what is a distribution channel 
a distribution channel is the network of businesses or intermediaries through which a good or service passes until it reaches the final buyer or the end consumer distribution channels can include wholesalers retailers distributors and even the internet distribution channels are part of the downstream process answering the question how do we get our product to the consumer this is in contrast to the upstream process also known as the supply chain which answers the question who are our suppliers jessica olah investopediaunderstanding distribution channelsa distribution channel is a path by which all goods and services travel to arrive at the intended consumer distribution channels can be short or long and depend on the number of intermediaries required to deliver a product or service increasing the number of ways a consumer can find a good can increase sales but it can also create a complex system that sometimes makes distribution management difficult longer distribution channels can also mean less profit for each intermediary along the way components of a distribution channelproducer producers combine labor and capital to create goods and services for consumers agent agents commonly act on behalf of the producer to accept payments and transfer the title of the goods and services as they move through distribution wholesaler a person or company that sells large quantities of goods often at low prices to retailers retailer a person or business that sells goods to the public in small quantities for immediate use or consumption end consumer a person who buys a product or service types of distribution channelsa direct channel allows the consumer to make purchases from the manufacturer this direct or short channel may mean lower costs for consumers because they are buying directly from the manufacturer an indirect channel allows the consumer to buy the goods from a wholesaler or retailer indirect channels are typical for goods that are sold in traditional brick and mortar stores hybrid distribution channels use both direct channels and indirect channels a product or service manufacturer may use both a retailer to distribute a product or service and may also make sales directly with the consumer distribution channel levelsthis is a direct to consumer model where the producer sells its product directly to the end consumer amazon which uses its platform to sell kindles to its customers is an example of a direct model this is the shortest distribution channel possible cutting out both the wholesaler and the retailer a producer sells directly to a retailer who sells the product to the end consumer this level includes only one intermediary hp and dell are large enough to sell their computer products directly to reputable retailers such as best buy including two intermediaries this level is one of the longest because it includes the producer wholesaler retailer and consumer in the wine and adult beverage industry a winery cannot sell directly to a retailer 1it operates in a multi tiered system meaning the law requires the winery to first sell its product to a wholesaler who then sells to a retailer the retailer then sells the product to the end consumer 1this level may add the jobber this level adds the role of the individual who may assemble products from a variety of producers store them sell them to retailers and act as a middle man for wholesalers and retailers a distribution channel also known as placement can be part of a company s marketing strategy which also includes the product promotion and price distribution channels in the digital eradigital technology has transformed the way businesses especially small businesses use direct channels of distribution with increasing consumer demand for online shopping and easy to use e commerce tools direct selling means more success for businesses rather than having to rely on relationships with retailers to sell their products software and artificial intelligence ai sales technology allows companies to manage sales and automatically achieve high customer relationship management crm online advertising through social networks and search engines targets specific areas or demographics and social media networks are increasingly considered the industry standard and are changing traditional marketing strategies if a company continues to use indirect channels of distribution digital technology also allows it to manage relationships with wholesale and retail partners more efficiently choosing the right distribution channelnot all distribution channels work for all products so companies need to choose the right one the channel should align with the firm s overall mission and strategic vision including its sales goals the method of distribution should add value to the consumer do consumers want to speak to a salesperson will they want to handle the product before they make a purchase or do they want to purchase it online with no hassles answering these questions can help companies determine which channel they choose secondly the company should consider how quickly it wants its product s to reach the buyer certain products are best served by a direct distribution channel such as meat or produce while others may benefit from an indirect channel if a company chooses multiple distribution channels such as selling products online and through a retailer the channels should not conflict with one another companies should strategize so one channel doesn t overpower the other 