What is Direct Distribution Channel? Definition of Direct Distribution Channel, Direct Distribution Channel Meaning and Concept
A direct distribution channel is established when a company brings and sells its product to the final consumer, without using intermediaries.
It can be established when a company uses its sales force to promote and sell its products. Since in these cases the company has a face-to-face or face-to-face relationship with the consumer.
Also when you use the sales mode using media such as television, telephone, mail, digital media and the internet as a platform to sell.
Forms of direct distribution channels
The most common ways in which we observe that this distribution channel is being used is any company that employs:
- Catalog sales: In order to sell their products, they prepare catalogs that can be disseminated in printed or digital form, then the consumer chooses their product and it is delivered to their home. It is used by companies like Avon, which is a cutting-edge company in the use of this modality.
- Television sales: In this case, the product is promoted through television and then a telephone number is exposed for the customer to place his order and it is delivered to his home. Tvoffer is an example of a company that uses it.
- Sales by mail: This form occurs when the company directly contacts the consumer through email to promote their products, receive orders and make the corresponding deliveries. It is used by many companies today.
- Sales at home meetings: This form summons people who may be potential customers of a product, they are shown, the use and benefits of the product are explained to them. Those interested buy their products there. This is the case with Tupperware.
- Home sales in general: This modality is used by any company that takes the product directly to its consumer.
These are the most common modalities, but there are many more using the direct distribution channel.
Advantages and disadvantages of direct distribution channels
Among the advantages we can mention:
- Direct relationship with the client: The company has a personal contact with the client, this helps to understand him better, since a feedback of information is given immediately. If the consumer is satisfied, the company knows that it is doing well and if the client expresses dissatisfaction, the company can take measures to correct and improve.
- Immediate response: When sales are made online, the company is connected 24 hours a day, so it must respond immediately to any request, suggestion or disagreement from the client. Using your sales force, the salesperson can also quickly solve the customer's problem.
Information management allows you to solve difficulties immediately and improve products and processes.
- Low costs: The cost is low because there are no intermediaries, this is an important benefit because it allows a greater profit margin for the company. Costs can be reduced by increasing the efficiency of the company and applying the principle of economy of scale. At the same time, the consumer obtains a lower price, since when there are intermediaries, each link in the chain wants to win at each step of the process.
- Scope and promotion: Well used this type of channel can achieve that the promotion and reach of the product is generated globally, because if digital media and the internet are used, there is no border for the diffusion of the message and the promotion of the product. anywhere in the world. When you use your own sales force, you also get an excellent promotion of the product, but of course the reach is less in relation to digital media.
- Control: The company controls all processes so that it can offer the best advantages to its customers, so that the products arrive in the best conditions and at the right times that the consumer expects. These details could be differentiating elements that give the company a comparative advantage over other competitors.
While among the disadvantages we cite the following:
- Fixed costs: It is required to carry out many administrative activities, to be aware of all the processes and logistics of distribution. The cost of transportation and personnel in charge of the process becomes a fixed cost. This could increase operating expenses.
- Investment of time: More time is required to carry out the planning process of all the processes and the logistics required. This situation could cause the company to lose its main focus, which could be marketing activities or strictly the production process.
To finalize a company, when you decide to use a direct distribution channel, you must weigh its cost-benefit ratio, to decide if it is better to use a direct channel or an indirect channel more. This decision will also depend on your skills, your advantages, your logistics and your transport infrastructure to carry out this task.