In indirect channels of distribution there are one or more middlemen between the manufacturer and consumers. There is no direct contact between the producers and the customers. Indirect channels of distribution may be classified as follows:
1. Manufacturer -> Retailer -> Consumer:
In this channel, the manufacturer sells goods to consumer through retailers. This channel of distribution thus has one middleman i.e. the retailer.
Consumer durables such as TVs, refrigerators, scooters, washing machines, cars and industrial machinery and equipment are generally sold through this channel.
When large scale retailers are available such as departmental stores and super bazar, the manufacturer finds it convenient to use this channel of distribution.
2. Manufacturer -> Wholesaler -> Retailer -> Consumer:
This channel consists of two types of middlemen, called, wholesaler and retailer. Consumer products of daily use such as soaps, cosmetics, detergents, etc. are generally sold through this channel.
For example, Hindustan Lever Ltd., sells its products through wholesalers and retailers. Small scale producers also find this channel convenient for the distribution of products enjoying widely scattered demand.
3. Manufacturer Agent -> wholesaler -> Retailer -> consumer:
This is the longest channel of distribution. The manufacturer sells his entire output to a sole selling agent who in turn appoints wholesalers. Wholesalers sell to retailers who in turn sell to ultimate consumers. This channel is popular in the distribution of cloth, food grains, sugar, edible oil, paper, etc.
Indirect channels relieve the manufacturer from the problems of distribution and he can concentrate fully on production. The expert services of middlemen become available.
But indirect distribution creates distance between the producer and the consumers. The producer loses control over distribution. Distribution of goods may be slow due to intermediaries between producer and consumers.