What is a distribution channel?

Many manufacturers partner with other companies to make their products available to the end consumer. These partners are known as distribution channels, and are often crucial to the profitability of the manufacturer. What tasks can a distribution channel have, and how do you find the best company to work with?

What does a distribution channel mean and what is its purpose?

All third parties that make it possible for a company to make sales and distribute a product are known as distribution channels. As a business owner, you can sell directly to the end consumer, but key to developing the business and making it more profitable can sometimes be to hire other companies for certain tasks. All companies have different needs and limitations, which is why the choice of distribution channels will vary. For example, a larger company might have the ability to run their own marketing department, while smaller companies benefit from hiring an external agency.

Also read: Third party logistics (3PL)

What should I consider when choosing distribution channel?

Choosing the right distribution channel from the start is necessary to help your company develop in the right direction, and the wrong choice can have negative consequences. Below are a few things to consider when making your decision.

1. Analyse the market and compare several options

Look for potential partners that fit your budget, and consider if they will be as great a fit in a few years when your business has developed. Compare the alternatives and weigh the pros and cons.

2. Does the partner understand your business and what it needs?

When you have selected a handful of companies you think might be a good fit, check if they can actually meet the needs you have. If you need to change your business in order to work with them, a different distributer might be a better choice.

3. What does the partner gain from working with you?

If the partnerships is to be successful long term, it can’t just be profitable for you – your company must also contribute positively to your partner’s business. Make sure you understand each other’s businesses and long-term goals, to help each other achieve them.

How PostNord can act as a distribution partner

Do you need help distributing products? PostNord Portal Business is the portal that helps you make your logistics more efficient, regardless of the type and size of your business. In the portal you will find tools to easily send, track and manage shipments. If you run an e-commerce store, you can even integrate your web store with PostNord, to send shipping information straight to us when your customers make a purchase.

You can find more information about our business services here.

Learn more about logistics

More meaty reading on logistics is available in one place: our logistics page. Other than our primary article you will find all articles on the subject of logistics on this one page.

Frequently asked questions about distribution channels

What’s the purpose of a distribution channel?

The right distribution channel will help your company be more profitable and efficient.

What tasks can a distribution channel help with?

A distribution channel can, for example, be tasked with coordination, marketing, negotiation, financing or distribution.

Why do I need a distribution channel?

The primary reason to have a distribution channel is to contribute to your business’ profitability.