Sales channel

Sales Channels

Sales channels represent the path through which a product moves from the manufacturer to the end consumer. In the modern world, a buyer can purchase the same product, for example, a smartphone, through various platforms: in a physical store, on the official website, or through a mobile application. For instance, the iPhone can be found both in intermediary stores and on the Apple website. These various points of sale represent diverse sales channels for phone manufacturers.

The main goal of distribution channels is to organize the sale of goods and services. They serve as a link between manufacturers and consumers, ensuring the movement of goods in one direction and money in the other. Among popular sales channels, online stores stand out, often proving to be a more economical and less risky option compared to offline stores.

Classification of Sales Channels

Although there is no single classification, sales channels are often divided into two main types: direct and indirect.

Direct Channels

Direct channels are characterized by the absence of intermediaries, allowing the manufacturer to sell the products directly. Examples of such channels include:

• Telemarketing: sales over the phone, where calls are made from the sales department or call center.
• Offline Events: fairs, exhibitions, and presentations where companies showcase their products.
• Online Channels: online stores, mobile applications, and proprietary websites where transactions occur directly between the seller and buyer.
• Brand Stores: specialized stores that sell only products from a specific brand.
• Catalogs: a traditional but outdated channel that is still used by some companies.

Indirect Channels

Indirect channels include several intermediaries who participate in the distribution process. These include:

• Distributors: purchase goods from the manufacturer and sell them to other intermediaries.
• Dealers: buy products from the manufacturer or distributor and sell them to end consumers.
• Retailers: organize the sale of goods to end consumers, setting their own prices.

How to Choose a Sales Channel

When choosing a sales channel, it is important to consider many factors, such as the geographical location of the manufacturer, the range of products, the transportability of the goods, and storage conditions. For example, direct channels become more effective if the product is bulky and difficult to transport. Indirect channels can be beneficial for companies looking to expand their audience and sales volume.

To select a new sales channel, one can use the verification questions proposed by marketer Igor Mann:

• What will we sell through the new channel?
• How much will sales increase?
• How will the significance of existing channels change, will there be a conflict between new and old?
• What will be needed to create a distribution channel?
• How quickly can a new sales channel be implemented?
• How difficult is it to manage?
• Does it align with the company's culture?
• How will competitors react to the launch of a new channel?
• Is there a better alternative to the chosen distribution channel?

Impact of the Channel on Profit

When choosing sales channels, it is important to assess their economic efficiency. For instance, entering a marketplace can significantly increase your profit, both directly and indirectly. One of our clients noted that they list their products on a marketplace because many buyers search for them there. However, the majority of sales still come from their website. Thus, while the marketplace may not generate direct profit, it still influences overall sales volumes.