Channels of distribution
Products (goods and services) from both primary and secondary producers are made available to consumers through any of the following six channels of distribution:
Channel 1 From Producer to Wholesaler to Retailer to Consumer
- It is the traditional route of distribution.
- Wholesalers buy goods in bulk from producers.
- Wholesalers break bulk for retailers.
- Wholesalers provide transport and a variety of goods and services.
- Retailers sell in single units to consumers.
- It is most suited for non-perishable products.
Channel 2 From Producer to Wholesaler to Consumer
- Wholesalers buy in bulk from producers and sell directly to consumers.
- Cash and carry wholesalers sell in case lots to consumers.
- Wholesalers provide variety.
- Goods and services are usually sell on cash and carry basis.
Channel 3 Producers to Large scale retailers to Consumer
- Large scale retailers like OK and TM buy from producers in bulk and sell to consumers directly in single units or in small quantities.
- Examples of large scale retailers are supermarkets and hypermarkets.
- Ideal for the sale of furniture, electrical gadgets and household goods.
Channel 4 Producer to Mail Order forms to Consumer
- Usually done through agents.
- Mail order firms advertise the products.
- Goods are ordered and sold through the post office.
- Cash on Delivery (COD) method of payment is used.
- Sell a wide range of goods.
- Packaging, advertising, postage and printing costs are high.
Channel 5 Producer to Manufacturer’s own retailers to Consumer
- Producers’s own retail outlets which get goods from their producers and sell direct to consumers e.g Bata.
- It is used where producers want to push their own products.
- Other products through this route perishable such as vegetables, fruits and bread.
Channel 6 Producers to Marketing Boards to Wholesalers to Retailers to Consumers.
- Marketing Boards, are state organisations that buy produce from primary produce e.g. Grain Marketing Board.
- Goods sold through this route are usually the country’s essential primary produce e.g. grain.
- Marketing Boards sell to both wholesalers and retailers.
- Retailers then sell to consumers.
To access more topics go to the Commerce Notes page.
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