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Q: Meaning of "direct to channel" ( Answered 3 out of 5 stars,   0 Comments )
Question  
Subject: Meaning of "direct to channel"
Category: Business and Money > Advertising and Marketing
Asked by: kbc-ga
List Price: $25.00
Posted: 02 Apr 2006 07:55 PDT
Expires: 02 May 2006 07:55 PDT
Question ID: 714605
What does "direct to channel" distribution mean in retail marketing? 
A company manufactures in France but has a Chicago warehouse for
shipping its product to American customers. It also says it will
"distribute direct to channel" for some retailers. Does "direct to
channel" mean it can ship from France direct to the customer (that
would be the point of "direct"-no?) instead of going through the U.S.
warehouse. Are there alternative explanations/ scenarios?
Answer  
Subject: Re: Meaning of "direct to channel"
Answered By: hummer-ga on 02 Apr 2006 09:37 PDT
Rated:3 out of 5 stars
 
Hi kbc,

"Does "direct to channel" mean it can ship from France direct to the
customer (that would be the point of "direct"-no?) instead of going
through the U.S. warehouse."

No, "direct to channel" actually means "direct to distributors or
resellers" and "indirect to the consumer".  Companies have a "channel
of distributors" to help them market and sell their products rather
than selling directly to the consumer (such as Dell).  In your case, 
"direct to channel" would mean that the French manufacturer is willing
to sell their product (which they normally sell directly to the
consumer), wholesale to some retailers for redistribution to the
consumer.  A "channel" is merely a means to get the product to the
consumer. A company may have a single channel or multiple distribution
channels.  One channel may be used for sales, another for after sales
service (e.g., call centers).

Channel
"That which keeps the organization supplied with customers, clients or consumers.
For many organizations, it is not practical to deal directly with
customers. Whereas the Boeing aircraft company can deal with airlines
directly, it is not practical for car maker Honda to do the same with
car buyers. It must rely on a 'channel' of distributors.
Types of channel organization: The term 'agent' or 'broker' is
generally reserved for those channel organizations charging a
commission for putting the customer in contact with the provider of
goods or services, e.g. real estate agent, shipping broker or agent
for office furnishings or home improvements.  Distributors, retailers
and franchisees usually buy the goods or are licensed to provide the
service and make their money from the difference between what they pay
their suppliers and what they charge the customer or client. What one
sees is often deceptive. The thousands of McDonald's restaurants in
countries around the world are not all owned by the company, many are
franchised and are a good example of the channel merging with the
organization so that the two become indistinguishable. The term
?channel? also applies to the service sector. For example, the channel
of a financial institution such as an insurance company may be a
multinational bank or a self-employed independent financial advisor."
http://www.howarddowding.com/channel.htm

Distribution Channel
"In certain areas of the world we do not sell our products and
services directly, but do so through a channel of distributors,
resellers and the like. We receive personal information from, and
supply personal information to, our distribution channel in support of
all the functions noted above."
http://www.qnx.com/legal/privacy_statement.html 

Business Plan for a Startup Business
Distribution Channels
How do you sell your products or services?
Retail
Direct (mail order, Web, catalog)
Wholesale
Your own sales force
Agents
Independent representatives
Bid on contracts
http://www.iahbe.org/Resources/PDFs/StartupBusinessPlan.pdf

Turn a Client Site into Saleable Software
Approaches to Sales
"Essentially, sales and distribution can be boiled down into two
categories: direct and indirect."
The Direct Approach
"The concept of direct sales is pretty self explanatory: in this
model, your company assumes responsibility for the sale of your
software. There are few large companies today that maintain a strict
direct sales policy, but certain companies, such as Apple and Dell,
have made names for themselves as being major supporters of the direct
sales model. The idea, basically, is that if someone wants to buy your
product, they have to come to you, rather than a retailer."
Channel Sales
"The concept of indirect, or channel sales starts to get a little more
involved. This is where you enlist the help of other companies to sell
your product. Essentially it's like marketing to retail stores, but
with software it's a little different.
Since there's no packaged product that can be put on a shelf,
distributors don't need to purchase stock to keep on hand. Instead,
they sell your software licenses for you, and you split the profits
with them. A good example of this is Microsoft. Have you ever
purchased a product directly from Microsoft? Have you ever contacted
their customer support department? Microsoft sells their products
wholly through third party distributors, often as integrated
components with other products. When was the last time you saw a new
PC in a store that didn't have Windows preloaded?"
A Hybrid Approach
"As with a lot of things, most companies find that a mixture of both
methods works best. Particularly when you're just starting out, it's
important not to get locked in to one form of sales. "
http://www.sitepoint.com/article/client-site-saleable-software/3

I hope I've been able to make this clear for you. If you have any
questions, please post a clarification request and wait for me to
respond before closing/rating my answer.

Thank you,
hummer

Google Search Terms Used: 

"direct to channel" distributors
"channel of distributors"
kbc-ga rated this answer:3 out of 5 stars
The operative word here seems to be "channel" not "direct" (as I was
construing the information). hummer-ga got to the point and the
clarification was quite helpful.

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