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.


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


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


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


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


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
producer → customer
producer → retail → customer
producer → agent → retail → customer
producer → agent → value added reseller → customer


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

Content Database

Leadership Development Jonathan Poland

Leadership Development

Leadership development is the process of helping employees develop the necessary skills and competencies to take on leadership roles within…

SWOT Analysis 101 Jonathan Poland

SWOT Analysis 101

SWOT analysis is a tool that is used to evaluate the strengths, weaknesses, opportunities, and threats of a business or…

Cross Merchandising Jonathan Poland

Cross Merchandising

Cross merchandising is a retail strategy that involves placing related or complementary products in close proximity to each other in…

Early Adopters Jonathan Poland

Early Adopters

Early adopters are individuals who quickly adopt an innovation. Marketing and selling innovative products can be challenging as it may…

Cost Leadership Strategy Jonathan Poland

Cost Leadership Strategy

A cost leadership strategy is a business plan that aims to reduce unit costs for a product or service to…

Decision Framing Jonathan Poland

Decision Framing

Decision framing refers to the way in which a choice or dilemma is presented or structured. This includes the language…

Industrial Design Jonathan Poland

Industrial Design

Industrial design involves creating designs for mass-produced products. A common principle in industrial design is that the design should be…

Examples of Customer Needs Jonathan Poland

Examples of Customer Needs

Customer needs refer to the specific requirements, desires, or expectations that a customer has for a product or service. These…

Penetration Pricing Jonathan Poland

Penetration Pricing

Penetration pricing is a pricing strategy in which a company initially sets a low price for its products or services…