15 Key Distribution Channels Terms for Business
Welcome to our guide on key distribution channels terms for business! In this section, we will break down some of the most important terms you need to know when it comes to effectively distributing your products or services.
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Distribution Channels: Paths or routes through which goods or services flow from the producer to the customer.
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Direct Distribution: The process of selling directly to the end customer without any intermediaries.
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Indirect Distribution: The process of selling products or services through intermediaries such as agents, wholesalers, distributors, or retailers.
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Wholesaler: An intermediary entity in the distribution channel that buys in bulk and sells to resellers rather than to consumers.
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Retailer: A business that sells goods or services directly to the public or consumers.
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Supply Chain: The entire process of making and selling commercial goods, including every stage from the supply of materials and the manufacture of the goods through to their distribution and sale.
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Channel Conflict: A situation in which channel members, such as manufacturers, wholesalers, and retailers, have conflicting goals, miscommunication, or disagreements.
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Omnichannel Distribution: A multichannel approach to sales that seeks to provide customers with a seamless shopping experience, whether they are shopping online from a mobile device, a laptop, or in a brick-and-mortar store.
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E-Commerce: Commercial transactions conducted electronically on the internet, often involving online stores.
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Drop Shipping: A retail fulfillment method where a store doesn’t keep the products it sells in stock; instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer.
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Logistics: The detailed coordination of a complex operation involving many people, facilities, or supplies, especially in the transport of goods.
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Distribution Strategy: A plan created by the management of a company that outlines how the company aims to distribute the product or service to the end customer.
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Value-Added Reseller (VAR): A company that adds features or services to an existing product, then resells it (usually to end-users) as an integrated product or complete “turn-key” solution.
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Exclusive Distribution: A strategy in which a manufacturer grants exclusive rights to distribute or sell a product to a limited number of wholesalers or retailers in a given geographic area.
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Multi-Channel Distribution: The practice of using several different types of distribution channels to reach customers in various ways (e.g., physical store, online store, catalog).
Understanding these terms is crucial for effectively planning and managing the routes through which a product or service travels from its point of origin to the final consumer.
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