Buying and selling are part of everyday operations. Consumers are an imperative part of commerce. Manufactures’ will use a variety of methods to be able to reach them. The type of method used will be determined by availability, cost and success of both the product and method. Local and international distribution methods are used by the manufacturer to find the most effective and productive way for their product to reach their consumer. These are very different types of distribution methods that manufacturers will decide to use.
Zero Level Channel
Zero level channel or direct channel distribution is when a manufacturer sells a product directly to the consumer. The transactions are done directly with manufacturing company. This can be done as a local distribution or an international distribution. The complexity of it will be determined by the method of sales used along with the location of the customers. The increased use of the internet has made direct channel distribution more popular in the last few years. Consumers can now buy directly from manufactures online, among other options. This is great for consumers as they are not paying a markup from a third party. A great example of local direct channel distribution would be Farmer’s Markets.
Level One Channel
Much as it sounds, level one channel distribution occurs when a manufacturer uses a middle man to sell their product to a consumer. This is a great option for simple transactions for international distribution. It is also convenient for consumers who like to see a product first hand before purchasing. Examples of this include retail stores. With retail, a manufacturer creates the product and sells it to the retail outlet, the retail outlet turns around and sells it to the consumer. With level one channel distribution, the retail store is in direct contact with the product manufacturer.
Level Two Channel
Level two channel distribution is seen regularly with large wholesale companies. These companies produce very large volumes of products and do not have the resources or desire to deal directly with the retail outlets that sell the product for them. In these instances the manufacturer creates a very large volume of an item, this item is then sold to a wholesaler, the wholesaler sells it to the retail store and then the retail store sells it to the consumer. This works especially well with international distribution as many wholesale items are created in one location and then sold around the world. One example of this would be children’s toys. Many toy stores will sell the same type of toy. These toys were all purchased from a wholesale provider; this provider purchased the toys from the manufacturer.
Level Three Channel
Level three channel distribution is extremely common with the most popular products we use. Soft drinks, brand name foods, hair and body products and many more use a three level channel international distribution system. The third level of this system incorporates a sales agent. Consumers purchase from a retail store, that retail store will purchase from a wholesale company, the wholesale company orders their purchases from a sales agent, this sales agent will deal with the manufacturer directly.
In this level of system, the wholesale company would contact the sales agent with consumer demands and questions, they do not have direct contact with the manufacturer. While it sounds like a cold and impersonal chain of command, it is very effective. Without the sales agent, a consumer could spend months waiting on pertinent or relevant information. The manufacture simply would not have time to be able to respond to those needs. Assigning a sales rep, brings back a personal touch to the process and also gives each region that they sell to a dedicated person or team to be able to properly monitor to make sure their products are being distributed as demanded.
The best distribution method will depend on a large number of factors. The consumer, the manufacturer, the volume produced, the volume purchased, and the location of the product, along with the manufacturer and the budget needed to inform the public about the manufactured product. Whether the choice is for local or international distribution, the method used will play a large part on if the sale of the product becomes a success or failure. Creating an item is only half the task; the other half is finding the best way to put it into your consumer’s hands.