Generally goods and services are supplied through different ways and paths, these ways and paths are called channels of distribution. For example, if you are a wall-clock manufacturer, then to reach to your final consumer you have to go through different channels like agents, whole sellers and retailers. These all middlemen like agents, whole sellers and retailers are called channels of distribution.
There are basically two kinds of distribution channels -
1. Direct Channels and
2. Indirect Channels.
1. Direct Channels - Direct channels are concerned with direct marketing where producers of goods and services sell goods or services directly to consumer without any
role of middlemen. Today there are many companies who are selling their goods and services through internet directly. In direct channels there is no role of middlemen, retailers or whole sellers.2. In-direct channels - These are the real distribution channels and the number of channels depends on how you want to market your products. For example, many FMCG companies follow these distributional channels -
Manufacturer - C&F (carry and forward agent) - distributors - whole sellers - retailers - customers.
If you want to cut the cost then you have to cut the distribution channels, but you should be careful because these channels play a crucial role in sales, hence cutting cost on distribution channel may affect wrongly on your
sales. Different businesses follow different distribution channel according to their needs. For example, if you are a heave industry equipment manufacturer, then there is no need to appoint a C&F; you can directly sell your products through distributors and retailers. So number of and types of distribution channels depends on your business style and your products of business.How do you want to sell your products or services? If you want to sell your products and services through various distributional channels, then you should follow proper distribution policy and if you want to reach directly to your consumer, then you do not have any need of distribution channels.
In mass selling, distributional channels play a major role in overall selling process. Many times, to move goods or services from manufacturing point to the ultimate customer distribution channels are essentially required.
In nutshell distribution channels are the ways through the products or services are reached to the consumers. Basically distributional channels are connectors that connect producer and the ultimate consumers. Normally goods and services pass through various ways, paths and hands, and these hands, paths and ways are called distributional channels.
