A Distribution Channel is the path that a product takes from the manufacturer to the customer. In general, the longer the distribution channel, the less profit the manufacturer makes because each intermediary vendor charges for their services. There are three types of Distribution Channels:
- Direct, where the manufacturer sells directly to the customer.
- Indirect, where one vendor is added between the manufacturer and the customer (e.g., a retailer).
- Indirect with more than one intermediary, like a wholesaler, supplier, distributor, retailer, or dropshipper.
While there are pros and cons to all distribution models, the most important consideration is ensuring the smooth delivery of goods to customers.