Sales channels is a marketing term that refers to the process of getting a product from the producer to the consumer. There are various ways or channels by which the consumer can receive a product. We will cover a few basic elements in sales channels in order to help you decide which channels you should target.
1.Retailers. Retailers purchase inventory to then resell it for profit. Best Buy, Barnes and Nobles, and even grocery stores are all examples of retailers.
2.Distributors. Distributors sell products to retailers. This may seem odd at first, but including a distributor in your sales channel may make it possible to get your product in a more successful store than if you tried on your own. Distributors offer you their clout with retailers in order to get your product on the shelf.
3.Brokers. Brokers bring buyers and sellers together. Brokers can help you find someone to sell your product if you don't know which distributors or retailers to users.
4.Direct distribution. Direct distribution is a technical term for producers selling their products to users. Land's End is a good example of a company which relies exclusively on direct distribution.
Why should you use sales channels? In theory, using sales channels allows you to, in the long run, spend less money to get your product more widely distributed. The key is to determine what you are and aren't willing to do to get the product sold yourself.
If you like the idea of doing the selling yourself then you may not need to look into any sales channels. What you lose in ease of distribution you gain in control. However, the price of direct distribution is creating a channel to your to customers. Internet distribution through sites like Ebay or Amazon has made this accessible even to business initiates.
If you want to make use of sales channels, you must ensure each piece in the sales channels puzzle has the proper incentive to move your product. Remember that distributors will likely be buying inventory from many different producers. If a competitor is using the same producer, what's the incentive for the distributor to push your product over your competitor's product?
You may combine both direct distribution and sales channels distribution if you so desire. Many companies complement direct methods like sales team and mailing service with sales channels. The key is to find the balance of many invested in distribution and the resultant profit. If you find yourself spending too much on either direct marketing or sales channels, it is time to make a change in how you get your product distributed.
For more information here's a two part webinar posted on youtube: