Posted in Operations and Supply Chain Terms, Total Reads: 2242
Definition: Distribution Channel
The media through which goods or services flows from the producers to the consumers is known as a distribution channel. It involves a series of individuals and organizations who act as intermediaries in the system. Distribution channels are also called marketing channels or marketing distribution channels.
Distribution Channels accommodate bidirectional flows such that they allow the flow of goods and services from the vendors to the consumers and at the same time facilitates the flow of payment for the goods/services in the opposite direction from the consumers to the producers.
A distribution channel can have several stages depending on how many organisations are involved in it:
Multistage Channel - A wholesaler buys and stores goods in large quantities and supplies the same to retailers in smaller quantities.
Example: Apparel is first goes from producer to the wholesaler and retailer and then finally to the consumer (Wal-Mart, Big Bazaar, etc.)
Single Stage- Channel contains only one intermediary, which is typically the retailer in consumer markets.