Channels of Distribution and E-Trade

6. Channels of Distribution and E-Trade

Channel of distribution refers to the path or route through which goods travel — and

ownership of goods passes — from the producer to the final consumer. Broadly, two patterns

are recognised:

1. Direct channel — the producer sells straight to the consumer, with no wholesaler or retailer in between (e.g. a farmer selling produce directly at a local market, or a small manufacturer selling directly from the factory). Cuts out middlemen's margins but places the whole burden of storage, selling, and reaching scattered consumers on the producer alone.
2. Indirect channel (through middlemen) — the more common pattern for most manufactured goods, where the producer sells to a wholesaler, who sells to a retailer, who finally sells to the consumer (Producer → Wholesaler → Retailer → Consumer). A shorter indirect channel (Producer → Retailer → Consumer, skipping the wholesaler) is also common for large retailers who buy directly in bulk from producers.

The choice of channel depends on factors such as the nature of the product (perishable goods

need shorter channels), the geographical spread of consumers, the capital and organisational

reach of the producer, and the degree of after-sale service the product needs.

E-Trade (E-Commerce) — a brief introduction: E-Trade refers to the buying and selling of

goods and services conducted electronically, typically over the internet, rather than through

a traditional physical shop. At this introductory stage, note only its basic features:

• No physical shop visit required — the buyer browses and orders through a website or app, similar in spirit to mail-order business but electronic and typically far faster.
• Wider reach — a single online seller can potentially reach consumers across the whole country (or beyond) rather than only a local neighbourhood.
• Round-the-clock availability — an online store, unlike a physical shop, is not restricted to fixed opening hours.
• Cashless/digital payment — transactions are typically settled through online banking, cards, or digital wallets rather than cash at a counter. …