Channel Structure

Channel Structure

Channel Structure Jonathan Poland

A channel structure refers to the way in which a company distributes its products or services to customers. It is the network of intermediaries, such as wholesalers, distributors, and retailers, that a company uses to bring its products or services to market.

There are several types of channel structures that companies can use, including:

  1. Direct distribution: This involves selling products or services directly to customers, without using intermediaries. This can be done through a company’s own retail stores, online sales platforms, or by selling directly to businesses.
  2. Indirect distribution: This involves using intermediaries, such as wholesalers or distributors, to reach customers. Indirect distribution can be used to reach a wider range of customers, or to tap into established distribution networks.
  3. Multiple channel distribution: This involves using a combination of direct and indirect distribution channels to reach customers. This can be an effective way to reach a wider range of customers, or to cater to different customer segments.
  4. Omni-channel distribution: This involves using a variety of channels, including online and offline channels, to reach customers. This can provide customers with a seamless shopping experience, as they can purchase products or services through the channel of their choice.

Overall, companies need to carefully consider their channel structure in order to effectively reach their target customers. Choosing the right channel structure can help a company to increase sales and grow its business. Here are some illustrative examples.

Direct

Selling directly to the customer using channels such as personal selling, retail or wholesale. For example, a fashion brand that uses its own shops, websites, and social.
producer → customer

Retail

Selling to retailers who sell to the end-customer.
producer → retail → customer

Value Added Reseller

Selling to firms that add value to your products or services before selling them. For example, a firm that sells components that are used in mobile devices.
producer → value added reseller → customer

Wholesale

Selling to wholesalers who distribute the product to retailers and sometimes direct to consumer (DTC).
producer → wholesaler → retail → customer

Agents

Using agents or brokers to manage your sales to wholesalers, retail and/or ecommerce sellers.
producer → agent → wholesaler → retail → customer

Complex

It is common for organizations to have many channel structures for different products and regions. For example, a fashion brand that sells direct in the United States but uses agents, wholesalers and retailers in other countries.
United States
producer → customer
France
producer → customer
producer → retail → customer
Japan
producer → agent → retail → customer
producer → agent → value added reseller → customer

Detailed

Channel structures may include details such as the types of channel that are involved. For example, a direct producer → customer structure might be expanded out with more details:
United States
direct retail → flagship → customer
direct retail → brand shops → customer
direct retail → outlet shops → customer
direct sales → customer

Media Infrastructure Jonathan Poland

Media Infrastructure

Media infrastructure refers to the technologies, services, facilities, and outlets that are essential for the communication of information, opinions, and…

Business Verbs Jonathan Poland

Business Verbs

Business verbs are action words that are commonly used in business communication to describe goals, plans, and achievements. These verbs…

Strategic Partnership Jonathan Poland

Strategic Partnership

A strategic partnership is a relationship between two or more organizations that is characterized by mutual cooperation and the sharing…

Substitution Pricing Jonathan Poland

Substitution Pricing

A substitution price is the price at which a customer will choose to switch to a different product or service…

Curiosity Drive Jonathan Poland

Curiosity Drive

Curiosity drive, or the desire to obtain new information, is a fundamental human motivation that drives learning and exploration. In…

Ground Rules Jonathan Poland

Ground Rules

Ground rules are rules or guidelines that are established at the beginning of a meeting, activity, or other situation to…

Long Tail Model Jonathan Poland

Long Tail Model

The long tail refers to a business model that allows a large number of niche products or services to be…

Resource Efficiency Jonathan Poland

Resource Efficiency

Resource efficiency is the process of using resources in a way that maximizes their value and minimizes waste. This can…

Sales Quota Jonathan Poland

Sales Quota

A sales quota is a target for the revenue or units sold that a sales department, team, or individual is…

Learn More

Due Diligence Jonathan Poland

Due Diligence

Due diligence refers to the level of investigation, care, and judgement that is appropriate and expected in a given situation.…

Risk-Reward Ratio Jonathan Poland

Risk-Reward Ratio

The risk-reward ratio is a measure that compares the potential for losses to the potential for gains for a particular…

Net Nuetrality Jonathan Poland

Net Nuetrality

Net neutrality is the principle that all internet traffic should be treated equally, without discrimination or preference given to certain…

Brand Perception Jonathan Poland

Brand Perception

Brand perception refers to the way that a brand is perceived by its target audience. It’s important for companies to…

Settlement Risk Jonathan Poland

Settlement Risk

Settlement risk is the risk that a trading counterparty will not deliver a security or asset as agreed upon in…

Augmented Product Jonathan Poland

Augmented Product

An augmented product is a product that includes intangible benefits beyond the physical product itself. These intangible benefits may include…

Brand Authenticity Jonathan Poland

Brand Authenticity

Brand authenticity is the degree to which a brand accurately represents itself and its values to consumers. It is the…

Customer Dissatisfaction Jonathan Poland

Customer Dissatisfaction

Customer dissatisfaction refers to a customer’s negative evaluation of a product or service. It can be measured by asking customers…

What is a Product Line? Jonathan Poland

What is a Product Line?

A product line refers to a group of related products that are marketed together as a single unit. Product lines…