Distribution channel refers to the series of business firms which together facilitate distribution of products from their manufacturers to the end customers and users. These firms constituting the distribution channels are called middleman or intermediaries. Typically a distribution channel consists of different types of intermediaries like wholesaler and retailers.
Manufacturers prefer to distribute their goods through distribution channels rather than sell directly to end customer because of several useful functions performed by them. These include the following:
- Physical distribution or transportation of products from place of manufacturing to places more convenient to customers for buying.
- Storage of products at various locations so that customer can get immediate delivery of the products they want without waiting for transportation from manufacturing locations.
- Bulk breaking, or dividing large order quantities of product from supply manufacturers to smaller quantities that are more suitable for customers.
- Assortment, or making a large variety of products available to customers at one location. Typically, u sell just one type of products, whereas retail outlets stock a very wide range of products from many different suppliers.