What are sales channels?
Sales channels are the places where the customer can buy your product. A distinction is made between direct sales channels and indirect sales channels. Direct sales are sales of goods and services through your own channels - this could be your website or your physical shop. Indirect sales are sales of goods and services through third party channels - these can be affiliates or distributors.
Making the right choice can affect not only your marketing strategies, but also your company's potential earnings. You can choose to sell your products exclusively through direct or indirect channels. In this post, we'll focus on indirect sales channels.
Online marketplaces as a sales channel
Online marketplaces that include platforms such as eBay, Amazon and others, are popular indirect sales channels used by businesses of all sizes.
As a small business owner, you probably only have access to customers who are near you. By selling through an online marketplace, you can reach more potential customers who might not otherwise know you exist.
As an added bonus, by using this channel, you can help cut your marketing costs. Of course, using an online marketplace also has some drawbacks. Amazon and other marketplaces can charge large fees to suppliers. In addition, marketplaces often limit the brandingyou can do online so consider whether brand development is important for your business or not.
Distributors as a sales channel
Distributors are mainly wholesale companies specialising in sales to retailers, not directly to consumers. Because they have a desire to sell your products for you, distributors save you money on hiring and training a sales team as they market your products to their customers.
There are restrictions that you need to be aware of. Because distributors want to distribute your goods to make money, they may not be ideal for businesses selling lower value products. You will need to make sure that your product is priced sufficiently below the recommended retail price so that a distributor - and their retail partners - are willing to sell it.
Foreign distributors as a sales channel
Foreign distributors specialise in sales abroad. There are various advantages to using a foreign distributor, including the opportunity to access new customer bases around the world. In addition, foreign distributors handle customs formalities and paperwork.
Despite these advantages, using a foreign distributor is not without its drawbacks. Typically, companies have to sell their products to the distributor at a large discount. As a result, this sales channel may not be ideal for products with low prices or if the target group is too narrow.
Affiliate sales as a sales channel
Affiliate selling means that individuals or companies sell goods on behalf of other companies. When something is sold through this person or company, they get a commission on the sale. Affiliate companies help businesses reach larger and more varied customer bases, however they tend to charge high commissions.
Outsourced sales as a sales channel
It's no secret that many small business owners don't have enough hours in the day. With that in mind, a number of businesses are choosing to outsource their sales needs to other companies, rather than handling them in-house.
One of the advantages of this sales channel is its flexibility. Companies can choose to outsource a particular aspect of the sales process, such as lead generation. Nevertheless, companies should be aware of the disadvantages before choosing this sales channel. Not only is outsourcing expensive, but companies tend to let go of control too much when it comes to executing their sales strategies.
Catalogues as sales channels
Catalogues are considered old-fashioned by some business owners - but they are still an effective way to target specific markets for physical products. Not only are catalogs an attractive alternative for potential customers to view your products, but they also allow you to entice more traditional buyers as well as those who just can't or won't visit your store in person.
Using catalogues as a sales channel is not without its drawbacks either. First, many catalogues require you to sell products to them more cheaply and it is not uncommon for catalogues to charge extra fees for advertising or product photography. So always be sure what the final cost of using a catalogue as a sales channel is before you make a deal.
Advice for sales channels
When choosing a sales channel, there are several things to keep in mind. Not only do you need to assess how your competitors sell their products, but you also need to consider the costs of these different methods in addition to customer preferences.
Once you've found the ideal sales channel or channels for your business needs, you can add any additional marketing effort and watch your products fly off the shelves. If you're looking for more ways to boost your profits, check out our article on seven ways to increase your business sales.
