Home » Business, Headline

Your Guide to Direct & Channel Sales

7 August 2017 No Comment

In a world where business enterprises are constantly growing in number, it’s no surprise that the ways in which they sell their products and services differ as well. There are two main types of sales that are conducted throughout the world of commerce and trade: direct or indirect channel sales. Although the two terms are not very complicated and can be understood easily, both are rather different in nature.

What is Direct & Indirect Sale?

As aforementioned, the two terms are used on a broad perspective to define the method through which the owners of a business choose to conduct sales.

Direct Sales

A company or organisation that chooses to sell their products or services to their clients in a manner that is direct is known as a direct sale. This means that the sale is being made between the owner of the business and the client who is purchasing, without the involvement of a third or outside party. Direct sales are noted to be more of a conventional form of selling products, with no middleman in between. This form of sales also means that the profit of the sale goes directly to the business owner, since there is no need to pay anyone else for their duties. However, there is a possibility that there will be a good deal of hidden costs involved in most of the cases regarding direct sales. Therefore, a direct sales partner is the person that the company sells their products and services to. Usually, a company conducting direct sales only operates through their own shops or franchises.

Indirect or Channel Sales

As opposed to direct sales, indirect or channel sales is when a company or organisation chooses to sell their products through a middleman, or third party. Although the profit is divided in the case of channel sales, the profit is also a lot more due to the vast platform that is given to the product. Coca Cola is a great example of a company that chooses to conduct channel sales rather than direct sales. Due to the fact that the company makes a huge amount of profit, making payments to a third party for their duty really isn’t a hassle. Therefore, an indirect or channel sales partner is basically every retailer that buys these products to sell at their own shops.

However, incentivising indirect channel partners can be quite a task due to the fact that the main agenda is to motivate the partners in order to sell more products and services. Some forms of incentives are as follows:

  • Rebates are a popular form used by companies to create incentives
  • Honouring clients by introducing additional discounts dependent on sales volumes and buying in bulks
  • Making use of programs in the order of Co-op funds or MDF
  • Honouring clients by introducing additional discounts dependent on margin requisites

Comments are closed.