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Sales Channel

There are various definitions about sales channels. As the wording says: it describes the path for the product on the way from the factory to the final user. In some discussion it seems that the channel is more important than the customer.

It makes it easier to clarify the meaning, if we look at some cases:

  • Case 1. A producer for closes decides to setup a shop on his facility and to sell directly to consumers. Customers can be dealer, small businesses, and consumer. This will be a factory outlet and at the same time a direct channel to customers.  
  • Case 2. A manufacturer for smart-TV in japan supplies his products to a retail-chain for entertainment electronics in Poland. This is a sales channel directly to retail-shops.
  • Case 3. A manufacturer for batteries for electric cars in China supplies his products to a car manufacturer in France. This is a direct supply to an OEM (Original Equipment Manufacturer).   
  • Case 4. A Farmer for apples in Netherlands supplies the fruits to a wholesaler in Germany. Retail shops collect the apples from the warehouse of the wholesaler. Or the wholesaler supplies the apples to the retail shops. We got a channel with on stop in between.  

During the last decade a further option grew up: the online-trade.

All cases are setup with the distinction of physical movement of products. 

Sales channels can also be differentiated in a strategical context. This is more practiced in the international scope of business. A manufacturer needs to spent time and efforts to decide about the right partner or concept how to ensure appropriate distribution in export markets. The correct choice will influence the successful distribution. We do not look at the aspects of marketing and strategy.

The concept of a startup is to develop a new product, which will create a brand-identity in conjunction with a logo. Most startup will move into the status as manufacturer from a certain point. This status makes it necessary to take responsibility on the sales-channels. The startup needs to be aware, that the sales channel will take over responsibility for branding and pricing in his territory. This is important, when the decision about the choice of the partner must be made. Online-Retailer will often create their own dynamic, which is difficult to control and even more across Europe.


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