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

Network Infrastructure Jonathan Poland

Network Infrastructure

Network infrastructure refers to the hardware and software components that are used to build and support a computer network. It…

Job Levels Jonathan Poland

Job Levels

Job levels, also known as career levels or job grades, refer to the hierarchical structure within an organization. They are…

Cost Benefit Analysis Jonathan Poland

Cost Benefit Analysis

Cost-benefit analysis (CBA) is a systematic approach to evaluating the costs and benefits of a project, program, or policy to…

Market Expansion Jonathan Poland

Market Expansion

Market expansion is a growth strategy that involves offering an existing product to a new market.

Product Innovation Jonathan Poland

Product Innovation

Product innovation refers to the development and introduction of a product or service that significantly improves upon existing offerings, often…

Capitalism Jonathan Poland

Capitalism

Capitalism is an economic system based on the principles of economic freedom, private ownership, and the creation of wealth through…

Political Risk Jonathan Poland

Political Risk

Political risk refers to the potential for losses or other negative impacts on an organization as a result of changes…

Ease of Use Jonathan Poland

Ease of Use

Ease of use refers to the usability of a product, service, tool, process, or environment, and is an important factor…

What are Project Estimates? Jonathan Poland

What are Project Estimates?

Project estimates are used to predict the costs, task completion times, and resource needs for a project, often broken down…

Learn More

Business Analysis Jonathan Poland

Business Analysis

Business analysis is the practice of researching and developing strategies, plans, solutions, and studies to support the goals and objectives…

Employee Goals Jonathan Poland

Employee Goals

Employee goals are specific targets or objectives that are set for an individual employee in order to align their work…

Team Objectives Jonathan Poland

Team Objectives

Team objectives are specific goals that are established for a team in order to guide their work and track their…

Pricing Strategy Jonathan Poland

Pricing Strategy

Pricing strategy is the process of determining the right price for a product or service based on market conditions, business…

Data Science Jonathan Poland

Data Science

Data science is the use of mathematical and statistical methods, machine learning algorithms, and other techniques to extract meaning and…

Executive Hiring Jonathan Poland

Executive Hiring

Hire 1 to hire 10. Never hire individual team members, always focus on making a single hiring of a manager…

Strategic Management Jonathan Poland

Strategic Management

Strategic management involves the formulation and implementation of the major goals and initiatives taken by a company’s top management on…

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…

Business Case for Selling B2G 150 150 Jonathan Poland

Business Case for Selling B2G

A hypothetical example of a business case where a company could potentially double its revenue by securing a specific government…