Distribution channels and their importance to business is a matter of concern to many businesses. In this article, Viindoo will share about the characteristics of retail and wholesale channels in the company's marketing strategy, helping you find the most suitable sales form for your business.
Learn about distribution channels
What is a distribution channel system? How important is it in marketing? Please refer to the content below!
What is a distribution channel?
Distribution channel is a system of organizations and individuals outside the enterprise participating in the process of transporting products from the manufacturer to the final consumer. This is the bridge that helps businesses achieve their business goals and bring products to consumers quickly.
Distribution channels are an essential bridge, ensuring smooth and effective connection in the supply chain.
It plays an important role in Marketing strategy. There are different types of distribution channels on the market, and which channel to choose depends on the type of product as well as the target market of the business. Using them effectively will help businesses achieve their business goals.
The importance of distribution channels
The importance of distribution channel for Businesses
- Acting as a bridge between manufacturing businesses and customers, helping products reach consumers quickly and promptly, overcoming barriers of space and time.
- Bringing products to many retail locations, thereby increasing exposure, promoting and expanding the market effectively.
- Through the distribution channel system, manufacturers can capture market demand, customer tastes and information about competitors.
- Distribution channel also supports manufacturers in customer care, product usage instructions, shipping and handling complaints and questions quickly and professionally.
The importance of distribution channel for Customers
- Ensuring quick and convenient product supply through supermarkets, distributors and retail points, helping customers not have to go to the production site.
- Customers can easily choose and buy thanks to product display and detailed introduction information.
- Distributors provide consulting support and resolve warranty and maintenance issues, saving customers time and effort.
Popular distribution channels today
Currently, there are popular types of distribution channels that help businesses reach customers effectively. And below are 4 distribution channels popular today.
The distribution channel system includes 4 popular types today
Direct distribution channels
Direct distribution channel is a method in which products are sold directly from manufacturers to consumers, skipping intermediaries. This method can be implemented in many different forms, including:
- Direct distribution via the Internet
- Distributed through direct sales staff
- Distributed through affiliated retail stores
Advantages and limitations of direct distribution channel system
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Indirect distribution channels
Indirect distribution channel system is a method in which products are sold through one or more intermediaries before reaching consumers. This distribution channel can be divided into the following three levels:
- Distribution channel One level: Manufacturer → Retailer → Consumer
- Distribution channel two levels: Manufacturer → Wholesaler → Retailer → Consumer
- Distribution channel three levels: Manufacturer → Broker → Wholesaler → Retailer → Consumer
Advantages and limitations of indirect distribution channel system
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Affiliate marketing distribution channels
Distribution channel Affiliate marketing is an indirect channel in which members receive commissions for referring customers to buy products.
In this system, members are called affiliate marketing distributors. Affiliate marketing distributors can be individuals, organizations, businesses or even consumers themselves.
Advantages and limitations of affiliate marketing distribution channel system
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Multi-level distribution channels
Multi-level distribution channel marketing is an indirect channel in which members act as both retailers and distributors. They receive commissions not only from selling products to consumers but also from recruiting new members into the system.
Multi-level distribution channel systems can be divided into the following types:
- Distribution channels traditional multilevel
- Distribution channel online multi-level
Multi-level distribution channels expand products through many levels, optimizing reach and efficiency
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Real-life example of a business's distribution channel
Nowadays, most businesses have to use its distribution channel to improve sales performance. One of them is Cocoon - Vietnamese vegan cosmetics, investors have to use all kinds of distribution channels to bring products to consumers in many ways.
- Distribution channel Direct: The brand has a network of retail stores spread across major cities across the country. This system not only helps Cocoon strictly control product and service quality but also build close relationships with customers.
- Distribution channel indirectly: Cocoon through distributors, wholesalers and retailers, expands its reach and brings products to more markets.
- Distribution channel Affiliate marketing: Cocoon uses distribution channel This through websites, applications and social networks such as Tiktok, Shopee, etc. creates opportunities for brands to reach young customers more effectively.
- Distribution channel Multi-level: Through a network of direct sales agents, this cosmetics brand can effectively reach customers throughout Vietnam.
Steps to building an effective distribution channel system
To build an effective distribution system and widely reach customers, investors and traders need to follow these sequential steps:
Steps to building an effective distribution channel
- Thorough market research and survey: Many businesses today often skip this important step or do it poorly due to lack of skills. Sometimes, coordination between internal resources and professional market research units is necessary to obtain complete and accurate investigation results.
- Determine market access methods: Based on the characteristics of the market, you can build distribution channel Fit. With a large market, set up your own distribution system and self-management. For small markets, use natural retail channels. Each market requires a unique approach.
- Effective management after system setup: Once the distribution system has been established, strict management is necessary to maintain and optimize planned efficiency. Take each step carefully to reduce risks and increase work efficiency. Choose the right management method for each channel to ensure success.
- Focus on investing in human resources: Human resources are a key factor in the development of businesses. An excellent team of employees will help you overcome all obstacles and expand your distribution network effectively.
- Sales support is key: A strong sales support team will significantly increase the efficiency of the distribution system. Therefore, in addition to training human resources, you also need to focus on developing and improving the skills of your sales support team.
Viindoo Omnichannel - Simple distribution channel management solution
Viindoo Ominichannel is a comprehensive business management software platform, especially designed for small and medium businesses. This software helps manage many aspects of business operations, including order management, inventory, and distribution channel.
Viindoo Ominichannel allows tracking and processing orders from order to delivery, automating the process to minimize errors. It also offers real-time inventory management, which helps track inventory and manage multiple warehouses. The platform integrates the ability to manage different distribution channels from a single system, along with detailed reports and data analysis on sales and performance distribution channel.
Viindoo Omnichannel's interface is simple and easy to use.
Viindoo Ominichannel also integrates customer relationship management (CRM), tracking customer information and transaction history, thereby supporting effective marketing strategies. The software also supports integration with other applications such as accounting and e-commerce, helping to synchronize data and workflows.
In particular, Viindoo Ominichannel provides features to automate the import, export and order processing processes, helping to save time and improve work efficiency. You can learn more at Viindoo's official website.
Above is detailed information about distribution channels. We hope that this knowledge will meet your needs and bring practical value. If you have any questions, please contact Viindoo via website or hotline 0225 730 9838 to receive enthusiastic advice and support from our staff.