Channels of distribution may broadly be classified into two categories:
1. Direct channels
2. Indirect channels
In direct channels of distribution there are no middlemen and a producer directly sells goods to consumers. A manufacturer can sell goods directly to consumers in several ways which are as follows:
1. Door-to-door Selling:
A producer may employ travelling salesmen who go from door to door and sell goods on the spot to consumers. The producer also arranges for delivery of the product to customers.
For example, Eureka Forbes Ltd., is selling Acquaguard brand of water filters and Vacuum Cleaners through its sales force of more than 700 people spread out over 50 branch offices throughout the country.
2. Chain Stores:
Big manufacturing firms may open their own retail stores in different parts of the country to sell their products directly to consumers. For example Bata India Ltd. has established retail outlets throughout the country to sell its shoes and other products.
3. Post Office or Courier:
In this method, the manufacture sends sales literature by first to a select group of customers. Customers place orders over telephone, fax or by mail. The manufacturer delivers the product to customers through value payable post (V.P.P.) or courier. It is called mail order business.
In this system, a manufacturer advertises the product, its features, uses, prices and availability through the medium of television. The interested customers place orders by telephone, fax or mail.
The product is delivered through courier, manufacturer’s own vehicle or by post. For example, Asian Sky Shop and Telebrands are distributing goods through tele marketing in India.
Direct selling is the simplest and the shortest channel of distribution. This channel facilitates fast movement of goods from the producers to consumers.
The profits of middlemen are eliminated and consumers can get goods at lower rates. The producers can maintain direct contract with customers and there is full control over distribution of goods.
But direct selling requires huge capital investment as the producer himself has to perform all marketing functions. The producer has to undertake the burden of distribution in addition to production.
Countrywide distribution of goods may become difficult. The expert services of middlemen are not available. Direct selling is popular among large and well established firms.
In recent years, direct selling has become more popular due to increasing competition, need for controlling costs of distribution, technical nature of products, availability of public warehouses, etc. Direct selling is more useful when aggressive selling is necessary or when the customers of the product are concentrated at a few places.