Some of the common channels of distribution. Image by Thom Holland.

Some of the common channels of distribution. Image by Thom Holland.

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.