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What are the distribution channels of a company?
The distribution channels They are the routes chosen by a company that runs its product from its creation until it reaches the consumer. In a distribution channel there are certain elements involved what is necessary to know. These are the producer, wholesaler, retailer and the final consumer.
Below te we are going to explain the types of distribution channels and we will let you know one tool that will allow you to keep good inventory control as well as other applications to keep track of your company.
Types of distribution channels
First of all, these channels are divided into two types: channels for consumer products y channels for industrial or business-to-business products. These, in turn, are subdivided into other channels that are differentiated according to the number of channel levels that act on them.
Distribution channels for consumer products
First we will talk about the distribution channels for consumer products, which is divided into four types of channels that we will see below:
- Direct Channel or Channel 1: in this type of channel, the producer carries out all the processes of commercialization of the product, as well as its ttransportation and storage without the help of third parties. They are direct sales activities by different means, some of them are sales by telephone, online purchases or by catalog.
- Retail Channel or Channel 2: in this channel there are some intermediaries, known as retailers or retailers. The manufacturer has a sales team that is responsible for contacting retail companies to market the product. They take care of the orders and the sale to the consumer.
- Wholesale Channel or Channel 3: in this case there are two types of intervention. First, the wholesalers will make wholesale sales of the product to retail companies, who will take you directly to the customer. It is a type of channel used in high-demand products, when its manufacturer does not have the capacity to bring the product to all consumers.
- Agent/Intermediary Channel or Channel 4: The intermediary agents will help the producer to establish deals to market his product. In this way it will reach the wholesalers and follow the normal course towards the retailers and the consumer.
Channels for industrial or business-to-business products
Now we will tell you about the channels for industrial or business-to-business productsThese are usually their distribution channels:
Direct Channel or Channel 1: is he most common channel for products for industrial use, such as quantities of raw material, for example. It is the shortest and most direct. Manufacturers are responsible for offering and selling the product to industrial customers, according to their requirements.
Industrial Distributor or Channel 2: in industrial distributors are involved in this type of channel, who act as wholesale companies. They buy the products and act as a sales force for the manufacturer. It is a common channel for small manufacturers that cannot manage a sales force.
Agent/Intermediary Channel or Channel 3: here the intermediary agents facilitate the sales process to the manufacturers by finding clients who may be interested in their product and determining commercial agreements.
Agent/Intermediary Channel – Industrial Distributor or Channel 4: As we said before, agents will make it easier to sell the product. However, the industrial distributor will carry out the task of storing said products until they are requested by industrial users.
How to control inventory management and the relationships between the different production channels.
We introduce you Zoho InventoryThis tool allows you to control the stock of your company, thus avoiding stock breaks and problems with the different distribution channels.
This application also allows you to know how much each supplier sells to subsequently carry out actions to reach agreements with those suppliers that sell less of your products.
Know more about| Zoho Inventory.