Channels Of Distribution

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What are the Channels of Distribution?

Channels of distribution refer to a company ‘s potential to ship its products to a customer at any given location within record time. Companies with several distribution channels enjoy more flexibility while offering fewer transit times to an end user. It also serves as a count of paths a merchant can take. 

Significance of Channels of Distribution in an E-commerce Shipping and Delivery

Distribution channels play a vital role in dictating a company’s ability to offer low transit times while serving many locations.

  • Low transit time: A company with several channels of distribution can do a comparative analysis and select the best-suited channel that offers minimum transit time for a comparatively low price. As a company, being able to ship products quickly plays a massive role in its branding. Therefore, having several channels of distribution is extremely important.
  • More serviceability: The availability of several channels of distribution allows a company to serve a wide range of locations has perks of itself. A merchant can effectively target and sell their products in more areas while fulfilling them. 

Prerequisites of Channels of Distribution and How It Works

Every company needs a minimum of one distribution channel. If a seller wants to create a distribution channel, they must invest in warehouses and other storage units.

  • Manual channel creation: A seller is required to locate warehouses in advance to buy or rent them. Subsequently, they must sign agreements with railway freights, truck carriers, and couriers to create a channel.
  • Outsourced channels: Sellers can sign up with a third-party shipping company and gain access to a multitude of distribution channels owned by them. 

Use Case with Channels of Distribution

A seller in Bangkok signs an agreement with a third-party shipping company focused on the APAC region. Subsequently, the merchant can now market and sell products accross countries like the Philippines, Thailand, Australia, China, India, etc. After accepting an order from any mentioned country, the delivery responsibilities are transferred to the newly partnered shipping company. 

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