A sales channel is the way that a manufacturer brings his/her goods and services to customers. It is basically how goods and services will become available to be purchased by consumers. Sellers have to know where customers need their commodities and how to deliver them there.
The general idea is that usage of more sales channels reaches more customers but businesses usually ensure not to use competing sales channels. This is because increment in sales channels increases cost and therefore adding a sales channel that rivals an existing channel is not beneficial in any way.
There are various sales channels available to businesses but they all fall under direct or in indirect sales channels. In the former, businesses sell directly to the consumers while the latter makes use of an intermediary between the source and the customer.
Types of sales channels
1. Face to face
This type of sales channel involves selling directly to the consumer; face to face. A business using this type of channel has the advantage of getting firsthand information on how exactly the customers feel about the product, and it helps in building personal relationships with the client. A face to face seller can demonstrate how a commodity is to be used, unlike other channels, further showing the advantages of this type of sales channel.
Despite the numerous advantages, face to face selling represents significant cost; the costliest of all channels. It also demands more time from the business’s employees. Face to face is best used:
- When selling complex and high-value goods
- For initial contact with a key prospective customer
- When in need to strengthen business relationships
2. Using distributors, retailers and wholesalers
Using intermediaries to sell goods represents a more cost-effective channel for businesses to reach their clients. A business may choose to supply their goods to a large wholesaler stocking similar goods so as to take advantage of the existing connections between the wholesaler and customers. Using wholesalers to retailers to consumer chain is very popular with many businesses and it has been proven to be effective.
3. Distance selling
This implies that a business has to sell its merchandise either through mail order, digital television, telephone or the internet. E-commerce is growing by the day and distance selling is taking root. Distance selling is cost effective but the lack of physical contact can be limiting.
4. Sales agents
Sales agents offer companies a way out of recruiting and training employees, which can be costly. A sales agency comprises people with the required skills.