A distribution channel is a route through which a company chooses to distribute its products or services to customers. The success of a company or an organization can be highly dependent on the selection of distribution channels. So, it is important for you to be very careful when choosing company distribution channels.
The route chosen by a company can be short, for example, a business may choose direct distribution companies to sell products directly to the customers. Sometimes, this route can be long when it contains a network of interconnected intermediaries including retailers, distributors, wholesalers, etc. Another popular distribution channel that is now widely being utilized by a large number of businesses is the online channel which includes e-commerce sites, online stores, etc. A company chooses a single channel or a combination of different channels based on the nature of the product and market.
Functions Of Distribution Channels
Distributions channels play a great role in the growth of a business. They are responsible for delivering a company’s products or services to the right customers at the right time and at the right place. Therefore, choosing a distribution channel that can fit the requirements of your company is significant.
Apart from distributing the products of a company, a distribution channel has many other functions too. It is important for you to know them to choose an ideal channel for you. The following are some of the important responsibilities that the distribution channels carry.
The company distribution channels should be able to supply the products or services based on the requirements of customers. It should be able to process the order for accurately delivering the products. The distribution channels you choose should be able to process the orders you receive. For example, if you are selling products in a bulk, then choosing a retailer as your distribution channel may not be ideal. Similarly, a long channel may not be suitable for products that are highly perishable. Hence, the channel must process the order properly, and deliver the products accordingly.
It is important to store enough inventories for meeting customer requirements. Distribution channels carry the duty to keep the inventories in a place that is suitable for delivering them easily when needed. Inventory control is one of the most costly processes involved in the delivery of products. Hence, channels of distribution should be able to effectively keep the inventories at the most affordable rates, so that inventory control will not become a burden for companies.
It is the storage of the finished products until they are sold. There are different key decisions to make by the distribution channels when it comes to warehousing. They include the location of the facilities for storing the goods, number and size of warehouse, layout and ownership of the warehouse, etc. Choosing the right place for storing the goods is important and they should be kept in a place where they can be delivered easily and quickly to customers based on their requirements.
Another important and costly factor involved in the delivery of the products is transportation. It includes the transportation of the inventories to the manufacturer’s site and the transportation of finished goods to a place that can be accessed by the customers. Distribution channels should be able to facilitate faster and cost-effective transportation.
Distribution channels can also be called as marketing channels, as they play a key role in forming the marketing strategies for your products and services. They will be able to know the trends in the market and can form strategies accordingly. As these channels are in direct contact with customers, they will be able to propagate the brand message and the benefits of the products and services to the customers.
Sharing Of Risk
As most of the channels usually buy products beforehand, they will be sharing the risk along with the manufacturers. Hence, they will try their maximum to sell the products in different ways so that the manufacturers will not have to carry the risks alone.
Distributions channels are also responsible for providing pre-sales as well as post-purchase services to customers. It includes financing, maintenance of the products, channel coordination, information dissemination, etc.
Another important duty of distribution channels is the branding of your products. This will help you to stand amongst your competitors thereby attracting more customers. These channels can be beneficial for establishing your brand name among customers. Also, it can be useful for improving your reputation. Hence, distribution channels can help you to earn the trust of your customers and generate more sales.
The company distribution channels are an important part of every business. You have to choose the right distribution channel for your business to ensure the efficient delivery of your products and services. In addition to delivering products, these channels can offer you a large number of advantages including marketing, warehousing, transportation, branding, etc. Therefore, distribution channels can help with the growth of your business.