- Manufacturers to consumers.
- Manufacturer to consumer via retailer.
- Manufacturer to consumers via wholesalers and retailers.
- Manufacturer to consumer via agents and/or wholesalers and retailers.
Costs: the longer the supply chain, the greater may the cost to the final consumer be.
Control: some manufacturers want to control the distribution channels they use carefully.
Legal factors: the law may affect how a product is distributed.
Effectiveness of different distribution channels
Company
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Wholesalers are businesses that purchase large quantities of products from a manufacturer and then separate or ‘break’ the bulk-purchases into smaller units for resale, mainly to retailers. They act as the intermediary between producers and retailers.
Benefits of using wholesalers:
- Bear storage costs.
- Lower transaction costs as wholesalers are the customer.
- Time is freed up for manufactures to focus on production not distribution.
Distributors and Agents
Distributors are independent specialist businesses that trade in the products of only a few manufacturers.
Agents are negotiators who act on behalf of companies to sell the products. They are often experts, who are given a commission for their services.
- Can use experts.
- Frees up time for producers to not spend on marketing products, rather producing.
Retailers Sellers of products to the final consumer, they are often refer to as ‘shops’. Retailers have the ability to reach large numbers of consumers, especial those with global reach.
Independent retailers: small vendors, sole proprietors. Usually sell a small range of products.
Multiple retailers: chain stores.
Supermarkets: sell food stuff, tend to buy their produce and products from other manufacturers, cutting out wholesalers.
Hypermarkets: Huge outlets that stock a broad range of products and consumer durables (e.g. Sams club).
Department stores: sell everything.
