Distribution channels are important for every business, as they are responsible for the distribution of products or services provided by a manufacturer or company. Distribution channels are the pathway through which the products and services move from the producers to the consumers. Therefore, selecting the right distribution channels and best distribution companies for your business is important.
Before selecting a distribution channel, you have to understand what it is and which are the factors affecting them. Without considering all the aspects of these channels, it is impossible to choose a channel that suits you the best. Hence, we are listing some of the factors related to distribution channels for helping you to find the right channel for you.
Components of Distribution System
The main components of the distribution system include:
Channels of distribution: It is referred to as the process through which the products or services reach the end consumers. It can include merchants, wholesalers, retailers, etc. Nowadays, there are also many online distribution companies that facilitate online distribution. They can be considered as middlemen that facilitate exchange and create time and place for the distribution of products.
Physical distribution: It deals with the physical distribution of products along with ensuring maximum customer services. Physical distribution involves order processing, packaging, warehousing, transportation, inventory control, customer service, etc.
Elements of Distribution Channels
Important elements of distribution channels are:
Pathway: Distribution channels are viewed as a pathway that facilitates the flow of products from manufacturers to consumers.
Flow: The flow of products usually has a sequential order and will be directional.
Composition: Distribution channels include different intermediaries that are also known as middlemen who participate in the product flow.
Objectives: The main objective of distribution channels is to facilitate the smooth flow of products and services by meeting customer demands.
Leader: Usually, the manufacturers will be leading the channels and there will be a common behavior that is formed based on a mutually accepted code of conduct.
Functions: The functions performed by intermediaries include the transfer of ownership of goods from marketers to customers.
Functions Performed by Middlemen
The common functions performed by intermediaries or middlemen can be classified as:
Sorting out: It involves breaking out of products through grading and inspection.
Accumulation: In this process, products of the same category are brought together. It is also known as concentration.
Allocation: Here the accumulated products will be sorted and broken down for dispersing to individual supply units.
Assorting: It can be referred to as the process of assortment of different or related products to form a stock of a middleman or intermediary for the purpose of distribution.