January 30, 2024

What is the Most Common Channel of Distribution for Large Industrial Goods?

The route through which goods move from point of production to consumers is called a channel of distribution. The selection of the appropriate channels of distribution depends on several factors like buying habits of customers, nature of products, costs of intermediaries and financial strength of channel members. The channels of distribution can be long or short, single or multi-level, diversified or intensive.

Direct Selling

Manufacturers try to reach out to the consumers directly by opening their own retail outlets like Bata shoe shops or by establishing mail order departments for certain types of goods. Costly products like computers and luxury automobiles are usually sold through this channel of distribution.

Producer-Sole Agent -Wholesaler-Retailer-Consumer

This is the most common channel of distribution for consumer products. Manufacturers appoint agents in major markets to connect with wholesalers and retailers. The wholesalers buy the products in large quantities from the manufacturers and sell them to retailers in smaller quantities. This is a very efficient way of reaching out to the widest number of customers in a limited geographical area.

Product characteristics also determine the length of the channels. Products with fast fashion changes or physical perishability need to be delivered quickly and hence require shorter channels. Size is another factor which influences the length of channels, as larger products have to be shipped over longer distances.

Sometimes the manufacturers sell goods to consumers themselves in case of expensive products like a jet aircraft or manufacturing equipment. This is a very effective way to approach the end users and can help in building a good brand image.

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