What is Distribution Channel | Types of Distribution Channel | Distribution Channel explained

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From this video you will learn What is Distribution Channel & how it works, Types of Distribution Channel, Advantages of Direct Channel, Disadvantages of Direct Channel Advantages of indirect Channel, Disadvantages of indirect Channel for beginners in english.

Distribution Channel:
A distribution channel is the flow or a network that a good or service follows from production or manufacturing until it reaches the final consumer or buyer. The distribution channels are part of a downstream supply chain which is oriented towards reaching out the ultimate consumer.

Types of Distribution Channel:
- Direct
- Indirect

Direct:
When the distribution channel is “direct”, the manufacturer is selling the goods or services directly to the consumers or the end users without a middleman also known as intermediaries.
For example : Goods sold under the traditional brick and mortar stores are part of the direct channel.

Advantages of Direct Channel:
- Eliminates Intermediary expenses
- Increases direct customer contact
- Provides more control
- Higher profit margins
- collect valuable marketing data

Disadvantages of Direct Channel:
- warehouse management
- time consuming and costly
- distribution channel options

Indirect:
When the distribution channel is “indirect”, the product changes hands several times between the intermediaries before reaching the end user or the consumer.
There are 3 different types of indirect channels:
One level channel
Two level channel
Three level channel

Advantages if indirect Channel:
- Share shipping and the storage costs.
- It makes easier for customers to find the products.
- Benefit from the third party’s experience, infrastructure and salesforce
- Faster expansion

Disadvantages of indirect Channel:
- distance it creates between the manufacturer and the customer
- establish brand loyalty
- decreases the profit margin

Making the right choice:
Distribution channels may vary depending on the particular manufacturer’s product type and their sales targets.
• Market characteristics
• Product characteristics
• Competitor characteristic
• Company characteristics

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