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Sales Channels: What are they and which one is best for your Business?

Philipp S.
Last updated on October 19, 2022

The pathways a product goes from manufacturer to customers are known as sales channels. There are many different types of sales channels, and each has its own advantages and disadvantages. The type of sales channel that a company uses will depend on many factors but essentially its goal is to get the product from point A to point B in the most efficient and effective way possible.

When you’re starting a business, it’s important to understand the different sales channels available to you. In this article, we will discuss the most common sales channels and help you decide which is best for your business. We’ll also talk about how to use each channel effectively to maximize profits.

What are sales channels?

Sales channels are the different ways that companies sell their products or services. Some companies use one distribution channel such as third-party retail and some use many other channels to sell products and services to potential buyers. Some sales teams use a specific strategy in which some products or services are widely offered. For example, Apple products are available in many stores, online, and through carriers.

Four Types of Sales Channels and How They Work

There are numerous ways to make your product accessible to your ideal clientele. However, most businesses use one of four types of sales channels:

Sales Channels

Wholesale channel

A wholesale sales channel involves selling your products to a middleman who then sells them to the consumer. This type of channel is often used by companies that sell products that require a high level of expertise, such as cars or machinery.

Retail (both online and instore)

A retail sales channel is when a company sells its products through stores, whether it’s brick-and-mortar locations or online retailers. For in-store customers can touch, feel, and try on the product before they buy it.

This type of sales channel is great for companies that have products that need to be tried on or seen before customers make a purchase, such as clothing or cosmetics. It’s also good for companies that want to build a brand image and create customer loyalty.

Direct sales

A direct-to-consumer sales channel is when a company sells its products directly to the consumer, without going through any intermediaries. This type of sales channel can be done online, through a company’s website or an online retailer, or offline, through a brick-and-mortar store.

Direct-to-consumer sales channels are great for companies that want to have more control over their product and how it’s presented to the consumer. They can also be good for companies that want to build a direct relationship with their customers.

B2B

Business-to-business sales channels involve the sale of goods or services from one business to another. These sales are usually done through a variety of intermediaries, such as distributors, wholesalers, and retailers.

Business-to-business sales channels can be beneficial for companies because they provide access to a larger customer base. They can also help companies save on costs by reducing the need for marketing and advertising.

B2B vs. B2C

B2B and B2C businesses differ in a few ways. For B2B channels, businesses need to define and manage relationships with other businesses. The most common B2B channels are wholesalers, manufacturers, and distributors.

B2C channels are managed a little differently because the relationship is between the business and the consumer. The most common type of B2C channel is retail, but there are others such as e-commerce, direct mail, and catalogs.

The key to a successful distribution strategy is to identify the channels that will work best for your business and then manage them effectively.

An important part of any business is its sales channel or channels. But what are sales channels? And how do they work?

5 essential sales channels

There are many types of sales channels, but we’ve compiled a list of the most important ones that your business should consider.

Ecommerce platforms

There are many other sales channels available to businesses, but eCommerce is one of the most popular. When we buy clothes on our favorite website, it is called e-commerce. Ecommerce has been a part of our lives, especially during the pandemic because of the convenience it offers.

Pros:

  • As a sales channel, e-commerce offers a broad audience because anyone with an internet connection can be your customer.
  • You also have the opportunity to target a global market.
  • E-commerce is fast, efficient, and 24/7 customers can purchase products anytime and anywhere.
  • It is also cost-effective because you don’t need a physical store.

Cons:

  • In order to create a safe and reliable online store, you will need to purchase a dependable eCommerce platform.
  • You will also need to invest time and money in marketing your products online.
  • E-commerce can be competitive, and it can be difficult to stand out from the crowd.
  • You will also need to keep up with the latest trends and technologies.

The bottom line is that eCommerce is a great sales channel for businesses of all sizes. If you are thinking about starting an online store, there are a few things you need to keep in mind. But if you are willing to invest the time and effort, eCommerce can be a great way to reach your target market and grow your business.

Traditional marketplaces

Traditional marketplaces sell their products or services directly to the customer without using any third party. This could be done through a brick-and-mortar store. Traditional marketplaces are convenient for customers because they can see, touch, and feel the products before making a purchase.

Pros:

  • Customers can get a product immediately without having to wait for delivery.
  • There is no need to worry about stock levels because products are available in-store.
  • Businesses have more control over customer experience.

