products directly to customers at higher price points. The retailers charge customers significantly higher price points for the manufacturer's product offerings than the price that the retailers paid per unit when purchasing the inventory of products from the wholesalers. Manufacturers believe that the profits elicited from having an enormous sales volume by selling their products to intermediaries in sizeable quantities at a discounted rate per unit will yield them more sales revenue than selling their products directly to customers at a higher profit margin per product sold.