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

Learn More
Federal Grants 150 150 Jonathan Poland

Federal Grants

The US government grant money is divided into a variety of categories, including: Social programs: These programs provide assistance to…

Idea Generation Jonathan Poland

Idea Generation

Idea generation is the process of generating new and original ideas. It is an essential component of the innovation process…

What is Marketability? Jonathan Poland

What is Marketability?

The marketability of a brand, product, or service refers to its competitiveness within a market. It is the likelihood that…

Contract Risk Jonathan Poland

Contract Risk

Contract risk refers to the potential negative consequences that a business may face as a result of issues or problems…

Business Risk Jonathan Poland

Business Risk

A business risk is a potential event or situation that could negatively impact an organization’s ability to achieve its objectives.…

Price Economics Jonathan Poland

Price Economics

Price economics, also known as pricing strategy, is the study of how businesses determine the price of their products and…

Good Customer Service Jonathan Poland

Good Customer Service

Good customer service is a service experience that goes above and beyond to meet the needs and expectations of customers,…

What is Fandom? Jonathan Poland

What is Fandom?

Fandom refers to the subculture that develops around particular popular culture series or formats, such as films, television shows, characters,…

Active Silence Jonathan Poland

Active Silence

Active silence is the intentional and strategic use of silence in communication. It involves the ability to listen attentively and…

Content Database

Income Statement Jonathan Poland

Income Statement

An income statement is a financial statement that shows a company’s revenues, expenses, and profits over a specific period of…

What are Tactics? Jonathan Poland

What are Tactics?

Tactics are short-term, immediate strategies that are designed to respond to fast-changing realities and situations. They are focused on taking…

What is Reliability? Jonathan Poland

What is Reliability?

Reliability is a measure of the ability of a product or service to perform consistently and predictably over time. It…

Risk Response Jonathan Poland

Risk Response

Risk response is the process of addressing identified risks in order to control or mitigate their impact. It is an…

Abundance Mentality Jonathan Poland

Abundance Mentality

Abundance mentality is the belief that there is enough for everyone, and that abundance, rather than scarcity, should be the…

What is Stagflation? Jonathan Poland

What is Stagflation?

Stagflation is a period of high inflation, low economic growth and high unemployment. Stagflation is a economic phenomenon in which…

Business Services Jonathan Poland

Business Services

Business services are a type of service that is primarily provided to businesses and organizations, rather than to individual consumers.…

Exit Strategy Jonathan Poland

Exit Strategy

An exit strategy is a plan for how to end a business venture, investment, or project. It is a way…

Marketing Theories Jonathan Poland

Marketing Theories

Marketing is the process of identifying customer needs and developing strategies to meet those needs. This involves conducting market research,…