Cons:

  • The cost of setting up and maintaining a brick-and-mortar store can be expensive. Businesses may need to staff their store(s) which can also be costly.
  • There is a limit to the geographical area that a brick-and-mortar store can reach.
  • Another con is that businesses are subject to the whims of foot traffic.

Businesses need to carefully consider their target market and decide if a brick-and-mortar store is the best way to reach them. For example, businesses that sell products that are not available in local stores (e.g. niche products) or businesses that rely on customer loyalty (e.g. high-end fashion) may do better with a brick-and-mortar store.

Mobile apps

Mobile apps have become increasingly popular in recent years. Businesses can use mobile apps as a sales channel in a number of ways. For example, businesses can sell products directly through their app, offer loyalty rewards or discounts to encourage customers to purchase through the app or use the app to drive traffic to their brick-and-mortar stores.

Pros:

  • They offer a convenient way for customers to purchase products and services.
  • Businesses can reach a larger audience with a mobile app than they could with a brick-and-mortar store.
  • Mobile apps offer businesses the opportunity to collect data about their customers that can be used to improve customer experience and better targetting.

Cons:

  • Developing a mobile app can be costly and time-consuming.
  • Mobile app requires ongoing marketing and promotion to attract users.
  • It can be difficult to stand out in the app store.
  • There are instances when customers may not be willing to download another app of your recommendation.
  • You need to continuously update your mobile application to ensure that it is compatible with the latest operating system and devices.

Partnerships

Partnerships are a great way to reach new customers. You can partner with another business in your industry to cross-promote your products or services. For example, if you sell health supplements, you could partner with a local gym. Cross-promotions are a win-win for both businesses because they help you reach new customers and generate more sales.

Pros:

  • With partnerships, your business can reach new customers.
  • A good opportunity to generate sales.

Cons:

  • You need to find a business that is willing to partner with you which usually takes time.
  • The partnership may not be beneficial for both businesses.
  • You have less control over the promotional message.
  • The partnership could end at any time.

Direct Selling

Direct selling is a type of sales channel where you sell your products or services directly to the customer. This can be done in person, over the phone, or online.

Pros:

  • One advantage of direct selling is that it allows you to build relationships with your customers.
  • Another is that you have complete control over your sales process.
  • This means you can set your own prices, create your own marketing materials, and decide how to best sell your products or services.

Cons:

  • The main downside of direct selling is that it can be time-consuming.
  • You may also need to invest in sales training and hire experienced salespeople.
  • And, if you’re selling products, you’ll need to find a way to store and ship them which costs money.

Factors to consider when setting up sales channels

If you are a sales professional at a company or a business owner, you can have different ways in which they can get you a potential customer. Here are some important factors you should look at when choosing a marketing channel:

Customer needs and wants

When you are thinking about which distribution channels to use, it’s important to consider what your customers need and want. For example, if you are selling a physical product, they may want to be able to try it out before they buy it. If you are selling a digital product, they may want to be able to download it immediately after purchasing it.

Size of the company

The size of a company will dictate the number of salespeople you need and the type of support they require. If you have a large company, you may need to set up an internal sales team or use a third-party provider.

Cost

Setting up costs and maintaining a sales channel can be significant. You need to factor in the costs of developing marketing materials, training sales staff, and providing ongoing support. If you are selling a physical product, you will need to factor in the cost of shipping when deciding which sales channel to use. If you are selling a digital product, shipping is not an issue.

Age of your target market

There are different sales channels intended for a certain age group. If you are targeting a younger market, you may need to use a different sales channel than if you were targeting an older market.

Geography

The geography of your target market will dictate the type of sales channel you use. If you are targeting a local market, you will use a different sales channel than if you were targeting a national or international market.

Access requirements such as software

Some sales channels will require that your target market has certain access requirements, such as specific software. If they don’t have these requirements, they won’t be able to use your sales channel.

Sales cycle

The length of the sales cycle will also dictate the type of sales channel you use. If you are selling a high-priced item with a long sales cycle. You will need to use a different sales channel than if you were selling a low-priced item with a short sales cycle.

Existing distribution channels

You may already have a distribution channel in place that you can use to sell your product. For example, if you are selling a physical product, you may be able to sell through retailers. If you are selling a digital product, you may be able to sell through an online marketplace such as Apple’s App Store or Google Play. Before you start adding new sales channels to your business, it’s important to consider whether or not you can make use of any existing ones.

