Trade requires distribution of goods and services among consumers. Goods are produced at certain places but their consumers are scattered throughout the world.
Goods must, therefore, be distributed from the points of production to the centres of consumption. The channels through which products move from producers to consumers are called channels of distribution
Meaning and Definition of Channels of Distribution
A channel of distribution or trade channel is the route or path along which products flow from the point of production to the point of ultimate consumption or use. It starts with the producer and ends with the consumer.
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In between there may be several middlemen or intermediaries who operate to facilitate the flow of product and its ownership transfer. A distribution channel consists of the producer, the middlemen and the consumer.
“A channel of distribution is the structure of intra-company organisation units and extra company agents and dealers, wholesale and retail through which a commodity, product or service is marketed.”
“A channel of distribution is a path traced in the direct or indirect transfer of title to a product as it moves from a producer to ultimate consumers.”
“A distribution channel consists of the set of people and firms involved in the transfer of title to a product as the product moves from producer to ultimate consumer or business user.
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It includes both the producer and the final user of the product as well as merchantile agents and merchant middlemen engaged in the transfer of title to goods and services.”
“A marketing or trade channel is a set of interdependent organisations involved in the process of marketing a product or service available for use or consumption”
A channel of distribution represents three types of flows:
(a) Products flow downward from the producer to consumers;
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(b) Cash flows upwards from consumers to the producers as payment for products; and
(c) Marketing information’s flows both downwards and upwards.