Posted in Marketing and Strategy Terms, Total Reads: 882
Definition: Direct Channel
A direct channel of distribution defines a condition in which the producer sells a product to a consumer directly, without any assistance from any of the intermediaries. In case of a direct chain of distribution there can be computer sales or mail order or face-to-face sales but there can’t be any sort of distributor except the original producer. Those chains of distribution which include nonaffiliated retailers or wholesalers can’t be defined as direct channels of distribution. They are called indirect chains of distribution.
1) Amazon is the producer of KINDLE, so amazan.com selling Kindle online as an E-Commerce portal is a case of Direct Channel
2) A small farmer selling his production of vegetables in the market is also an example of Direct Channel.
The Advantages and Disadvantages of Direct Channel of Distribution for a business are -
A direct channel of distribution say an E-Commerce portal and delivery has various benefits. A web-based selling has very low overhead and provides your product publicity at a global level. Due to the absence of any intermediaries to share the profits, the direct distribution channels generally have higher profit than the indirect distribution channels. An E-Commerce portal is very convenient and is available round the clock for its customers. A number of customers also appreciate the opportunity to provide profits to producers and artists directly. Due to these reasons we are witnessing a huge surge in the E-Commerce space.
The most generic disadvantage of a direct distribution channel is its inability to compete with the high geographical reach and huge business volume of an indirect distribution channel which involves major wholesalers and retailers. Although players like Amazon, E-bay, Alibaba and Flipkart are increasingly expanding and serving new markets everyday Last Mile Delivery for remote areas still remain a big challenge for them to encounter. The companies do provide Free Shipping for a lot of products and for orders over minimum limit but still not all products are exempted from delivery charge which tends to fend away the customers.