Why make your online store the center of your sales channel strategy?

The internet and mobile technologies have made it easier for consumers to purchase items from the comfort of their homes. In fact, according to a report by Insider Intelligence, global retail eCommerce sales are expected to reach $7 trillion by 2025. With this in mind, it’s no surprise that more and more businesses are selling their products and services online.

This is why an eCommerce store should be the centerpiece of your sales channel strategy for a number of reasons:

  • Have complete control over your brand image and how customers interact with your company
  • Collect data about customer behavior to inform future marketing decisions
  • Reach a larger audience with relatively low overhead costs
  • Flexible enough to integrate with multiple sales channels
  • Offer a better overall customer experience than most offline retailers
  • Control the inventory of products available for sale

Set your own prices without worrying about competition from brick-and-mortar stores.

If you have a physical store as well, an eCommerce site can supplement your offline sales and reach customers who may not live close enough to visit your brick-and-mortar location. You can also use your eCommerce site to sell products and services to customers in other countries.

Of course, setting up an online store is only half the battle. You also need to make sure that people can find your store and that they want to buy what you’re selling. This is where distribution channels come in.

Few things to remember while you build your online store

Curate your own brand narrative

Your eCommerce site is an extension of your brand, and that means it should have its own unique voice. This is what will set you apart from other stores in your niche and give customers a reason to come back to your site again and again.

Think about the overall look and feel of your site, the tone of your product descriptions, and the type of images you use. All of these elements should work together to create a cohesive brand narrative that will attract your target customer.

Rely on multiple platforms for sales

Customer preferences differ by platform, which products they buy, and how often they buy. When an external company experiences a shift, it is common for them to change its policies or algorithms. Additionally, users usually adjust the way they interact with these entities. It’s best that you avoid depending on a single platform to generate sales. You can sell your business through Instagram Stories. When your customers move to TikTok, they can be exposed to business risk where they have built their business in an isolated environment – this is an example – customer behavior can change gradually and keep flowing.

Seller restrictions

When you sell through traditional markets, the channel controls the brand and the way you upload service and the customer owns the customer or interacts with them. It is possible that customers differ from those stores that offer similar or exactly the same items as you. This marketplace should satisfy both the buyer and the seller. As a seller, your goal is to create a place where buyers naturally want to shop, but you don’t own much of the decision-making. You have to be careful not to create a situation where customers are just buying from you because it’s easy and they don’t have any other options.

In order for buyers to want to shop with you, you must offer something that the competition does not or cannot provide. This could be anything from lower prices to faster shipping times. If you can find a way to offer buyers something that they value, then they will be more likely to choose your store over others.

Ease of use

Since you are starting out especially when you are still developing a product, it can be much easier to develop the business on a web-based e-commerce site first & plug into various sales channels on it. Often a company will request more detailed information about their product in exchange for approval. This is product-specific information such as SKU numbers and ISBN numbers.

Multiple sales channels

A single sales channel limits your ability to interact with your consumers on various platforms, and it presumes they don’t want to shop elsewhere. It’s much easier to use multiple sales channels as you can then interact with your consumers on the platform of their choice. It also allows you to track how they interact with your product and brand on each platform, so you can your marketing strategy accordingly.

Some businesses will use multiple sales channels to increase their reach. For example, a business may sell products on its own website as well as on Amazon. By being present in multiple places, they are more likely to be seen by potential customers.

Some things to consider before you decide to use multiple sales channels

  • You need to make sure that your product is compatible with the different platforms.
  • Check whether all these platforms can provide good customer service.
  • Prepare to invest the time and resources into managing multiple platforms.
  • Each platform will have its own fees and commissions, so make sure you are aware of these costs.

The most important thing is to make sure that your product is available where your target market shops. If you’re selling products that are aimed at young adults, for example, then being present on social media platforms like Instagram and Snapchat is important.

Conclusion

In a nutshell, they’re the avenues through which you can sell your product or service. Depending on your business – whether it’s B2B or B2C – some sales channels will work better than others.

We’ve looked at the most popular sales channels for businesses today, as well as some factors to consider when setting them up. But what if you’re not sure where to start? That’s where we come in.

Get in touch with our team of experts who can help you identify the best distribution channels for your business and create a plan that will increase revenue through smart selling strategies. Enquire now!

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