What Sales Methods are Used to Deliver a Product to Market? / What Does the Term Channel Sales Mean?

Channel is simply the method used by the company that manufacturers a product, provides a service or develops software to deliver or sell it to the end user.

Companies use one or more channels to sell their products. The sales channel or channels are selected based on what the manufacturer believes is the most efficient method to get the product to market.

Direct Sales - the company has employees who have responsibility to sell the products either full time or part time.

Agents - independent sales people or organizations are agents for the company. They receive a commission on their sales but usually do not receive a salary and pay their own expenses. Life insurance is often sold this way in the US.

Value Added Resellers (VARs) - independent companies that often take something that they use as a component and incorporate it into a system. VARs often integrate computer hardware and software to provide a turnkey system to the end user.

Retail - stores and businesses that customers visit to purchase products. Car dealers are an example of a retail channel.

Manufacturer's Representative - separate businesses often with exclusive territories that sell a limited product set, but have expertise in the product. A Rep company will sometimes carry inventory of high volume products, but this is not always the case. They often provide Tier 1 support and are considered Subject Matter Experts (SME's) for the product. They will typically be able to demonstrate and make product presentations to users.

Wholesalers - sometimes are called Master Distributors purchase in large quantities from the manufacturer. They typically do not modify the product to see it. The Master Distributors in turn re-sell in large quantities to smaller distributors or retail stores.

Businesses will often utilize more multiple channels depending on the cost, complexity and breadth of their product line. A company that sells a broad line of computers might have some products sold in electronics stores and the more complex and expensive products sold by their own sales force.