Channels of Distribution

Channels of Distribution

The channel of distribution means the route at which the goods move from producer to the consumer or the route, which helps the product to move towards market. A channel of distribution includes the producer, the consumer or industrial user and any middlemen involved in this route.

“A channel of distribution (sometimes called a trade channel) for a product is the route taken by the title to the goods ads they move from the producer to the ultimate consumer or industrial user”

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Main Point

• It is a route
• To move the goods
• Producers to ultimate consumers

Kinds of Channel of Distribution

Following are the important kinds of channel of distribution

Producer to Wholesaler to Retailer to Consumer:

Under this channel the producer sells the goods in large quantity to few wholesalers. The wholesalers sell the goods to the retailers. Retailer sells the goods in the hands of a consumer. For example various goods like sugar and cloth are sold through this channel in Pakistan etc.

Producer to Retailer to Consumer:

Sometimes a producer adopts this channel and supplies the goods directly to the retailer without involving any wholesaler. The profit of wholesaler is saved in this channel. Retailer profit also increases and control of producer on supply of goods increase. Now the sales by producers to retailers have become very common, as the scale of production has increased.

Producer to Consumer:

Some producers adopt the direct channel and they supply the goods directly to the consumers without any middleman. Generally those goods, which are produced on small scale, are sold directly to the consumer. For example, some agricultural and industrial goods are sold door to door to the consumers.

Producer through Agent to Wholesaler to Retailer to Consumers:

According to this channel producers contact with the agents and pay commission to them for selling the product. The agent supplies the goods to the wholesaler who supplies to retailers. Retailer supplies the goods to consumers.

Producers through his Own Retail Shop to Consumer:

In this channel if the producer is producing goods on large scale and reputation of his firm is good in market then he established his own retail shops. Producer supplies the goods directly to theses shops. Consumer being familiar with these shops purchases the goods from these shops at lower prices as compared to market prices. Different producers like shoes, clothes are sold through this channel.

Producer through Agent to Retailer to Consumer:

Many producers often use agents to reach the large-scale retailers who sell the goods the consumer.